Earnings Call: Q3 2021

Oct 21, 2021

Earnings release

Welcome to the AerCap Deal Roadshow Call. I will hand the call over to Ashley Everett from Goldman Sachs to open the call. Thank you, Madison. This is Ashley Everett from Goldman Sachs' Investment Grade Capital Markets team. On behalf of Citigroup and Goldman Sachs, I'd like to welcome you to AerCap's fixed income investor presentation. Speaking from the company today will be Angus Kelly, Chief Executive Officer Pete Juhas, Chief Financial Officer Brian Cannith, Group Treasurer and Joseph McKinley, Head of Investor Relations. Before we begin today's call, we encourage you to access the investor presentation at netroadshow.com using the password AIRCAP485. I would also like to direct you to the relevant disclaimers, including it in the front of the investor presentation. The AerCap team will provide a brief introductory overview with Q and A as the main focus of the call. I'll now turn the presentation over to the company. Thank you, Ashley. Thank you all for joining us for the call today. As Ashley mentioned, the presentation is available on the roadshow.net. But for today's call, we really want to encourage you to ask any questions you have. In comments, I want to make three points to you. Firstly, it is clear that global air travel is recovering far quicker than we had envisaged When we agreed the GCAP transaction at the beginning of this year. This is driven by the huge success of the vaccination program And the easing of government restrictions. We see this already in our improving operating cash flows, Deferral trends and we see it in the demand for leasing aircraft and the recovery in aircraft values. Secondly, the acquisition of GECAS, which we expect to close shortly, will significantly enhance The revenues and cash flows of the business as well as the overall quality of our assets. Thirdly, I believe that the recovery that we are seeing in aviation, the combination with GECAS, Our own extremely strong balance sheet and our track record of having done this before We'll put AerCap on a higher ratings trajectory. Higher rating is a key priority of the company and of mine. Operator, let's open it to questions, please. And we'll go ahead and take our first question from Jonathan Ng with Fidelity International. Please go ahead. Hi, everyone. It's Jonathan Leiker from Codelsey. Just let me ask a couple of questions on the The transaction itself and also on the state of the registry approval. So first of all, what's the sort of size and tranche that you are Considering and how much are you comfortable issuing in the long bonds? I guess, it's interesting given that we're seeing at least a portion of your cash Ashley, you could be in Hong Kong going forward. And then how certain is it that you will issue in euro market? For example, if you were to pay enough demand in dollars, could you do a whole lot in dollars? 4, you're definitely going to issue in euros. And then thirdly, what is the status of the regulatory approvals? Are there remaining titles And are there any risks to completion, Duffy? Thanks, Austin. This is Blayne Canif here, the Treasurer. With respect to your first question, I think that the tenants that we are considering are anywhere from 2 to 20. I think the final sizing of each of those tranches will determine with our advisers over the course of the next 24 hours. But and obviously, we do think that there will be significant interest in the long end. And I think it's a natural progression To issue out to 20 years, I think it's up to now. We've obviously done out to 10, but we think as the company grows in size, it also helps as well matching the overall average lease term of the company as well. With respect to the overall size, we're thinking something in the context of $20,000,000,000 plus or minus. And to your question around could we do it all in dollars, well, again, we'll discuss it with our advisers Over the next day or so, we believe that there's going to be a strong level of support for the transaction. So we do think it would be possible. But obviously, we have the euro option open and available to us as well. And Gus, do you want to deal with the In relation to the regulatory approvals, you'll have seen in the filing that we made last night that we do have the last major approval that was outstanding was China. So that came in. There are a couple of minor things that have to get done between now and closing, but we would expect that to be done in the coming days. Thank you very much. We'll go ahead and take our next question from Patrick Flanagan with MFS. Please go ahead. Hi, this is Patrick from MFS. You mentioned the higher rating trajectory. Just curious about How you're thinking about shifting the funding composition over time? I think that should be key to unlocking that higher rating trajectory. I'm just Curious on the pace and how you're thinking about accomplishing that? Sure. Patrick, it's Pete here. With this transaction, we're going to be funding predominantly unsecured, right, for the acquisition takeout financing here. And as a result of that, we expect to be below 20% secured digital assets, which is a key Kind of rating threshold for the rating agencies. And going forward, we expect to maintain that and to be below that. So, I think that in and of itself post this transaction should put us in a better place there. I mean, we're going to continue to do some secured debt off and obviously that's going to continue to be a part of our funding structure. But just by virtue of this transaction alone and the predominantly unsecured nature of That will definitely get us there. Okay. Thanks. You don't expect to be Sorry, Patrick, it's Gus. I would note that Yes. 7 years ago, we were facing the exact same issue on how to make sure we put the company on a rapid ratings ascent. We did that. A lot of discussion, a lot of work into how we put the capital structure together, but of course then how we optimize the business as well. Again, at that time, we did get well ahead of schedule. And as you can see in our operating cash flows in the presentation, you've seen consistent Strong improvement in those over the last 15 months. Thank you. Sure. I think it's worth noting, okay, just before we finish on that point, this isn't contingent on us changing the overall cap Structure of the company, the rating trajectory, maybe give some thoughts as to why we think we're in a higher rating trajectory. It's not about just reducing our secured funding. It's about a lot more than that. Sure. I mean, as we look at it, right, I think there are three reasons why we think we We're optimistic about getting an upgrade. 1, we were close to an upgrade prior to COVID, right? As COVID hit, We were in a good position and positive outlook with the rating agencies. And so we felt we were close to an upgrade then. Obviously, we were subject to COVID, which is About the worst stress test manageable for a company in the aviation industry, and we came through it very well. I mean, for example, we talked about this in the presentation, but Our leverage ratio went from 2.6x pre COVID to 2.4x today. So that's a huge, I'd say, example, demonstration of how resilient AerCap is. And finally, The combined company is going to have a better credit profile than AerCap does standalone. And Gus mentioned before, From a revenues, from an earnings, from a cash flow standpoint, but also in terms of our customer diversification, I mentioned before the secured debt profile, that Percentage is going down and we're going to continue to maintain a huge amount of liquidity. We can start to have $17,000,000,000 of available liquidity Upon closing this transaction. So I think all of those things should argue for a higher rating. Okay. And we'll go ahead and take our next question from Jay Consett with Anew Lies. Please go ahead. Hey, thanks. So I mean, I guess maybe just at a higher level, just thinking about what risks I guess you see, if any, Being such a large insurer, I guess I'm looking at my just my world, my apathy. And you're going to be up there with Banks that are kind of mostly deposit funded and have access to the shareholder and you will not. Is that I guess, does that pose a A risk that you may have thought about? Well, we are going to be a large issuer, but We balance that against that $17,000,000,000 of liquidity, right? So obviously, it costs us a fair amount to hold that liquidity, We think it's important and we size that against looking out at our cash needs going forward. And so when you think about The maturity profile that we'll have, obviously in this transaction, we're going to do this over a number of tenures and spread that out make sure that we don't have high maturity towers in any specific year, I do think it's manageable from that standpoint. We report very openly our source of use and target and we will continue to maintain that at the moment. That's 1.5x coverage of our 12 months uses of cash and we're going to maintain that. So I think from that perspective, We're comfortable even though it will be a larger company. I mean, look, it's one thing that even during the COVID environment showed is that there is strong access for this company to Capital Markets, and I think it's just with this transaction, with the increased liquidity that will be there, we think that will improve. Okay. Thanks. Sure. All right. We can go ahead and take our next question from Nicknamee with G. W. Pei Investment Management. Please go ahead. How are you gentlemen? Thanks for taking the question. So A lot of your outstanding capital structure is 150 ks by 1 domination. I was just wondering if you guys are considering going lower than the nomination for the same ratio? Thank you. Hi. Yes, it is something we've been aware of. Obviously, the retail issuers can it's helpful Certain investment funds in terms of the size that we've looked at. I think just for the sake of continuity for this issuance, we try to be consistent with our historical issues and try not to change too much, but it is something we're aware of and may look to address in the future. I think for this issuance, we'll stay at Go ahead and take our next question from Carly Jang with ExodusPoint. Please go ahead. Yes. Good morning. Thanks for hosting the call. Just a quick one. On the leverage charge you have, I believe before my closing, you'll be up just a tad I've said about 3 turns or so. And I think I believe you're targeting getting back to that 2.7 times Over about 12 months, I guess my question on that is once you get there, where do you really want to go here in the future? Would you like to see that A particular metric, yes, trends below that 2.7x. And then I had a quick follow-up question. Thank you. Sure. Thanks. So you're right that we expect to be around 3x leverage at closing And we expect to get back down to our target of 2.7 to 1 within 12 months of closing. And that's Really frankly, based just on our operating cash flow that we project, but if we without Projecting a significant amount of asset sales. If we do a significant amount of asset sales at that market, if markets continue to recover and we do that, That should accelerate that timetable. But once we get there, look, we're maintaining our target. We think that my comments Before about the ratings upgrade, we're optimistic about that. We are optimistic about that even with maintaining that target. So I don't think That goal necessitates changing that target at all. So I think you would plan to keep that target. Whether we run exactly at that target or around there remains to be seen. I mean, you can see now, right, we're running significantly below Our target. So that will move around where we actually are from quarter to quarter, but I don't envision changing Target now. I'm giving deeper point on the velocity of getting to 2.7 is very valid. That 2.7 number is based really just on operating cash flows. As we projected at the time of closing the transaction since then, There's been a huge resurgence in air travel on a global basis around the world. We've seen a significant increase in aircraft values Since we closed the transaction or since we agreed the transaction, I should say, in March, there's significant uptick in interest from people buying assets, Aircraft assets at the moment also. Again, just more generally, the pandemic proved that aircraft assets Are a very solid asset. And throughout the pandemic, I think we'll do well out of them and willing to reinvest in them. And so if we do go anywhere close to the level of pre pandemic sales of the 2 companies we're doing of €4,000,000,000 to €5,000,000,000 a year, We would get to this lower leverage ratio much, much faster. Great. Thanks for all that information. Appreciate it. Just a quick Shifting gears to your aircraft portfolio here pro form a, I'm just Referring to Slide 14, you obviously have a nice upper weighting to the 320neo relative to the MAX. And Just wondering if you could tell us based on your order book, how you see relative weightings between the Neo and the Max Sort of trending here over the next several years. Thank you. That's it for me. Thanks. In our order book, the Neo makes up the vast, vast majority of our entire order The MAX would be significantly smaller, a small minority of the order book. That being said, Of course, in the market, we see what's happening every day around the world. And on the MAX 8 aircraft, That aircraft is in demand. We've seen lease rates increase materially over the course of the last, I would say, 2 to 3 months in particular. And demand for the aircraft is much more solid. It won't ever catch the A320neo, that's not going to happen. Well, it will have a significant customer base. It is a very good aircraft, probably the safest aircraft that's ever been built. And I would say that that particular variant of the MAX, the MAX has 3 variants, an 8, a 9 and a 10. The 8 in particular, which is comparable to the A320neo, we're seeing good strong demand in the market for that. So I would say that when you look at that slide, The bubble slide in the portfolio that you referenced. It's very interesting here. You may have heard me describe this in prior presentations. We have a barbell approach to the portfolio. The new technology or next generation of technology, the stuff on the left, we want to keep that as young. We want to keep that as we want to focus all our new acquisitions on. And we do not want to buy at any cost end of line current technology assets because those assets will get replaced Hi, the next generation of technology, the new tech, the neos that you referenced on the MAXUS. And what's interesting is that the 2 largest lessors in the world We'll have more information than anyone else in the world about airline strategies and what's happening in airline fleets. It's very similar portfolio strategies, which was To avoid buying end of line new technology assets for the reason that they will not be they will not have demand for 20, 25 years, they'll have demand for another decade or so and only purchase new technology assets and the older technology assets, you want to make sure they're old assets and that they can consume their assets, you want to make sure they're old assets and as they can consume their remaining life. You can see here on that chart, Those assets that we have average around 12 years of age, they'll be in demand for the next decade. So we'll extract all that value on a profitable basis. If they were 2 years old, that wouldn't be the case. And as I said, as succinctly as I could on the roadshow is that Put simply, any 6 year old new technology assets such as a 787 or an A320neo is better And any 3 year old current technology assets, be that the 737NG, the A320, the 777, many of our competitors over the last 10 years In order to keep their portfolios young, cost end of line current technology assets, that's where the greatest risk lies If you're looking at an aircraft portfolio, I would encourage you as you look at portfolios of aircraft lessors, to understand risk, have to look at each individual component and what's the appropriate age for those components rather than the simple average age. And that's why over the last 15 years AerCap has led the industry in this regard. Very helpful. Thank you. All right. We can go ahead and take our next question from Louise Pet with RPIA. Please go ahead. Yes, good morning guys. Thank you very much and thanks very much for the call. Just two questions. One, could you talk a little bit about The types of funding that you might want or need to do post the dollar and euro senior deal, so anything in the footprint or pref And anything outside of those 2 currencies, is that to come after the initial financing? And then the second question just on ESG. Can you just comment a little bit on how that's Developing and what you might expect to be looking at with respect to even scope 3 emissions targets or any other additional information you might be willing to put out over the next Sure. I'll cover the first part. So we are doing an institutional term loan as well in conjunction with these other offerings that could be A couple of $1,000,000,000, it's a secured term loan that we're looking to do. Other than that, There's no other financing that we're going to do now or really for a while after this offering is completed. I think I'll turn it over to Joe McGinley on the Hi, Louise. Yes, look, the focus on the sheet side is quite frankly on increasing our transparency and dislocation in that regard. You'll have seen that ramp up in the last number of years in our port issue, which you'll see in our website under the environmental and sustainability section. We do disclose our Scope 1 and 2 emissions. Our Scope 3 emissions, as you can imagine, for a company of our size, we want to make sure it was accurate. We have a number of scientific targets that we would like to Transition towards over time, but obviously finding a reliable data source is the most important thing before we publish any information on it. We have a pretty good handle on it at the moment and we feel that directionally we've done a pretty good job even on an intensity basis which are in Double digits over the last couple of years, notwithstanding the impact of COVID, which obviously flattered it for 2020. But yes, it's an area that we'll continue to look to disclose Even further on and we're confident that the new technology strategy that we have in terms of reducing our overall emissions is the best way for us to interact with that And we'll be glad to share more information with investors in due course. And if you just to finish off Joe's point there, no other airline or lessor in the world Has brought more of the most environmentally friendly fuel efficient aircraft available. AerCap has invested $25,000,000,000 already In those aircraft types and when we complete the GECAS acquisition, that will be closer to 35,000,000,000 No other entity has done as much in that regard as AirCap has and we have ambitious targets to continue on that trend given our order book over the course of the next 4 years, 10 years. All right. We can go ahead and take our next question from Phil Feuler with Zuka Investment. Hello. This is Phil Feuler From Frankfurt, can you hear me? Yes. Yes. Okay. You already spoke a lot about that you want Move to a better rating trajectory. However, when the merger was announced, Fitch placed the minus rating on what's negative. So this would be my first question. So how do you see that Fitch placed the rating on watch negative? And the other question would be Just when you look back through the corona pandemic, what were Challenges there, what help could you provide to airlines that needed to raise cash? Maybe what were the challenges and how could you manage Thank you. Sure. So I'll cover the first part and then turn it over to Gus. So on the Fitch, the negative launch, So, pitch put us on negative watch really because of the pending financing that they wanted us to get through. They came out with a press release earlier today that said that assuming that we complete a large We should pay off basically do enough financing in order to cover a large portion of the bridge financing that we would have done that they would take us off So we're confident that once we've completed this transaction, then we'll come off negative watch. Thank you for turning over to Gus on the second part. Sure. On the second part, what did we do during the pandemic? Well, You don't decide what to do when you're in it. You prepared for many years in advance, and that's the experience and history of the company. In order to survive and indeed thrive in periods of difficulty in the industry, which we have done many times, You have to have a clear portfolio strategy. That means you have assets that your customers want for the remaining useful life of that asset. And that portfolio strategy evolves over a decade and you have to stick to it and AerCap stuck to it religiously over the course of the last decade, As I just highlighted on an earlier question, that's very important that you have a portfolio of assets that your customers want. 2 is on the liability side of the business that you have an appropriate liability structure that has 2 components. First of all, the right duration. You don't have big maturity towers in any given year and that will be the same on the far side of this transaction, how the liability is there to impose the transaction. That would be for sure. 2, you don't want to have any loan to value test or similar covenants in your debt structure That could enable anything to recall there. We didn't have any of those like we didn't have them in the financial crisis. And thirdly, you need to ensure That you have adequate liquidity. For the last 12 years AerCap has carried $10,000,000,000 of liquidity. That had a significant cost to the business and many equity holders asked me several times not to do that. They said you should assume that the capital markets I said I will never ever do that. It costs us £100,000,000 a year to do that. But that discipline in the business again It's crucial to being able to go through the pandemic to help our customer base where we believe in the customer that they had a viable business model, which the vast majority did. And then enables us to take advantage of the GTAS transaction on the far side. Thank you. All right. We can go ahead and take our next Obviously, the valuation of the company has been in flux post close, and I know that you have to pay down to the 2.7x target. Can you talk about the capital allocation priorities after you get there? You have a pretty aggressive fleet upgrade Target and just how you're going to prioritize that versus share buyback at dividend? The balance sheet, as Pete said in his comments on the roadshow, always comes first. That's the side of the business I grew up on. A strong balance sheet is crucial in this business. And a strong balance sheet means getting the right rating. That is the only focus of the business at the moment. Once we get to those levels, which we're very confident of, then we'll determine what's in the best long term interest of all our stakeholders. But rest assured that the strength of the company and the flexibility that the strong balance sheet gives you is absolutely crucial in this business. I said it at the outset, the number one priority for me is to get back on a higher rating trajectory. And indeed, as Pete noted, We were effectively upgraded by Moody's just prior to the pandemic. We had already been upgraded by S and P, and we just went through the worst Possible stress you could. There was no rating agency stress that remotely approached what we went through over the course of the last 18 months. And the track record that we have as well 7 years ago of rapidly delevering and putting the company in a higher ratings trajectory, These things carry a lot of weight with the rating agencies, but suffice to say, the only objective we have right now Regards to capital structure is to delever down to the 2.7. You mentioned capital expenditure. CapEx has to be seen in context of the business. This is a 2,000 aircraft business along with having the largest engine leasing business in the world, the biggest Freight releasing business in the world, which is an important aspect as we go forward. And when you see the levels of aircraft purchases, We show in one of the slides in the presentation. You'll see that in any given year starting in 2022 at 73 aircraft and 79, you have to see that in the context of the 2000 aircraft fleet. This is very manageable. We've always been very careful about how we grow the business in that regard And we'll continue to do so. All right. Thank you very much. And we'll go ahead and take our next question from Haben Kumar of Citrus Capital. Please go ahead. Hey, guys. Thanks for doing the call. Appreciate it. Can you walk us through some of the asset sales that you guys might be considering? When I look at the engine leasing and the small regional debt portfolios, it's almost 5 It doesn't seem like the equity market is giving you a whole lot of credit for these assets. I'm quite curious how are you thinking about those? When it comes to asset disposals, of course, and as we have in the past to come to aircraft disposal, we have a very firm strategy there, what we want to do. On the engine business, we'll talk about that for a minute. That is a very complementary business to our own. It provides you with so much more knowledge and access about what Premier Airlines is doing. When you have the largest engine leasing company in the world, What you see is the daily activity of all the aircraft in the fleet, the condition of all the engines in the fleet, And you have another very active daily source of contact with the airlines and it is a business where we have less competition. It's still a large business in the engine world just in terms of the size of our balance sheet. It's not quite as big as you say, it's 5%, but our balance It's small, of course, but the engine leasing business is one that's very important. Now where do we think there's Huge amount of interest in that business, but for good reason. What we do see though more generally across The industry is a significant uptick in the number of investors wishing to purchase aircraft and in key transactions that are closing. We've seen that ourselves in the aircraft that we've sold and indeed we see the aircraft values rising right now. We think that will continue as air travel continues to return. In the numbers that we gave you, I want to reiterate where we see that in 12 months, we get 2.7 times. That's based over the de minimis level of sales activity. As you said, if we were to pick that up in any way at all, we expect to get to that 2.7 faster, Just like we did before in 2014, 2015. Got it. That's very helpful to know Would you plan to hit the targets even without asset sales? On the cash lockbox feature in the Gcash transaction, of course, you're going to get all the earnings and cash Slow from September 2020. I'm curious and I do apologize if you've given any details in the equity conference. So pro form a EBITDA free cash flow for 2022, have you guys made any further comments about the number you guys are expecting from a forward looking perspective? We have not other than we have said that we expect to have combined cash flow of operating cash flow of over $5,000,000,000 For the combined company. Got it. Perfect. That's very helpful. Thank you very much guys. Sure. All right. We'll go ahead and take our next question from Harold Thomas with Schroders. Please go ahead. Hey, good morning, guys. I appreciate the call. A question on this $18,000,000,000 of available liquidity. Roughly, how much of that do you think is going to be committed So that includes about $11,000,000,000 of committed lines from the banks We've already put in place. We already had a large a couple of large revolving credit facilities And at the same time that we put the bridge financing in place when we announced the transaction, we also put in place a new revolver and essentially doubled that Basically, it should be worth noting that those facilities were tried and tested in the pandemic when they were fully available to the company. The other thing I've mentioned, Charles, which is worth noting is of that $17,000,000,000 not doesn't assume any aircraft sales either. So that's just the kind of the baseline liquidity that we would expect. Got it. Can you talk about So the labor shortages that we're seeing, did you see any impact whatsoever on aircraft, well, in the first order On the airlines that you leased to and then the indirect impact to MCAT. On the airline side, there are 2 issues on the supply chain that are affecting them. You are correct On labor, for sure, there is a shortage of ground handling, shortage of Cabin crew and to a lesser extent, pilots. To be fair, that's mostly focused in North America and Western Europe. It's not the case for the most of the world. And so when we look around the rest of the world, that's not the case. It is prevalent Western Europe and North America, which are both very significant markets, but not so much elsewhere in the world really. Now The other supply chain issue that's affecting the airlines and something that is clear positive for us is what's occurring in Boeing And what is occurring with raw materials? There is a significant delay in the production of aircraft. We don't see that changing for a long time to come. And that's despite even if going through their current issues, we don't believe that you're going to see the level of deliveries that the manufacturers are hoping for. We just don't think that's going to happen. And obviously, are hoping for, we just don't think that's going to happen. And obviously, that's the largest owner of commercial aircraft that are in service in the world today. We would expect that that should be a benefit to us. Very, very helpful. Appreciate that. I should comment, one thing I did mention earlier on, we just talked about engines, we talked about the TCAS portfolio. In relation to this, Tim Gently, is the GECAS Freightl business. We said that we bought GECAS for the right price, the right asset at the right time. The right asset is very complementary to our team portfolio strategy, big narrow body content, biggest engine leasing business in the world, also the leading freighter business in the world. And as we all know, over the course of the pandemic, people have been buying a lot more online. That's not going to change. And also the supply chain constraints the world faces, That won't clear anytime soon. GCAS was well ahead of this trend. It already has one of the biggest freighter fleets in the world. But finally, When you're getting into freighter business, you have to have orders of slots to convert a freighter airplane, which is a big industrial process, takes a long period of time. And without those slots, you cannot get into the freight business, but GCAS has more 737 slots than anyone in the world. And also it is in an industrial joint venture that launched the 777 conversion program. So as we look forward with the GECAS fleet, it is a unique leadership Position in the freight business also. We'll go ahead and take our next question again from Jeff Kompas with Manulife. Please go ahead. It would be interesting to just, can you talk about the synergies of having that freighter business? Obviously, like 3 A330s and other older aircrafts and the 2.27s are facing auto conversions and just So more, are there any other synergies in terms of realizing higher values on those aircraft that are facing pressure in the passenger market? We have a unique position to do it. We have a unique position. What's important in an aircraft? Your input price, Your capacity to lease us and your capacity to deliver the airplane to the customer on time. Our input prices are lower than anyone in the world. This business has been built over the last 20 years on buying companies at big discounts for recurring values. All our competitors always buy at premium They do an M and A transaction. AerCap is the only one that's bought at a discount. So our input price is lower to start with and the GECAS transaction is another example of this. 2, your capacity to deliver the airplane on time. GECAS has the leadership position in slots for the 2 most popular aircraft types in the world on the freight side, on the narrow body, the 737 and on the wide body, the 777. So they're the 1st mover, Leadership advantage there and indeed they're the industrial partner on the 777 program. And then also, crucially in the freight business, Much longer lives, you want to have the engines to power those airplanes. You don't want to have to send them into the shop to overhaul them. Given that we're the biggest engine leasing company in the world, we have all the engines that are needed. When we put a freight rate in the market, we don't need to go in and overhaul a GE90 for $15,000,000 We have them ourselves in our own inventory. Thank you. And then can you put into context some of the price trends we've seen in new aircraft? I guess Ryanair stepped away from a deal a couple of months ago. Just More comments on that new aircraft market. It seems like the prices there could be on the upswing. They are, is the short answer. Boeing will tell you the best deal they ever did in the financial crisis was to turn down Ryanair. And they will tell you the best deal they did in the pandemic was to turn down Ryanair Again, so what we see in new aircraft and we've seen this in the first recovery, if you go through the same in all the trade downturns, The most in demand airplane in the world is the 320neo. AerCap is the biggest owner of those in the world with the biggest order book of them. And that recovered first. Then we've seen the MAX recover, as I said. We've seen the 320, the 7 37 market start to recover and now the new technology wide bodies. So we definitely see upward pressure on the new aircraft prices for new technology airplanes. And as I said, because of supply chain issues, I don't believe that Airbus in particular are going to be able to achieve the numbers that they would like to. And again, that will have a knock on effect for us. I'm sorry, one more. Sorry, go ahead. No, you please go ahead. I was just curious like Sorry, please go ahead. So I was just curious, like a follow on to that. Seeing the new aircraft prices kind of going higher, how do you deal with new leases? Do you try to shorten the lease terms? Or do you just stick to The long lead terms that you typically do, will you have that kind of transparency into recoveries in lease rates? Well, what you're doing right now is you're pushing up the lease rates on the new technology airplanes from where they were. And They were fully recovered back to pre COVID levels on the 320neos. And so now what you would have done Over the course of the last 8 months, 10 months, we've not used any of those. We were pretty well leased coming into the COVID pandemic, which is very important too How you're managing portfolio? So we have the vast majority of all our airplanes delivering over the coming couple of years already leased. And so now we held back we weren't under pressure to put airplanes away over the course of the pandemic and now we're being Fairly choosy about how we price the airplanes right now. Okay. Thanks so much. We'll go ahead and take our next question from. Please go ahead. Thanks. Just a follow-up. You mentioned a couple of businesses. The one you did not mention Helicopters, just curious as to how you think about that. Is there a market if you choose to sell it? I mean, it seems like That's the first market to get disrupted by new technology. How do you think about it? Well, the helicopter business Is one that was heavily reliant on oil and gas. And indeed, when GE bought Milestone, which is the business that's within GECAS today, that was back in 2014. Oil and gas was quite high, similar to today's prices in oil and gas tanks. And we saw a lot of oil and gas projects get pushed to the right accounts altogether. With the upswing in commodity prices over the course of the last year, What we have observed is that none of those oil and gas projects are getting pushed to the right. They're all starting to affirm or they're beginning to happen. In the meantime, the portfolio has been reduced from 80% to 60% oil and gas. And so It's still 5% of the business, clearly not as complementary to the company as the engine leasing business is, but we are pleased to see some positive trends In that business, because again, from when we were negotiating the price of that transaction, that part of the deal in December, January of last year And where we are today, things have gotten better. Just in the interest of time, we're running up. I know one question left in the queue, Sergey. But we might just give them an opportunity to ask their first question and then we'll have to call as they have Sure. We'll go ahead and take our next question from Sean Conahan with New England Asset Management. Please go ahead. Hi, thanks for taking me in. I'm just curious if you can talk about the benefits to things like some aircraft delivery delays. Just wondering if you could help me understand maybe the impact of some of your deliveries are delayed in terms of how that works with contracts that are in place or How it impacts your margins at $300,000,000 Sure. Of course, that was helpful during the pandemic, to be honest, Following and we're so delayed in their deliveries. Now what happens is that in those situations you have matching termination rights. So If we have if the lessee had a right to walk away due to the aircraft being late, we would mirror that. That's mirrored in our On track with the manufacturers, so we wouldn't take that risk in any situation. And As we look forward, our first debatable airplanes are not really out there until 2023 to 2024. It would be quite easy to hold the manufacturers with Fire on those deliveries. Okay. Well, thank you everyone for joining the call today. It's much appreciated that you've on a short notice. My name is Joseph McGinni. If you do have further follow-up questions and I'm conscious of those a lot of demand on the call, but feel free to just direct your questions to me Via email or via our partner partners and we'll be more than happy to come back to you. Thanks again for joining the call. This concludes today's call. Thank you all for your participation. You may now disconnect.