Christine Tu

Christine Tu inquired about the availability and pricing of aircraft and engine assets for SCI, the nature of investor conversations regarding SCI's appeal and potential concerns, the financial treatment of FTAI's 19% equity portion in SCI within adjusted EBITDA and leasing segment, and the 'secret sauce' behind the module facility's rapid growth and market penetration.

Answer

Joe Adams, Chairman and CEO, identified lessors and airlines as key asset sources, highlighting FTAI's competitive advantage with engine exchanges and MRE as a problem-solving solution for investors, offering higher returns, lower risk, and predictable cash flows. Angela Nam, CFO and CAO, clarified that the 19% equity pickup, servicing revenue, and engine exchanges from SCI would all be included in adjusted EBITDA within the leasing and aerospace products segments. Joe Adams attributed the module facility's success to a focused strategy on CFM56 and V2500 engines, and the ability to attract and retain talent by selling a compelling vision of solving customer problems.

Christine Tu inquired about the availability, pricing, and expected returns of aircraft engine assets for SCI, the nature of investor conversations, and the financial treatment of FTAI's 19% equity portion in SCI within the company's financials. She also asked about the 'secret sauce' behind FTAI's rapid growth and market penetration in module facilities.

Answer

Joe Adams, Chairman and CEO of FTAI Aviation, described asset sources from lessors and airlines, highlighting FTAI's competitive advantage with engine exchanges. He noted investors are attracted to SCI's higher returns, lower risk, predictable cash flows, and asset-backed structure. Angela Nam, CFO and CAO, clarified that FTAI's 19% equity pickup will be in the equity income line, servicing revenue in the leasing segment's 'other revenue,' and engine exchanges in aerospace products, all included in adjusted EBITDA. Joe Adams attributed the module facility's success to a focused strategy on CFM56 and V2500 engines and the ability to attract and retain talented people by selling a compelling vision.

Christine Chi from Morgan Stanley asked if lessors like AerCap could play a role in helping countries balance trade deficits by facilitating aircraft purchases. She also requested more detail on the Shannon Engine Support (SES) joint venture, its operational model, economics, and potential scale.

Answer

CEO Aengus Kelly affirmed that lessors could be very helpful in addressing trade imbalances, as they can provide aircraft much sooner than the OEMs, whose order books are full until around 2030. Regarding SES, he described it as an integral part of the OEM aftersales service, managing a global pool of spare engines to support airline customers. He highlighted the significant logistical infrastructure required, noting over 1,200 engine movements last year, which underscores its operational importance to AerCap.