We are AerCap. At AerCap, we're passionate about what we do. Fueled by our shared ambition and commitment to excellence, we're shaping the future of aviation for generations to come. We provide comprehensive and innovative solutions to over 300 customers around the world, enabling access to the most in-demand new technology passenger and cargo aircraft, engines, and helicopters. We are the partner of choice to hundreds of the world's most successful airlines. Our team of aviation experts are driven to build long-lasting, trusted relationships that help our customers grow their businesses in profitable and sustainable ways. Our highly attractive portfolio consists of over 1,700 aircraft, 1,000 engines, and 300 helicopters, and an order book of over 300 of the most in-demand new technology assets. We continue to make progress towards our target of approximately 75% new technology aircraft by the end of 2024.
These aircraft provide leading-edge fuel burn savings, helping our airlines modernize their fleets and reduce their emissions. We have become the global leader in aviation leasing through carefully planned organic growth and decisive industry-leading acquisitions, combined with five decades of experience, continuously driving returns for our shareholders. We have a conservative balance sheet and close to $20 billion of available liquidity, with strong investment-grade credit ratings from all three major rating agencies. We're backed by hundreds of the world's largest financial institutions and investors. We are AerCap, home to an unrivaled team and united by a shared purpose of driving aviation to reach new heights and perform at its best. We never stand still.
Well, good morning, everyone. And to reiterate Joel's welcome, you are all very welcome here today to our 2024 Capital Markets Day. This day is all about you, our stakeholders. And with that in mind, in advance of today, we reached out so that we knew the issues that were top of your mind. And this is the results of what we got back, unsurprisingly, supply-demand, capital allocation, outlook. So today, I'm going to deal with supply-demand, capital allocation, our strategy. But there are four key messages that I want to convey to you, our stakeholders, today. First and foremost is that today we have a very favorable supply-demand environment for AerCap. I expect that to last to the end of the decade. However, beyond that, I expect that supply and demand will largely be in balance for the long term.
We have never seen supply overwhelm demand in this industry, and I will talk through that shortly. Next, I will speak about the capability of the AerCap platform, the unique industrial capabilities it has. This platform adds value to your assets every single day, and that value manifests itself in our returns and the profits and cash flows of the company. It's that platform that creates the capital we have to allocate. We are very disciplined stewards of your capital. I don't mind what avenue we allocate capital into. What I care deeply about is that at each point in the cycle, we invest that capital in the right place at the right time. It's those three factors that have combined to generate AerCap's extremely durable and significant returns that you've seen over the last 15 years and that you will continue to see.
So they're the messages that I want to convey this morning. Now, I'm going to start with the macro side, the strong industry that we operate in. Firstly, with supply. We're all aware of the challenges that the airframe OEMs have in making the number of aircraft that the customer base wants. But I want to give it context. If you look at the slide on the left-hand side, this shows narrow-body production each year for the last 10 years. Now, the point here is that we are forecasting that this year we still will not meet the number of narrow-body aircraft that were produced in 2017, that 7 years ago we still can't make the same number of aircraft. On the right-hand side, on the wide bodies, it's even more dramatic. We actually have to go back even further than the chart.
We have to go back to 2012 before we were able to manufacture the same number of wide-body aircraft that we were able to make today. That's over a decade ago. Now, what's happened to passenger demand in that time frame? Well, I've often told you that every 15-20 years, the number of people traveling in the world doubles. This time frame is no different. In 2024, IATA is forecasting that we'll have 156% of the people traveling in 2024 that we had in 2012. But look at what's happening to supply. These assets cannot be disrupted. No one is going to come up with a new aircraft and have it in the market in the next 6 months, the next 6 years, or frankly, the next 16 years. We have what we have, and it won't change.
So that's my first slide on supply, just to put in context the quantum of the issue that we're facing. Second is something about supply that's not as obvious. This relates to what happens after aircraft are being delivered. So the OEMs are not delivering as many as the market would like, but they are delivering a good few aircraft. So we all know about the first box. They're not producing as much. But the second issue relates to what happens to these aircraft when they've been delivered. When an aircraft is in operation after a period of time, it needs to be repaired. That repair is done. Those repairs are done by maintenance, repair, and overhaul facilities, MRO. You'll hear that term today. It basically is the repair shop for aircraft and engines. Now, we don't have enough of them today to meet the demand for repairs.
Why is that? Well, like a lot of things, COVID had an impact. But the greater impact is coming from the assets themselves. These aircraft and engines are engineering marvels. They fly further. They carry more, and they burn less fuel than the previous generation of aircraft. However, they're not as durable. They break down more often. They are strained to the engineering maximum they could be pushed to. So they do not last as long in service. So they have to go to the shop, the MRO facility, to be repaired. An MRO facility needs the same parts and skilled labor to repair an engine or an aircraft that the manufacturer needs to build them. And there is a very finite supply of both parts and highly skilled labor. So this is the second issue on supply, the first one we all know about.
But this is what's happening behind the scenes, that when these aircraft deliver, they don't stay in service. They spend more time getting repaired. What does that mean? It means the demand for new aircraft is increasing, and for old aircraft is increasing all the time. So we're seeing increased demand, lease rates, extension rates for older aircraft, which I'll come to on the back of this. Now, my final slide here on supply, to me, is the most important slide in the deck. And to a long-term investor in this space, I believe this is the most important slide. I said in my opening remarks that the OEMs will probably fix their issues by the end of this decade. I think that's probably fair enough.
However, for many years, when I've met investors, there's been lots of questions about, "Well, Gus, what will happen if Boeing and Airbus build too many airplanes? Will we have volatile aircraft values, falling lease rates?" I said, "We won't. That won't happen." We have never had a period of sustained oversupply of aircraft on a global basis, ever. So that's why you don't see tremendous volatility in aircraft values and lease rates. I'm not saying you can't have oversupply in a particular market for a period of time due to airline restructurings, etc. But there are two reasons why we never have long-term oversupply. The first, but not the most important, is to do we have two airframe manufacturers, Boeing and Airbus. Now, their bias is to produce as many aircraft as they can, but it is a duopoly.
If they overproduce too many aircraft, what will happen is airlines will come back and say, "I can't take this many airplanes. I'm losing money. I need to cancel orders or restructure orders." But they have a bias to do it. And if you look at this chart here on the left-hand side, that blue bar for 100%, that's the amount of revenue that the airframers get on day one. They get 100% of their revenue the day the airplane flies over the fence. That seems obvious, but it's important for the next point. The green boxes are how the engine OEM gets paid. The engine OEM, GE, CFM, Rolls-Royce, Pratt & Whitney, they only get 25% of their revenue on day one. They get the rest of their revenue over a 20-year period through three shop visits.
That's where the engine goes in for a full repair and replacement of parts. The most important thing an engine OEM does is that last shop visit between 2017 and 2020. Now, for someone to spend $20 million on a single wide-body engine on a 17-20-year-old aircraft, they have to be fully confident that that aircraft will be in demand for the next 5+ years, i.e., a 25-year life cycle. This is the most profitable, the most cash-flow positive thing the engine OEMs do. Anything that eliminates that shop visit is fatal to their business model. And in fact, this exact shop visit profile was highlighted at the GE Investor Day. So as I said, the most important thing they do is that fourth shop visit. What could eliminate that? Well, the thing that can eliminate it is building too many new aircraft.
Because if there's an oversupply of new aircraft, the oldest aircraft gets scrapped. The most cash-flow negative thing the engine OEMs do is that delivering a new engine for an aircraft. It's the worst thing they do. So they will never, ever allow sustained oversupply of aircraft. They can't. It's fatal to their business model. And that's why we have never seen, since the start of this industry, since I've been in it, a period of significant sustained oversupply of aircraft. And we never will because it is so important to the key participants in the manufacturing chain, the engine guys. Now, so what does all this mean, then, for you, our shareholders and capital providers? How do we translate all this great supply information I just spoke about into greater returns for you?
Well, Peter is going to speak about what we've seen in increasing lease rates, and he'll give specific examples. But there are two other metrics I'd like to point out that show the impact of this shortage of supply and increasing lease rates. First, on the left-hand side is what we call aircraft extensions. When a lease expires with an airline, it might be after 12 years, 14 years, 16 years. They may decide to hold onto the aircraft. They can't. They don't have a right to. But they may ask us, "Can we hold onto the aircraft?" Historically, that happened about less than 15% of the time because they were getting new airplanes to replace the older assets. So over the last three years, this has changed.
If you look at 2021, the four boxes, the dotted line shows the average percentage of aircraft leases expiring that were extended. You can see that that was almost 60%, significantly higher than the average historically. In 2022, that went to almost 70% of the leases expiring were extended. Last year, it got above 72%. Now, that means less transition costs, which is $ millions, less downtime of the asset, which is $ millions, and generally, as Peter will show, longer extensions with better credits. That generates additional economic benefit for you, our stakeholders. The next chart is about gain on sale and what we sell assets for. This is connected to increases in interest rates.
Many of you have asked us, "What's the impact of rising interest rates, and when are we seeing higher lease rentals?" Well, as you can probably imagine, an aircraft lease has many similarities to a bond. A bond pays a monthly coupon, and at the end, you get your principal back. An aircraft lease is very similar. You get your monthly lease rental, and at the end, your repayment is the aircraft, the metal itself. The airplane at that point, the value of it is what people expect the future lease rents at that asset will generate to be. So if you have higher interest rates, the other things being equal, you would expect the value of that lease, an aircraft lease, and the asset value to decline in a higher rate environment. That has not been happening. The values have been going up. Let me show you this here.
Historically, when I say historically, I'm going back 60 quarters. We consistently sell aircraft at a gain, typically around 10% or 11% above net book value. That 10% or 11% equates to about 137% of our book equity because it's levered. Now, over the last few years, you can see we've been selling at much higher numbers, 125% of book, which is closer to 180% of our book equity. Now, why is that? As I said, we are selling assets that are already on lease. And those leases may have been put on in a lower rate environment. However, the buyer of the asset is a professional buyer and knows that when the lease expires, he'll put it out there at much higher lease rates. So this is where you are seeing directly the impact of supply and demand outweighing any impact of the increase in interest rates.
So that's our industry on supply and demand. Now, AerCap, the company, I said, this platform creates value every day for your assets. You own these assets, and you want this platform to add value to them. How does it do that? Well, first of all, we obviously have more information about what's happening in the market every day, be it demand for different engine types, different aircraft, which MRO shops are capable, which are not, which can deliver on time. How do you spec an airplane? Speccing a 777 might cost $25 million. How do you manage overhaul of an engine on a 777 , another $20 million? All that knowledge is built into the AerCap platform and is used to inform our portfolio strategy and to maintain our assets. This is important.
If we spend $150 million on a wide-body airplane today, we know we will spend $150 million maintaining that asset over its life. You spend the same on maintenance. It is absolutely vital. This is where you differentiate yourself on an operating basis from anyone else. It is vital that when those engines and that airframe is being repaired and overhauled, that you do so in a very efficient fashion. The MRO shops are like dentists. They only get paid when they open something up, take something out, and put something back in. The difference with these engines is it's $1 million to put something back in every single time. And if you don't know what you're doing, you will find yourself spending millions more. You will find yourself going to MROs that you don't have leverage with, where you're at the back of the queue.
You spend months waiting for the airplane or the engine to come out. That's what happens. And then you'll be late to the customer. You will have an asset the customer won't accept, extended downtime, hitting your lease rentals, hitting your downtime. No one has the experience, knowledge, and capabilities that AerCap has. And Tom Slattery will speak to that later on in our engine business. The liability side, you must have a matched duration on your debt and your assets. We're not here to run interest rate risk. We run a hedged book. And you must have diversified sources of funding. And Pete will talk to that later on. Of course, then you have to have a strategic offering or positioning for your customer base. Now, at AerCap, we have, of course, the largest install fleets with our airline customers. And aircraft are scarce assets.
But the most scarce asset in the industry is an engine. And we have more of those than anyone in the world. Furthermore, with the capability of our platform, we deliver aircraft and engines on time, on spec, to our customers. I'm going to demonstrate that in a second. But if we didn't do that, you'd have massive cost overruns. You'd have downtime, much less lease revenue. That is the key to running a successful business in aircraft leasing. And you must be able to do it at scale. Last year, AerCap executed almost 1,000 transactions where we bought, sold, or leased aviation assets. That's more aircraft than either Boeing or Airbus produce. To do that every single day, to move these complex assets around the world, you have to have a level of operational excellence that comes from the bottom up: process, procedure, internal audits.
Every good company is built on those basic building blocks. AerCap is no different. That creates a level of excellence that enables us to deliver assets every day on time, on spec. If we couldn't do that, as I said, you would see huge cost overruns. You'd see much lower lease revenue because you're not getting assets to the customer on time. You're making mistakes in the MRO shops. You're not ordering the stuff that you need to order to have it at the MRO shops. So that's the AerCap advantage. This is what creates the cash flows and the profits. Now, what do we do with those profits and cash flows? Job number one, always, we must have a strong balance sheet. We have to get our leverage point to our target leverage. That is job number one.
Without a strong balance sheet, you will never, ever be able to take advantage of opportunity when it presents itself. Then there's three other alternatives. Candidly, I don't care which one we do at all. What I care deeply about is that we pick the right one at the right time to maximize the long-term value of this business. Today, I'm delighted that we announced two of these three in terms of organic growth, our new engine deal, and return of capital through our dividend and our buyback, which I'll come to. But all of these are open to us. And I'm going to talk through them. So to start with delivery, this chart here shows a debt equity ratio. This is a cash flow metric. Cash flow. It's the one number in a set of financial statements that cannot lie, is cash.
This shows you the cash-generating power of AerCap. You'll see, 10 years ago, we bought ILFC, a company almost 4 times our size. So, of course, leverage went up. But you can see how rapidly it fell down off a $40 billion-plus balance sheet, way ahead of anyone's expectations. We got our ratings back very quickly. And then, as the cash generation continued, we were able to buy billions of tens of billions of assets and return $4.3 billion to you, our shareholders, before COVID. Then COVID came. Then we bought a $30 billion business in GECAS. Next thing, the Russians invaded Ukraine. That's a $2.5 billion hit to our equity account. Followed that up by returning $3.5 billion to you, our shareholders. I want to say that again.
In that period of time, in the last four years, we had to deal with COVID, the worst event that ever happened to aviation. We bought a $30 billion business. We took a $2.5 billion hit from the war from the Russians. We returned $3.5 billion to you, the shareholders. What happened to our leverage ratio, the cash metric? It went down. Despite all those challenges, it went down. That shows the cash flow-generating power and the operating power of this business. We are now at one of the lowest leverage points we've ever been at. And that's why today, we were able to make those announcements, which we're very excited about, on organic growth and additional return of capital. So organic growth has been a big driver of this business, as you can see from the chart.
We've invested over $40 billion buying the most fuel-efficient, advanced aircraft available over the last decade. Today, we're delighted to announce a strategic investment in our unique engine business. Our engine businesses, we have two of them. One we own ourselves completely that predominantly serves GE assets. And the second one is a joint venture with CFM, SES, which we own 50% of. Both of these businesses are critical parts of the after-sales service provided by the two leading engine OEMs in the world to their customers because these are the spare engines. Every time an engine breaks down, it's us that gets the spare engine there. We own them. We have to deliver them. We have to take them back. We have to make sure the paperwork is right. We have to make sure the engines are on spec.
It took 30 years to build these businesses and the infrastructure and capability they have. So when the opportunity came to further enhance our position in this industry, we're very excited to take it. In fact, we've now committed $8 billion to the engine business since the GECAS deal. That's bigger than the vast majority of the world's aircraft leasing businesses. M&A. Why do you do M&A? M&A is tough. It is hard to bring people together, to bring cultures together, to make sure that the day after the closing, the trains are running on time, if you forgive the pun. But the planes are leaving on time. They're arriving on time. It's hard. You want to make sure before you engage in any M&A that you have the platform that can do it.
No matter how good a deal you do, if you don't have the internal capabilities, you will never make a success of M&A. So that's number one. So when you got that, you can look at alternatives. So we've done a lot of M&A. We've done more than anyone. We've done the biggest M&A deals in our industry, and we've done them at bigger discounts. So you want to do the M&A when you're getting assets that are similar to your own at good prices or buying something that you don't have that you want at a good price. And we've done all of these in large size. Next is return of capital to you, the shareholders. I'm delighted today to announce the inaugural dividend. It is modest. It's $0.25 a quarter, $200 million a year, give or take. Why did we do it?
Well, for years, I've been saying to you that this business generates extremely stable profits and cash flows and that we have significant visibility into those profits and cash flows for a long time to come. So the dividend is a reflection of that confidence. Secondly, in many meetings with investors, we've had feedback that we like the story. We like the industry. But we just can't hold stock in a company that doesn't pay a dividend. It doesn't have to be a lot, but it has to be something. So they're the reasons that we instituted the dividend. However, the primary means of returning capital to our shareholders will continue to be share buybacks. And today, we announce another $500 million share buyback program, taking our total commitment to buybacks to over $8 billion. Now, why do we do that?
Well, first off, every time we buy stock in the company, we're buying that platform. It's that platform that creates the value every day. Secondly, and somewhat possibly more intuitive, is if we look at this. This chart on the left-hand side shows the value of assets we sold in the first quarter of 2024. So we sold $760 million of assets. We sold them at a gain of $160 million. Now, that $760 million had an equity and a debt component. The equity component is $205 million. That's our book equity. We sold that $205 for $365 million. Now, we've been selling at a gain for many, many years every quarter. But I just want to spell it out. So we sold it for $365 million. Go to the chart on the right-hand side. That's 180% of the book equity.
We then took that money, bought back our own stock, and by the time all was said and done, we turned $0.01 of book equity into $0.02 of book equity. So there's no investment that can compete with that. The question then you might say to me is, well, what did you sell? Because if you're selling your best assets just to show a gain on sale, then you're buying back stock in a less desirable business. So that would be a fool's gold. But we're not. We show you every quarter, and I've always done so, what we sell. And you can see the average age there. It's no different over the last 15 years. We generally sell the assets that are between 15 and 20 years old, so the less desirable assets. And who do we sell them to?
We sell them to highly sophisticated, professional buyers: other leasing companies, airlines, disassembly businesses, MROs. So that's who I sell them to. As soon as I sell them, head down to the New York Stock Exchange as fast as my legs will carry me and buy back more of the aircraft straight away by buying our own shares down there. And so long as that trade keeps going, we'll hit it all day long. So what has this meant for you in terms of returns? Well, I've always said, when you ask me, what's the target return in this business? Over the long term, we want to generate 8%-10% over the risk-free rate on a GAAP after-tax ROE. Now, I say that because I want to say that again: after-tax ROE. It's not tangible book equity.
Our board doesn't believe there's such a thing as an intangible asset. Anything that's on that balance sheet was paid for in cash. So it's full equity. They certainly don't believe there's anything called a non-cash charge. Everything was paid for in cash. The target is to generate that 8%-10% above the risk-free rate. On this chart, the risk-free rate is the 5-year Treasury over the last 16 years. That's the green line. The shaded area above it is if you add 8%-10% onto that. The solid line is the actual GAAP after-tax ROE. The only time it dipped below was for COVID and the charge we took in the Ukraine. You even all that out, including those charges. This is what we've generated over a 17-year time frame: over 9% after-tax ROE above the risk-free rate.
That shows the incredible stability and durability of the returns this company generates. Over the last couple of years, you can see the growth in book value has been moving at 20% compounded. So look, my key message at the start were one. We are in a very favorable supply-demand environment. I believe it'll take till the end of the decade before the airframers, the supply chain, get together and work it out. That'll be 2030, I suspect. In addition, though, and beyond that, the key structural feature of this industry that has prevented oversupply won't change. The engine guys will never allow significant oversupply to happen. Secondly, the AerCap platform adds value to your assets every single day, minimizing downtime, getting assets in the air as fast as possible. It's pointless telling someone I've leased an asset if you can't get it to them.
You're not getting paid. It's pointless if you deliver an asset to someone that doesn't meet the specifications. They won't pay you. You've months and months, millions and millions of dollars lost if you can't do that every day. Capital allocation. Want to make sure that at every point in the cycle, we're making the right decision to maximize the long-term value of the business for you, the shareholders. It's the combination of these factors that has led to the 16 years of profitability that I just shown you and what will lead to the next 16 years of profitability. So with that, I'd like to hand you over to Peter Anderson, our Chief Commercial Officer, who will talk about lease rates, which I know is a topic close to many of your hearts.
Then you'll hear from the rest of the team, and I'll see you later for the Q&A. So thank you very much, everyone. Thanks, Gus. Good morning, everybody. My name's Peter Anderson. I've been with AerCap since AerCap acquired ILFC back in 2014. I was running ILFC's Asia-Pacific business. I then ran AerCap's Asia-Pacific business through until 2018 and then moved across and ran the Europe, Middle East, and Africa business until 2021. I've been the Chief Commercial Officer for the last three years. There's four key messages I want to get across to you in my presentation today. The first is that aviation is a growing industry, but it is increasingly operating leasing as the means by which that growth is being funded. Secondly, that AerCap's leadership position is not just about our scale.
It's about our product offering combined with our expertise is unparalleled in the industry. Next, I'm going to talk a little about how we maintain that leadership position through layers of focus on ensuring we have the most in-demand new technology aircraft at all times. Then finally, bringing all that together, how we're able to capture strong markets like today to capture strong rents well into the future to generate better, stable returns for our stakeholders. Aviation is a resilient industry. As Gus said, it doubles every 15 to 20 years, irrespective of the crises that are thrown at it. If we look at the chart here, only the COVID pandemic really even registers as a dent in air traffic growth. This, the worst crisis in aviation history, we're back out the other side of it in only a matter of a couple of years.
This growth is going to continue. It's going to be fueled by the growing middle class in the emerging markets. Let me give you one example of what I'm talking about. In India, in 2024, 15% of all people that get on an aircraft are expected to be first-time flyers. That's 30-40 people on every single narrowbody flight that are going on their first-ever flight, 25 million people across the year in that country alone. They're visiting friends and relatives. They're going on business trips. But what they're not doing is stopping flying. They're going to take a second flight, a third flight. As you look forward, you might ask, well, can that growth continue? Well, if we look at a mature market like the U.S. and Europe, there are around 600 flights today between the U.S. and Europe.
Guess how many flights there are today between the two most populated countries in the world, India and China: 2.8 billion people. 0. 0 flights today between India and China. That's just those two countries alone. If you look at South America, Indonesia, Africa, the room for growth is huge. Aviation is a growing industry. Aircraft leasing is a growing segment within a growing industry. If I look back at 2003, 30% of all aircraft in the world were funded by operating leasing. Today, that's at 50%. Interestingly, if you look at the last five years, the world's fleet grew by 2,200 aircraft. 75% of that growth was funded through aircraft leasing. We have a growing industry, and we have a growing segment within a growing industry. Let me talk to you now about where AerCap fits in that segment.
This is the aircraft leasing landscape in the year 2000. The two largest leasing companies were GECAS and ILFC. This chart is showing by number of units. GECAS was more focused on the smaller regional aircraft. ILFC had more of the wide-body aircraft. But both these companies had book values of around $7 billion. AerCap, you can see in the middle of the pack. As I move forward through the years, you can see both GECAS and ILFC growing their fleets organically through large orders with Airbus and Boeing. In that period, AerCap itself, we doubled in size. That was through our own organic growth but as well through the M&A transactions that Aengus spoke about with Genesis and debis AirFinance. In 2013, opportunity came knocking with the AIG Group stating that they were going to be exiting non-core businesses. One of those non-core businesses was ILFC.
AerCap acquired ILFC. As we move forward, it's interesting to note here, you can see that both GECAS and AerCap, their fleet size is actually shrinking slightly. What's happening here is both AerCap and GECAS are making the conscious decision to start transitioning their fleet out of the old technology aircraft and into the new technology aircraft of the future. I'm going to come back to this point later. It's an important one. In 2020, as everyone knows, we took the opportunity again to acquire the GECAS business. As I move forward to 2024, this is the landscape as we see it today. AerCap is the largest aviation leasing platform that has ever existed. Our competitors today are a fraction of our size. We have over $70 billion worth of assets. Importantly, we are now a diversified aviation leasing platform.
Not only are we the largest passenger aircraft leasing company, we are also the world's largest engine leasing company, the largest cargo leasing company, and the largest helicopter leasing company. I'm going to speak today a little about the synergies that exist between those businesses and how we're able to win together. Now, it's easy to stand up here and say AerCap's better because we're the biggest and we've got scale. I can stand here and talk to you about how AerCap leases our assets better than anyone else in the market. Even though I think that's true, the fact is, what gives us a competitive advantage in the market is our platform. I want to explain what I mean by that.
Across the 25-year useful life of an aircraft, there are 7 key ways that we are adding value to those assets better than anybody else in the industry. First, financing. AerCap maintains investment-grade credit ratings with Standard & Poor's, Moody's, and Fitch. Having the lowest possible cost of debt is paramount in this industry, as is having a diversified range of funding sources, which our CFO, Pete Juhas, is going to speak about a little later on. Next, purchasing. This platform and, most importantly, the people in it have bought more aircraft than anybody else in history. Getting the buying decision right is one of the most difficult things to do in aircraft leasing.
Experience counts, whether you're buying from the manufacturers, whether you're buying through sale and leasebacks, or whether you're buying indeed through mergers and acquisitions, buying the right assets at the right time at the right price. When you go to Boeing and Airbus and you try and buy some aircraft, they're going to quote you a price in today's dollars. For a lot of people, that's where the analysis stops. Do I have a good price in today's dollars? But it's so much more complicated than that. You need to understand, firstly, the escalation provisions. What is the price I'm actually going to pay when this aircraft rolls out of the factory? How do the engine agreements work? What are the pre-delivery payment schedules? And importantly, how are you going to manage the specification of the aircraft? This is my third point here.
There is real value in the specification of an aircraft. A wide-body aircraft can run into the $10s of millions on specification. For a platform like AerCap that maintains relationships with the seat manufacturers, the avionics manufacturers, and so on, wheels and brakes, galley suppliers, there is real savings to be had. Let me give you just one example of this in practice. Aeroméxico is taking some 737 MAX 9 aircraft from AerCap's order book. Now, when you spec an aircraft, there are certain safety rules around how many seats you can put in the fuselage of that aircraft as compared to how many exits you have on the aircraft. Aeroméxico has a relatively low-density configuration, so they do not need the mid-fuselage exit door on that aircraft. And instead, they wanted to opt for the plug.
Now, you've all probably seen in the news the plug on the MAX 9 aircraft has become quite a topic recently due to the Alaska Air incident. But for a very different reason, our specification team were insisting that Aeroméxico take a deactivated door rather than the plug. And I'll explain why. In 12-15 years, when Aeroméxico returns that aircraft to us, we will likely take it, and we will lease it to someone that requires a more high-density configuration, putting more seats into the fuselage. When we do that, we're going to trip over the rule around the exits, and we're going to need that mid-fuselage exit door. If we've got a deactivated door, it's as simple as activating it, turning it on, and away you go. If we had the plug, the cost of installing that door is over $1.5 million.
You won't see that value when you purchase the aircraft. But through the 25-year useful life of the asset, that is money that goes straight to the nose of the aircraft. That's one example on one narrow-body aircraft. There are hundreds of examples on every aircraft that we take. And consider for a second how many examples there might be across a wide-body. Next, leasing. I'm going to spend some time talking about leasing and the synergies that I spoke about at various different businesses. But fundamentally, our scale and our installed base of assets with our 300 airline customers around the world, combined with the capabilities and expertise of our other businesses, gives us a relevance to our airline customers and, importantly, to our suppliers, Airbus and Boeing, that our competition just cannot match.
To put it another way, we have more levers to push and pull with our customers to ensure we end up with better commercial transactions than anyone else in the market. Fifth, maintenance. There is more money spent on the maintenance of an aircraft than there is on buying the aircraft in the first place. Let me say that again. There is more money spent on the maintenance of an aircraft than there is on purchasing the aircraft in the first place. There is real value to be harnessed through the careful management of the maintenance side of operating leasing.
Our engines and technical teams monitor all of the maintenance on our assets, making sure that the maintenance that is done is appropriate, that the downtime on our aircraft is at a minimum, and our aircraft spend as much time as they possibly can up in the air where they're meant to be. Our teams maintain our own relationships with the world's maintenance and repair organizations. Sometimes, we even opt not to do the maintenance at all. I know that's quite an alarming thing to say. But if you've got an engine on an older aircraft, to put that engine through the shop might cost $10-$12 million on a narrowbody.
If we go to our AerCap Engines team, we may well have an engine sitting there that has green time on it that we can hang under the wing and get the aircraft back flying without spending the money on that maintenance at all. It's not about compromising on safety. It's about ensuring that the spend on your maintenance is appropriate. Next, transitions. If there's one thing that this platform does better than anybody else, it's transitioning aircraft. We've moved 300 aircraft between airlines since 2021. When you move an aircraft from airline A to airline B, in fact, let me give you an example. We recently took an A320 from Northern Europe in a two-class configuration. We moved it to an airline in Southern Europe, an A320. It's about as simple as a transition gets.
Both of the registries are governed under EASA, which is the safety regulation in Europe. So it's as simple as it gets. But when you move from country A to country B's registry, what do you need to do to actually get that aircraft onto the registry? For example, something as simple as, do you have the right language on the safety placards in the seat backs on the aircraft? All of this needs to be thought through. Then you need to work with the receiving airline. How many seats do they want in the aircraft? What's the seat manufacturer that they use? What about the avionics? The pilots are going to want commonality between the aircraft. What about the galley carts that they put the hot food in? Are those galley carts actually going to fit the spaces that are in the galleys on the incoming aircraft?
The list goes on and on: wheels and brakes, carpets, sidewalls. I go through this to give you a sense of the complexity but also to highlight that for a platform like AerCap that does this every single day, there is real value and savings that we can generate through the transitioning of aircraft. Finally, seventh, trading and end of life. AerCap maintains our own part-out division within AerCap. These guys are professionals at taking part-out aircraft, harnessing the parts that are still valuable within the engine, within the avionics, within the aircraft, recertifying them, and getting them back out on lease or selling them into the market so as that value comes to AerCap or sometimes giving them back to me so as I can keep the maintenance costs and transition costs of my aircraft down. Either way, the value stays within AerCap.
Our peers generally sell end-of-life aircraft to the part-out shops, and that value goes elsewhere. So to summarize, the seven key ways that our platform is creating value in our assets, it's a very easy thing for me to stand up here and say and give you a few examples. The proof is that AerCap has sold 1,600 aircraft in the last 18 years. We've done it at a 35% gain to book equity. That 35% is effectively the premium that our trading partners are prepared to pay us for aircraft that come from the AerCap platform. Now, I spoke about leasing. I'd like to spend a little time going through the different businesses that we have. We're going to hear later on today from our head of engines, Tom, from our head of cargo, Rich, and from our Milestone helicopters business, Pat.
The synergies that are existing between these businesses are helping us win together and create better commercial transactions. I think the best way to illustrate this is if I just take you through a few examples of where this has actually happened. The first example I have for you is GOL. GOL is a low-cost carrier in South America. AerCap leases 35 passenger aircraft to GOL. Now, GOL didn't restructure their business during COVID. They had some cash issues as we're coming out of COVID, which meant as their engines came due for engine shop visits, they didn't have the cash to pay for them. Our engines team were able to supply spare engines to GOL to get their aircraft back in the air, which is what they needed more than anything else.
Further, our cargo team was leasing 737-800 aircraft, freighter aircraft, so as GOL could fly for a company called Mercado Libre in South America, which is the largest e-commerce platform in South America and a huge cash generator for GOL. Now, ultimately, GOL has gone into Chapter 11. The solution that we're able to come up with for GOL is we found another 7 spare engines to put into the GOL business to help them get their assets back flying. Through our relationship with CFM, we were able to secure and backstop engine shop visits for the GOL business to get their run-out engines through the shop and back under wing. We continued to deliver the cargo aircraft so as they can broaden their relationship with Mercado Libre.
And then through our relationship with Boeing and discussions with GOL, we were able to take over some of the GOL order book for MAX aircraft, buying the right aircraft at the right time at the right price. As they come through the chapter 11 process, many of our competitors are now having their aircraft handed back to them with run-out engines. And they'll need to go and find shops and try and get their engines shopped and try and release their assets. AerCap has kept all of our assets with the GOL business. And we've broadened our commercial relationship and acquired some additional assets. Another example is Emirates. Emirates, as you may know, is one of the largest airlines outside of the U.S. It's the largest operator of the 777-300ER aircraft. But this story actually starts with our cargo team.
AerCap today is the joint venture partner on converting 777-300ER passenger aircraft into the 777-300ERSF cargo aircraft. Now, Rich can explain that in much more detail than I can, so I won't go through it. But what we're able to do is line up many of the 20 777-300ER passenger aircraft that we have committed into that program, they're on lease with Emirates. We're able to line up the lease return dates to perfectly line up with the cargo conversion induction dates. But as those planes move into the cargo conversion program, we can drop the GE90 engines under wing. We pass them to our AerCap engines team. And they're able to get them back out on lease in a tight engine market. And in fact, some of those engines are actually finding their way back into Emirates themselves.
Further, Emirates, as the largest owner of 777 aircraft in the world, has now decided to convert some of their own aircraft in our program, broadening the relationship between the passenger aircraft, engines, and cargo. Not to leave out our helicopter friends, China Southern is the largest airline in Asia, a very large long-term customer of AerCap on the passenger side. Our engines team I know leases over 50 engines into the China Southern Group. Through introductions we've made to our Milestone colleagues, they've been able to secure a helicopter business with a China Southern subsidiary. And we now have AerCap large S-92 helicopters doing oil work in the South China Sea. There are plenty other examples I could give you where Milestone is, in fact, introducing my team, the passenger team, to new customers that are helicopter operators that want to branch into commercial aircraft.
So it's just a few examples there to give you a sense of how we're able to win together. If you don't have this diversity, you won't know about these opportunities. You won't be able to provide these commercial solutions. Now, this, of course, all starts and stops with making sure you have the right aircraft that the market needs at the right time. This is AerCap's portfolio back in 2014. It was built around the A320 family, the 737NG, the A330, and the 777. These were the right aircraft to have in your portfolio 10 years ago. You can see the first of the new technology aircraft coming into play in the bottom left there, the 787. What we saw in 2014 was a clear path whereby the new technology aircraft was going to come in and replace the older technology.
If you want to have the right aircraft today in 2024, you needed to be making decisions about that 10 years ago in 2014. Let me move you through the years and show you the strategy playing out. You can see we are intentionally sunsetting those large blue bubbles downwards and to the right, which means they're becoming a smaller part of our portfolio. They're moving, importantly, into an older age bracket. The worst aircraft you can have in your fleet is a high-book value, new, old technology aircraft where the replacement technology is already in production because you will not get the 25-year useful life out of that aircraft. Now, I pause here in 2020 for a reason. This is just before we bought the GECAS before the GECAS transaction. I want to show you how that impacted our portfolio strategy.
So moving forward again, it didn't impact it at all. The two largest leasing companies in the world, AerCap and GECAS, were following exactly the same path. We'd both seen the same thing back in 2014. And we were both building a fleet of new technology aircraft being the 787, the A350, the A320neo, and the 737 MAX. Here in 2024, you can see that strategy has played out. To show that to you another way, this is the same time period, 2014 to 2023. We had 6% new technology aircraft in 2014. At the end of 2023, we're up at 70%. And we are well on our way to hitting our target of 75% by the end of 2024. Again, I put in place the GECAS acquisition to show you the negligible impact this had on our portfolio strategy.
We were able to double the size of our business with the GECAS acquisition without compromising on our fleet in any way. So those are the decisions we made in 2014 to have the right aircraft for today. What are we doing today to make sure we have the right aircraft for tomorrow? What I'm showing here on this chart, these are the largest order books in the world. On the left, these are the aircraft with the largest order books in the world. On the left is the narrow-body. On the right is the wide-body. The dark part of the bar, these are the aircraft that have delivered and are flying today. The lighter part of the bar, this is the backlog that currently sits with Airbus and Boeing. You can see at the top three, AerCap is focused on the A321neo, the 737 MAX 8, and the A320neo.
In fact, we maintain orders for six of the eight most in-demand narrow-body aircraft in the world. So which ones don't we have? We don't have the MAX7. We don't have the MAX10. Neither of these aircraft are certified by the FAA. While I have every faith in our friends at Boeing and their ability to get those aircraft certified, they will, there are still hurdles to be overcome. It's not just about the certification. If we look at the MAX7, this is an aircraft that might surprise you is built around one airline, Southwest. In fact, there are less than 10 airlines in the world that have ordered the MAX7 aircraft. It's new technology. It's got a lot of orders.
But for a leasing company, what we need to see is a high user base because our business is moving assets between airlines across a 25-year useful life. On the wide body, the story is quite similar. We are laser-focused at the top there on the 787 family and the A350-900. But even within these types, you don't necessarily want every variant. You need to understand the market of the aircraft that you're going into. We are the largest owners of 787s in the world. But we have not taken delivery or ordered a single 787-10. It's not because it's a bad aircraft. It's not. It's a technological marvel. But there are less than 10 operators of that aircraft today. It's a larger aircraft. So you're going to buy a larger aircraft. Your transition costs are going to go up.
The universe within which you can lease that aircraft is significantly smaller. You're much better off going with the 787-9 that has over 50 operators today. So you can intentionally see there for the AerCap fleet in the circles there with the percentages, more than 50% of our book today is in the A320neo family and the 787. I'd like to drill into those two aircraft types for you a little bit and show you what we're seeing today on lease rates and not what we're seeing as compared to the last couple of years. Let's go back to pre-COVID and compare today's market to then. So firstly, on the A321neo, I should say the A321neo is by far and away, in our view, the most popular narrow-body aircraft in the world today.
It's interesting because with the older technology, the ceo, it was the A320ceo rather than the A321 that was the more popular. I talk about making decisions yesterday to have the right aircraft today. We actually decided to convert all our remaining A320neo order book from 320s to 321s a couple of years ago. What we saw was that in a world with airport congestion and air traffic control congestion, the larger variant was going to become the more popular. And we've been proven right. So in 2019, we leased four A321neos. What I show here are the dots. The height of the dot is the lease rent we achieved. And across the X-axis, this is the year that the aircraft delivered. So in 2019, we leased four. They delivered in 2021 and 2022. In 2023, we leased 53 A321s.
Not only did we lease significantly more, we did it at 20% higher delivery rents. What I'm talking about here is the rent that the airline will actually pay us. This is after escalation, after interest rate adjustment, after specification adjustment. We're locking in 53 A321neos in 2023 at a 20% higher delivery rent, which will then run for 12 years. The story on the 787 is similar. In 2019, we leased 2 787-9s. This is pre-COVID. During COVID, 2020, 2021, 2022, we didn't lease any 787s. There was no market. In 2023, the market came back strongly. We've leased 13. We've leased those at a 10% higher delivery rent. It's not just about the new aircraft.
If I look at the used aircraft for a second and I'm going to do this using the 737NG as our example, here are all of the 737NG deals that we signed in 2019. The height of the bar is the rent. The length of the bar is the lease term that we achieved in 2019. If I overlay 2023, you can see we're getting higher rents. But as well, our average lease term back in 2019 was 5 years. In 2023, our average lease term is 7 years. We're writing longer deals. Another dynamic that I'm sure Aengus is going to talk you through in his section on risk is that the credit quality of our underlying lessee is better today than it was pre-COVID. Now, the credit, obviously, during COVID took a dip. But we've come out the other side. We're writing better business.
So if I summarize that for you, we are writing more business today than we did in 2019. We are writing it at higher rates. We're writing it at longer lease terms and with a better credit customer. We are fundamentally writing better business today than we did in 2019. So you might ask, "Well, when are we going to see the results of all of this better business? When is this coming through in the financials?" There's no getting away from the fact that we are coming off the heels of the worst period in aviation history, the COVID pandemic. And during this period, 2020, 2021, we still had aircraft coming off lease. We still had orders coming from the OEMs. Aengus spoke this morning about how we committed to take delivery from Airbus even during COVID. And we did.
We took delivery of all of the aircraft that we committed to. We had to place those aircraft into a weak market. They're the dark blue bars that you can see here on my chart. The good news is that all of these leases are now in place. The lower economic deals that we had to write during COVID, you are already seeing them in our financials today. In 2022, we started to see the market recover. These are the light blue bars. These are the aircraft we're largely taking delivery of today. The strong market deals that we're seeing in 2023 and indeed is increasing through 2024, we're taking delivery of those today and over the next 3 or 4 years. So if you think about that for a second, those higher rents are going to start coming into effect in the next couple of years.
But at the same time, some of those weak market deals that we wrote and are already in place, some of them are going to start coming off lease. And we're going to be able to reset the economics of those deals as we move forward. It's going to create a real tailwind for AerCap into the future. So if I can summarize what I'm trying to get across in my presentation today, we operate in a growing segment of a growing industry. And we sit atop that segment. We are the largest, most diversified, most sophisticated aircraft aviation leasing platform that has ever existed. We add value to our assets through our platform.
Combined with a laser focus on making sure we have the right aircraft, the most in-demand new technology aircraft at all times, we are able to capture strong markets like today, harness higher rents, and ensure we have stable returns well into the future for U.S. stakeholders. Now, this, of course, is only possible with a robust risk and credit framework, which, of course, we have at AerCap. With that, I will hand over to my colleague, Anton Joiner, our Chief Risk Officer, who's going to take you through the risk side of our business.
Good morning, everyone. My name's Anton Joiner. I've been Chief Risk Officer at AerCap for over 20 years. Today, I'm going to tell you why credit costs are not a material factor in this business. I'll talk about our use of lease protections. I'll talk about our processes.
I'll demonstrate how we ran the business through the most significant downturn the industry has ever faced. I'll give you live examples of how our culture of action materially produces better outcomes than our peers. Put together, you'll see that credit costs will remain a sundry line item. What's going on in the business on a day-to-day basis to make this happen? Well, we've obviously brought the right aircraft, modern, fuel-efficient, in-demand aircraft. We have the largest leasing platform. Every aircraft that comes online is generating multiple leads. We're going to select our lessee based upon the best risk-adjusted returns with due consideration for geographical concentration and due consideration for lessee concentration. Once we've selected our lessee, we go about executing our lease. Our lease is a document that's tailored to the individual credit requirements of our customer.
So if it's a high-risk lessee, they're going to be paying maintenance reserves. That's an additional cash amount paid every month for the maintenance life that's been consumed in the prior month. A higher-risk lessee will pay a significant security deposit. And if we still believe there's payment risk, we'll be looking to take the cash directly from the retail source. So once we've signed our lease and we've delivered our aircraft, then we're in the day-to-day business of monitoring the cash payments. And barely a day goes by at AerCap without a dozen conversations around the payment behavior of our lessees. But it's all very well getting paid. If your aircraft is stuck in a distant corner of an airport with parts being removed, that's a very serious situation.
So not only are we ensuring that we're getting paid, we're monitoring the utilization of our aircraft on a daily basis as well. If our aircraft are grounded for more than 24 hours, we'll be asking the questions, "Is routine maintenance being missed? Are parts being removed?" If we don't like what we're hearing, then we'll move decisively to take aircraft back, repossess the aircraft, relocate the aircraft, take control of the original technical documentation. While we're doing this, our leasing team have already lined up the next customer quite often before the previous lease has actually been terminated. Why is this important? It's important that if you minimize the ground time of aircraft, then you're significantly mitigating any loss. I want to talk about the constantly improving credit quality of the portfolio.
Improvements are not just a result of our day-to-day actions but also a result of acquisitions. You can see here that when we acquired GECAS, we acquired 38% more names overnight. Now, diversification is obviously our principal credit tool. In this instance, we're also more relevant to more people. We have a seat at the table of more refleeting discussions. That, again, is driving down aircraft placement risk. It's managing downtime. In numerical terms, you see the top 30 names in our portfolio prior to GECAS accounted for around 75% of lease revenue. After the GECAS acquisition, it was down to 60%. The last chart here shows how credit quality is normalizing after COVID. You see a significant bump in December 2021 when we acquired GECAS. That was a portfolio packed with very strong names. Then the sequential improvement through 2023.
We think that will continue through 2024. Now, you see our internal score here is just a shade under 6. That won't mean an awful lot to you. You don't have our credit model. But we put all 300 customers through the Moody's model. The weighted average credit score comes out just better than a Ba3 or BB minus. One of our principal key performance indicators and our key credit metrics is day's sales outstanding, or in other words, the amount of time it's taking us to receive an invoice. You can see here, it's just 2 days, just 2 days. Our portfolio, the weighted average credit score of our portfolio may be subprime. But we have no arrears. Why is that important?
Well, if our security deposit accounts are up to date, our rent accounts are up to date, our maintenance reserve accounts are up to date, then you're in the best possible position to ride out with zero credit costs if your lessee gets into difficulty. Now, we don't think two days is just impressive on an absolute basis. When mapped against our global leasing peers, we're outperforming them by between 10 and 30 times. How do we do this? Well, if polite reminders go unanswered, we have in excess of 30 separate events of default in our lease. We have numerous methods, numerous ways which we can ground aircraft. There's numerous jurisdictions we can bring enforcement actions in if required. COVID-19 provided us with the best possible example of the durability of this business. We saw significant amounts of government money coming into airlines at the time.
This is because airlines were critical transport infrastructure. But the response to COVID-19 wasn't going to hang together unless lessors participated. And as having the largest portfolio in the world, we were quite frequently managing and running those projects. What were we looking for in order to participate? Firstly, all stakeholders had to buy in. Secondly, we had to protect the long-term returns of the business. There was significant pressure from lessees saying, "You're going to have to chop your rents," significant pressure from lessees saying, "You have to return aircraft." But we could see that COVID was relatively short-dated in duration and that the recovery on the other side was going to be emphatic. So the deferral was the chosen tool for dealing with it. And all deferrals had to be repaid. Lastly, our aircraft were being used during COVID. So maintenance reserves had to be paid.
There was always a portion of rent that had to be paid as well. You could see that even in the depths of the crisis in the middle of 2020, we were still receiving 65% of our monthly run rate. This was very quickly increasing through 2021 and 2022. History had shown us that when we work on a consensual basis with our customers, we always receive 100% of our money back. This is indeed what happened in the vast majority of cases here. But there was always going to be situations where lessees were going to seek the protection of bankruptcy courts to restructure their balance sheets and to lower their costs. The critical point here, this was not the time to be learning the ABC of insolvency. There were things that you had to be doing months in advance of the petition date.
Peter gave a great example on GOL, our low-cost airline in Brazil. We knew that to keep our claim to an insignificant amount, we had to have a large fleet at GOL which was indispensable. So in the weeks leading up to the petition date, we were participating in selling leasebacks. And we were delivering new engines. So through COVID, we restructured over 150 airlines and over 1,000 operating leases. And on the other side of COVID, you had fleets intact as a result of our actions, economics intact. I want to give you an example now of how our culture of action materially saves us a lot, in tens upon tens of $ millions in various instances. And I want to talk about GoAir. GoAir was a low-cost airline based in Mumbai operating a fleet of around 55 aircraft.
This has become the core criteria for asset protection in our industry and proven that never has the price been so high for getting it wrong. We could see in 2022 that aircraft were being grounded. When aircraft were grounded, parts were being removed from aircraft. There was a mounting financial problem with the airline. Now was not the time to be standing by waiting for somebody else to sort the problem out. We create red lines. You have to keep our aircraft flying. You can't remove parts from our aircraft. You've got to keep paying. But those red lines were very quickly breached. You have to move decisively. We exerted significant leverage on the airline to move the aircraft out of India and, crucially, to deregister the aircraft.
And in this time, we're using the significant industrial capability of the business to secure those all-important engine slots, to make sure we have hangar slots for the aircraft so aircraft can get repainted so that transition of the cabin can occur. And our largest leasing platform in the world is out there finding the second home for the aircraft. Meanwhile, if you're back in India wondering what to do, the curtains come down. It came down in May last year. And if you're still there, you haven't been able to move your aircraft. You haven't been able to access your aircraft. You haven't been able to remarket your aircraft. But AerCap is gone. We've placed the aircraft with Cebu in the Philippines, much better credit, same terms. This is the experience of the platform. We did the same thing with Kingfisher in India.
We did the same thing with SpiceJet in India. We did the same thing with Jet Airways in India. I want to give you another example now of how we moved even quicker to keep our credit costs to zero. And in the beginning of 2023, we could see that the project by Avianca to acquire Viva Air Colombia, where we had five aircraft, was beginning to falter. And we knew this because we were on site on a daily basis in Medellín and Bogotá. And we were speaking to the Ministry of Transport. So the red flags are there. What are we doing? We're making sure all our property is installed on our aircraft. We've got the right engines installed, making sure the aircraft are flying. And we're making sure that we're getting paid right up until the end. Now, the airline enters a form of creditor protection.
So again, decisively, we move quickly. We create significant leverage. We move the aircraft out of Colombia into the U.S. And we have our team working at the same time to secure the next customer. From those first discussions to the aircraft being home and dry is no more than eight weeks. The critical point here is that if you can't move at that pace and if you can't guarantee the quality of product, you're never going to secure a customer of the quality of LATAM. I've used just a couple of examples here. I could have used more. We did the same thing in Vietnam last year. A lot of people think that Vietnam's a difficult place to move an aircraft out. We moved our aircraft out of Bamboo. They're now flying for Thai Airways and for Etihad. Better credits, same terms.
We did the same thing only a couple of weeks ago in Indonesia with some freighters. But this isn't happening on a daily basis. When it does happen, it's largely consensual. You won't read about it in the press. But these are very important capabilities to have. These are capabilities unique to AerCap. So if you have the right mindset, you have the scale and the experience, credit costs are never going to be a significant factor in this business. Thank you.
Thanks, everybody. That ends the first half of proceedings. We're going to have a quick coffee break. We'll see you here afterwards for the panel discussion. Thank you.
Okay, well, welcome back. We've kept these three gentlemen away from you for long enough, so, we won't, without further ado, we'll get into the presentations. But just beforehand, I would like to draw your attention to the screen here. Here's a QR code, and if you go to this link, you'll, the questions that come up from that will come straight up to my iPad, and we'll direct them to the three gentlemen at the end of the Q&A discussion. So, feel free to take out your phones. It's not gonna be on the screen for too long.
It'll come up again after their presentations. You don't have to submit your questions immediately, but if you tick down the QR code now, at least it'll be saved. Otherwise, you can go to slido.com, and you can use the hashtag #AerCapCMD. So don't say you didn't get the opportunity. So, without further ado, I'll hand over to EVP of Engines, Tom Slattery.
Thank you, Joe. I guess the first thing I do is a little bit about myself. I started in the aviation industry 25 years ago with GE Aerospace, but more importantly, I spent the last 22 years in this business, AerCap Engines. I've held various technical and commercial leadership roles. As a result, I'm very proud to be here today to talk to you about the business, our portfolio, our growth, our industrial infrastructure, and the impact we're having on the AerCap passenger business. At AerCap Engines, we're the biggest lessor of commercial spare engines in the world. We're twice as big as our nearest competitor. We have 140 airline customers, but we also have two key strategic partners with GE Aerospace and CFMI, the two biggest manufacturers of jet engines in the world. We lease over 1,000 engines, and 80% of those engines are new technology.
That is the technology on the most popular Boeing and Airbus aircraft of today. We're growing. And amazingly, since acquisition by AerCap, we've doubled the size of this business, committing $8 billion to the balance sheets. That includes the $3 billion announced this morning for 150 LEAP engines. This is with a trusted partner, long-term commitments, and very favorable returns. We have very strong synergies across the AerCap business. As well as having 1,000 lease engines in the marketplace, we also manage the engines installed on all of our aircraft. So this is another 3,000 engines. We aim to optimize the maintenance expenditure on that portfolio, and I'll talk some more about that later in the presentation. We play a key role for GE Aerospace and CFMI. We are part of their critical infrastructure, and we've built an unmatched industrial expertise and global footprint in this space.
So we go to market with two brands, AerCap Engines and Shannon Engine Support. Shannon Engine Support leases over 400 engines in this space. Their primary focus is on the support of CFMI. That is CFMI's engines and customers in the marketplace. Shannon Engine Support is a 50/50 joint venture between Safran and AerCap Engines. And as you know, Safran is also the 50/50 joint venture partner with GE in CFMI. AerCap Engines leases over 600 engines in this space. We lease engines of all types to our airline customers, but we also have a focus on supporting the products of GE Aerospace and their customer operations. And as I said in my opening slide, between these operations, we lease over 1,000 engines in the marketplace. And to put another statistic on it, these two organizations are responsible for supporting 60% of the world's new aircraft. Struggling with this clicker.
Apologies. So you've heard Aengus and Peter talk about the supply side constraints in the industry. There's a shortage of aircraft, a shortage of engines, and a shortage of spare parts. You've also heard from Aengus that the durability of new technology engines is not the - is not as good as its predecessors. Together with our partners, we have had the ability to predict the demand driven by these phenomena. And as such, our operating - our 93% of our portfolio is under long-term commitments. This is predictable and stable income well out into the future. The balance of our portfolio is in our short-term rental segment, which generates premium rental rates and supports our customers in emergency situations. We have two other areas of interest in the portfolio: our engine exchange program. I mentioned that we manage the maintenance on our 3,000 installed engines, our engines attached to aircraft.
We are able to move engines around our system to make sure we optimize each aircraft. Then finally, our asset management activity. We manage all of the engines used in the GE and CFMI customer operations, all of the spare engines. And I'll talk some more about that. We have a global infrastructure for the delivery and redelivery of engines, the storage, delivery, and redelivery of engines, as well as the AerCap locations for commercial activity. We have a commercial center in Cincinnati alongside our biggest customer, GE Aerospace. Then we have distribution centers covering each continent in the world. Our key distribution centers are in Ireland, the U.K., the U.S., Hong Kong, and Singapore.
If I draw your attention to the photographs, on the top left, the engine you can see in the picture is a GEnx engine, the engine of the Boeing 787 aircraft being lowered into a transportation stand for dispatch to a customer. And on the bottom left, you can see our technicians inspecting an engine, the internals of an engine at redelivery. This network is capable of delivering over 1,000 engines a year to airlines. And to put another statistic on it, at any one point in time, we can have up to 50 engines in transit around the world. That is either on trucks or inside aircraft, not on the aircraft, inside the aircraft, on its way to a customer. So we also use this network to maximize and optimize the maintenance cost in the AerCap portfolio.
You heard Aengus and Peter say that the maintenance investment in an aircraft can be as much as the acquisition cost. In this example, this is an Airbus A320neo with a lifecycle of 20 years, and you can see that the maintenance investment on the engines alone is $53 million. Our aim is to take 20% out of that. We do that with our technical expertise, our commercial penetration at the airlines, and our industrial footprint. We can put the right engine on the right aircraft for the right lease. It is an unmatched capability in the industry. So to summarize, I talked about our growth. We acquire equipment early in the cycle with long-term commitments. We leverage our industrial platform to transition that equipment and support our aircraft portfolio. And then we extend the value of our equipment with engine leases, engine exchanges, and maintenance optimization.
With that, I'll hand over to Rich, who's gonna talk about one of our other life extension programs, our freighter conversions.
Thanks. Well, hi everyone. My name's Rich Greener, and I'm head of AerCap Cargo. We're a dedicated team within AerCap. We've got 30 years' experience, and we're specializing in freighter leasing and cargo conversions for the air cargo market. This clicker is wrong. Wrong. So we are the global leader in freighter leasing, and we have 120 aircraft committed to the cargo portfolio and the program. And that represents 2% of the AerCap total portfolio. We've got no AOGs, and we're placed out until 2025. We've got 20 customers, and the portfolio looks like a 737 narrow body, a medium wide body 767, and a wide body 777 freighter. And as Peter said earlier, cargo gives optionality to the passenger aircraft. We can diversify the market, and we can diversify to a different customer base. And it adds more economic life to the actual aircraft.
So a freighter aircraft is on average retires out at 35 years. So that gives you 10-15 years of more economic life to the aircraft. So that's more lease rate. That's more maintenance reserves. And post-conversion, it gives you a lower transition cost than passenger aircraft. So we've been at this now for 20 years. We've converted over 135 aircraft over that time period. So we design, we develop, and we manage cargo programs. And we got the luxury of having a very large portfolio of aircraft to look at and identify for cargo conversion. So a fantastic pool of feedstock aircraft. And we also got the scale. You know, we can invest in these large programs.
We're also the first mover in the air cargo e-commerce market, especially the narrow body with customers like Amazon, JD.com, which is the Chinese equivalent of Amazon, and Mercado Libre in Latin America. We believe this is the largest growth segment in the next 20 years. When I look at the air cargo market, there's several factors to support the long-term investment in air cargo. If we look at the long-term growth, the air cargo growth is expected to grow by 4.1% per annum on average over the next 20 years. But when I look back at the last 20 years, and despite the crisis and whatever happened during that time period, it actually grew on average by 3.6%. The market is recovering from the declines in 2022 and 2023 and post-COVID. IATA is forecasting that in 2024, the average growth will be 4.5%.
The cargo yields are holding. They're 23% higher than they were pre-COVID in 2019. When we look at the air cargo revenue, 2023 was estimated to be $135 billion. Now, 90% of that revenue goes to the dedicated freight operators and combination carriers. What is a combination carrier? It's a passenger operator that has a cargo network attached to it. So Emirates Cargo, Lufthansa Cargo, Turkish. And a lot of those combination carriers and dedicated freight operators are AerCap customers. And we already have them in our portfolio. Then we go on to aircraft replacement. Well, over the next 10 years, there's gonna be a freighter replacement wave. The classic aircraft, the 737, the 757, the 767, 747, and MD-11, all need to be replaced over that 10-year period. So the air cargo needs more fuel-efficient, reliable aircraft despite the growth.
So we believe that the air cargo market is resilient. I want you to now focus on a different sector within the air cargo market. And that's three delivery streams which are focused on e-commerce, air cargo networks, and dedicated freighters. It's e-commerce platforms. You may know these platforms such as Amazon. Manufacturers direct to the consumer. They've developed and adopted direct-to-consumer strategies and shipping to air cargo. So let's just focus on e-commerce. I give Amazon an example. Amazon started their air cargo network in 2016 with 767-300 freighters. They developed into the 737-800s, and AerCap supported that with them. And they were very U.S.-centric. And then they moved out into Europe and now India. And that was over an 8-year period. And now they operate over 90 aircraft, and it will grow to 100 with options.
There's other examples of e-commerce platforms: Mercado Libre in Latin America, JD.com in China, and Yamato Transport in Japan. They're all e-commerce platforms that adopted air cargo networks and dedicated freighters. Why? Well, the reason why they need these air cargo networks and dedicated freighters is because of speed of delivery. When the manufacturers of the direct consumers looked at this, they also need the air cargo networks and the dedicated freighters for their to put the goods into the consumer. But they use third-party cargo operators such as DHL, Atlas, Kalitta, FedEx, and UPS. They create their own niche networks, ring-fenced networks for their own system. But they also sell into the e-commerce platforms.
So when the shipping industry looked at this and they saw that the benefits of the direct consumers were doing to the strategies, they realized that there was a gap in the supply chain. So the three largest shipping companies in the world, Maersk, MSC, CMA CGM, have developed their own cargo networks and are now operating wide-body freighters to capture some of this market. So these networks are evolving, and there will be hybrid systems, over time. But this we see is the largest growth sector and the fastest growth that we see at AerCap. So what are AerCap gonna do about this, and how are we gonna meet this demand and growth? Well, the near-term growth is gonna come from these best-in-class conversion programs that we've developed over time. The 737-800, we started this way back in 2013 to start the planning.
In 2015, we launched this program with Boeing. In 2018, it got certified. Now, we saw this wave of requirements and e-commerce way before anyone else because we're ingrained in the cargo market. We know how to do this. We're at the coalface every day. We've converted 60 aircraft at the moment, and we've got 12 conversion slots left to fulfill. We have options and feedstock to actually grow that platform further. In 2022, we launched the A321-200 freighter, and that's with EFW and ST Aerospace, and it's supported by Airbus. We have 15 orders with options. This aircraft is the best-in-class to replace the 757-200. Now, there's 300 of these aircraft that need to replace over the next 7-10 years. So we see that as a good opportunity for growth. It also gives the Airbus operators the chance to operate freighters.
And a good example of that is Qantas, Lufthansa, and IndiGo, which is a low-cost Indian carrier. They all operate A321 freighters today. And then I come on to the most comprehensive program, which is the 777-300ERSF. We're co-investors in this program, as Peter said. And it's the biggest industrial program that I've ever been on. Certification is on track for mid-2024. We've got 20 firm aircraft committed to this program, including the prototype. This aircraft is gonna replace the 747 and the MD-11. It's a perfect aircraft for the e-commerce and express market. Why? Well, it's a 100-ton freighter. It's twin-engined, so it's fuel-efficient. And the payload-to-density ratio is perfect for that market. We've got options in place to grow this platform, and we've got the feedstock. So we're supplying the next generation of freighters for air cargo.
So in summary, we're a trusted lessor in the sector. We've got the innovation to do this and very successful programs in the past and now in the future. So with that, I'll pass you over to Pat Sheedy, who's gonna talk to you about our helicopter business.
Thank you, Rich, and good morning, everybody. Over the next few minutes, I'm gonna try and give you a brief overview of our helicopter leasing business, Milestone Aviation. Unlike the businesses led by my colleagues Tom and Rich, the helicopter leasing space isn't as explicitly intertwined with the commercial aircraft leasing space that has always been the core of AerCap's operations. As such, I'll try and provide some color on what it is we lease and finance, how we structure those products, and where and to whom we provide rotary solutions. But first, who are we? Milestone is the global leader in helicopter leasing. When we were founded in 2010, we were the first company to provide operating lease solutions at scale on rotary assets. We have a portfolio of over 300 helicopters leased to 50 customers in over 35 countries. So like AerCap, we are truly a global business.
It's an exciting and dynamic part of the aviation ecosystem, a business which, after managing through a deep and elongated downturn at the latter part of the last decade, is now benefiting from significant macro tailwinds. Our fleet utilization is high, and we see strong demand across all asset classes. Ultra-low OEM production over the last decade has fueled demand for our installed fleet, and we have developed a best-in-class team with unparalleled expertise at managing this asset class. Across all metrics, we are the industry leader. On this slide, I tried to give you a brief overview of what it is the overall supply and demand dynamics look like within the rotary sector. If I look at the left-hand side and focus on supply, you can see the OEM landscape.
Here, only Airbus and Leonardo produce helicopters at scale for our target markets, with Sikorsky and Bell now very much focused on military applications. Just to give you an idea of OEM production levels, the combined production of both Airbus and Leonardo over the last five years of heavy and supermedium helicopters for the civil space was just 15 units per annum. This is compared to 130 helicopters in those categories in our fleet. And indeed, this is not 70 A320s per annum. Production levels here are much, much tighter. In addition, both Airbus and Leonardo are also active producers of military helicopters. So across this OEM landscape, there is no motivation on behalf of the OEMs to overproduce for the civil space, as that production capacity can simply be redirected to military when civil demand is depressed.
If I look at the right-hand side of the slide, this looks at the demand environment. This illustrates the core of our business model. Unlike commercial aircraft leasing where the ultimate demand comes from underlying fee-paying passengers, our underlying demand comes from large corporates and governments or government agencies. Our operators, who are usually our direct counterparty for our lease, fly, maintain, and crew the aircraft. But typically, they back-to-back our lease contract with an underlying contract from a national or international oil company, government agency, or other government department. This gives us strong visibility into future cash flows and multiple avenues to manage risk. In some circumstances, Aramco being a good example, we lease directly to the end user, and they operate the aircraft themselves. So what is it we own? We own and finance mission-critical assets. These are twin-engine industrial helicopters that work for a living.
Now, if I showed you this slide 10 years ago, there probably would be one picture on it. At that point in time, our portfolio was very much focused on oil and gas, with over 85% of our assets focused on that mission. However, over the last 10 years, we have significantly diversified the end user base for this product. Now, over 40% of our portfolio is focused on other missions. I'll touch on each of those missions briefly now. Firstly, looking at offshore passenger transportation, this is primarily moving crews from shore to offshore oil and gas installations, which could be as much as 200 nautical miles offshore. Often, there is no other viable method to transport those crews and keep those platforms operational. However, also in this category is a new growing area, which is offshore wind farms.
Here, helicopters are initially used in the construction phase, but their primary role is in carrying engineers to inspect and maintain the turbines, as the most efficient way is to winch them down from the air. The second largest area in our portfolio is emergency medical services, or EMS. This is essentially hospital transfers, picking up from car accidents, skiing accidents, etc. Now, this is quite a large market here in the U.S., but we are more focused on the European market, where contracting dynamics and the assets used are much more favorable to investment. In Europe, this is a government-funded model. The assets used are bigger and much more easy to reroll and transition either within an EMS mission or to a different mission at the end of the lease. As such, our EMS exposure is primarily focused in the U.K., France, Spain, and Italy.
Similarly with search and rescue, again, here, this is based on underlying government contracts. So for example, we support 60% of the UK search and rescue fleet, something similar in Ireland, and have search and rescue assets on government contracts in both Norway and Australia. The final sector we call utility. This is sort of a catch-all for a diverse range of missions, which includes aerial firefighting. That's an area we've seen significant growth in over the last number of years. It also includes other heavy-lift operations such as power line installations, the vertical replenishment of cargo onto U.S. Navy aircraft carriers, law enforcement, and multiple missions in the UN and World Food Program. So as you actually, some of our 225s and the ones here on the page actually pick up the SpaceX capsules when they splash down. So this is a very diverse range of missions.
This often represents a secondary home for the assets once they have completed their life in one of the other missions that I discussed earlier. So I hope that gives you a very high-level flavor of our industry and what we do at Milestone. As the global leader in the space, we are well-positioned to take advantage of positive macro dynamics. We have the best team in the industry. Supported by AerCap, we are consolidating that ranking and positioning ourselves well for the future. We are and will continue to be the global leader in this space. With that, I'll hand you back to Joe.
Thanks, Pat. You might just pass that clicker.
Thank you, gentlemen. That was a great overview of your respective businesses. Just a reminder, I see plenty of questions coming in, but just so you can see it behind me, give everybody the opportunity to ask some more. Have to start with you, though, Tom. $3 billion engine announcement today. What was behind that? What's the outlook for your business?
So Joe, I guess, look, I've talked about the trusted partnership we have with CFM, the long-term commitment and the favorable returns. But I'll try and put some color around why we do that type of business and why we succeed where others maybe can't. So I also talked about maintenance cost. And, you know, maintenance costs on engines are hugely significant for airlines, and they typically contract that back to the manufacturers. In turn, those manufacturers contract that they will provide replacement engines while one of the airline's original engines is going through heavy maintenance. So at SES, our partner business, our partnership business, we aggregate that demand, and we take over those obligations for the manufacturers to supply those engines. We use our industrial infrastructure and our 30 years of experience to harness that business.
So that positions us for growth where other lessors just simply cannot play. And that really is the background for this recent deal but some of the other deals we've done in the $8 billion of expansion we've done in the last two years. So maybe the outlook for the business, Joe. Look, I couldn't be more excited, right? I talked about 93% of our portfolio being on long-term commitments, stable and predictable income right out into the future. There's nobody in that position like we are, okay? In addition to that, Aengus and Peter talked about the number of aircraft that still have to deliver into this segment over the next 10 years. It's north of 10,000 aircraft. Could be 15,000 aircraft. The engine types we are invested in are the engine types of choice on most of those aircraft.
We are the company that can provide the spare engines for those. I couldn't be more excited about our outlook, Joe.
Well, that certainly answers the $3 billion investment. And, obviously, that's great prospects, ahead. And this is the balance looking to be a theme of much of today. We've heard it through all the presentations. You'll hear it again. It's just the ongoing flywheel effect of having these businesses working together. I'm sure we'll touch on that in a moment. But, you know, from your perspective, Rich, you know, I I noticed you said you're placed out to 2025. Now, what's what's the focus on your business next kinda 12-18 months on the cargo side?
So my main focus is, you know, really delivering all the aircraft in the programs to our customers, okay? That's that's top of mind for me. The most important is getting the 777-300 certified. You know, that's that's a must. That's gonna get, you know, into service with our launch customer, Kalitta. And that's my main priority this year. But, you know, in addition to that, what I what I what I see on on the outlook side and, Aengus, you know, touched on it at the top of this presentation is the shortage of aircraft, in supply. That has a knock-on effect to the cargo business as well because it's lack of feedstock that's feeding into the conversion MROs. So over the next 18 months, what you'll see is that the conversion MROs will start reducing their conversion lines.
I believe that in the narrowbody sector, it's gonna go down by about 30%-50%. So with that, you know, you're not gonna have a lot of cargo aircraft being converted and being delivered. So you've got a supply issue there. So we see that that's gonna get correction in the marketplace, and the lease rates are gonna start to rise again.
So is that when you talk about that fact, it's really the I suppose the shortage of supply on the passengers? I'm just making sure I heard this correctly. The shortage of supply on the passenger side is now feeding into shortage of supply on the cargo side?
Correct.
Wow. Okay. Great. And from your perspective, Pat, what's the focus for you? You know, next 18 months, anything on the horizon from the helicopter side that you wanna highlight?
Well, I think for our business, Joe, you've really gotta look at where we've come from, right? So as I think I said in my pitch, we came out of a very deep downturn starting this decade. And really, since then, the focus of the business has been to drive fleet utilization back up, get aircraft that were on the ground back in the air, earning revenue. And we've been pretty successful at that to date. So our utilization in the portfolio bottomed out 2019, 2020 at around 80%. You know, now we're in the shadow of 100% max utilization. So having cleared that overcapacity that existed within the system, really, the focus of the business now and has been for the last number of years is to drive re-lease rates back up and improve the other terms and conditions around our leases.
So for example, we extended an aircraft with an existing operator in 2020. The lease rate at that time was sub $120,000. It was a three-year extension. That aircraft has come back up for release. It is extended again with the same operator. The lease rates are north of $165,000. So that's the same aircraft, three years older, 40%-like rise in lease rates. And that's a pattern we're starting to see across the board. So I think the focus for the business now is to try and capitalize on that, consolidate the gains we have to date, and continue to drive tenor and lease rates upwards.
It's a similar theme to what Peter is really saying, that this is, you know, credit story is improving, lease rates are improving, tenor's improving?
Yeah. That's correct. And I think what I would also say very similar to what Peter said is our renewal percentage has increased dramatically. So aircraft that had been coming off lease are now extending with the existing operators rather than coming back to us. That has the benefit of reducing transition costs, reducing downtime, reducing cost. And as I said, they're going back out at significantly higher lease rates.
One thing that really resonated with me in your presentation was this idea of mission-critical assets, right? I think it's a theme that, again, it's quite consistent across your different business lines, like, the idea of critical infrastructure of the asset. Can you talk to me about what it means to be mission-critical on the helicopter side?
Yeah. It's a phrase that's well used in our industry. And if you think about, you know, what we look at when we either, you know, deploy capital, new capital, or when we're looking for a home for the aircraft that we have, we're very, very focused on what is the underlying mission for that aircraft, who is it ultimately operating for, and how long is it operating for. So if I take the U.K. search and rescue for an example, those assets cannot be readily substituted quickly. The missions they fly on are not discretionary. The mission they fly on isn't really impacted by economic factors. It's critical national infrastructure for the United Kingdom. Similarly, if I look at some of the oil projects that we look at, these are multi-decade, multi-billion-dollar projects. And the only way to keep them operational is to crew them with helicopters.
We view our assets as critical to their infrastructure. That's the theory, at least. But how does it work in practice? I think the best example of how this worked in practice was during COVID because during COVID, all our helicopters that were flying in January 2020 flew through January 2021, flew through January 2022. We had no material impact on receivables. We had no material deferrals. We had no material restructuring. In fact, during that period, our fleet utilization increased. While the, you know, there was obvious distress across the entire aviation universe, these assets kept flying. They kept flying because they had to keep flying. That's what we mean when we talk about mission-critical.
Yeah. I think that's something that probably comes underappreciated from certainly when I started looking at the helicopter business and from the analysts looking at it, that it's just a totally different demand driver on the helicopter side to the passenger aircraft side. You know, there's you know, obviously, COVID was probably the hardest thing that ever hit our industry on the passenger side. But obviously, not so much on the helicopter side. Yeah, having mission-critical assets is really the key to getting through this crisis. Again, similar to what Gus said earlier about having the most in-demand fuel-efficient aircraft. It's just a theme for the day, I guess. From your perspective, Rich, we provide critical infrastructure, if I've to use the term again, on the cargo side. But how do we get to the situation that we're in today in terms of leading these programs?
Well, look, as I said, we spent 20 years at this. And we have a dedicated team. And we're just focused on cargo, right? No one else. And, you know, to build that team over 20 years takes time and experience. And we've got a relationship with the MROs. We've got a relationship with the OEMs. So again, we're trusted to deliver. And that's the kind of the key thing here. And, you know, when we look at this going forward, you know, who else can do this? It will take a lot of investment to do this to have the scale that we have at AerCap. And, you know, you need a very smart team that we have. You know, I'm blessed with a great team. I can't say that at any concerns that anymore.
So, and the other thing on the critical mission, when we launched the 777-300ER program, you know, is this not a 5-year program? This is 15-20 years. You know, we're vested seriously invested in this program as co-investor. So, you know, when we do these programs, we're in it for the long term.
I guess, you know, you're probably the poster child for this one, Tom, if I may say, in terms of critical infrastructure, given the role that we play with CFM and with SES. Can you talk to me about the operation of that, the operational element of it?
Yeah. Sure, Joe. I guess, look, I talked in my presentation about our global distribution, and which is fundamental to that. But I also worked for GE Aerospace before. I joined AerCap Engines. And I was actually a customer of this business. And I think about what was important to me. And what was important to me as a customer was availability of engines, on-time delivery, ease of contracting, 24/7 availability of people, very important in our space, 365 days a year. Aircraft engines don't break down on Monday morning. They break down on Friday evening. Effect, right? So that capability really drives value for their organizations. You know, it's not a price discussion. It's a value discussion. And this is fundamental for us. So, we have been able to capture demand here based on their operational requirements.
I think that really is the differentiator, Joe. And the other thing then is, when we show up at an airline, we are representing the manufacturer. So there's an expectation of quality. There's an expectation that our engines are in perfect condition. There's an expectation that, you know, our configurations are exactly what the documentation says. There's an expectation that it'll be there on time. So that expectation really and being able to deliver that for the two biggest manufacturers in the world is really our key differentiator, Joe.
I think that's a really well-put point. I suppose just to further develop that, I just saw from the slide that we talked about kind of having 1,000 engines between SES, or JV, and with AerCap Engines. But realistically, it's you're really managing more than 4,000 engines with the passenger side. There has to be a huge amount of synergies that come from having that level of ingrained, I suppose, IP or understanding of the engine for the whole passenger business. Are there examples there, or?
Well, look, for sure, Joe. Look, the first thing I would say is, look, we are the only fully integrated aircraft and engine lessor. There's nobody else out there that has one team. That's really important. I mentioned in my presentation about managing 3,000 engines and optimizing the maintenance. This goes directly to the bottom line, to returns, to profitability. You know, nobody else has infrastructure to be able to do that in the way we can do it. Then I think about Pat's business. Logistically, we transport the helicopters around the world for Pat's business because that's our expertise. We move so many engines. A helicopter is just a slightly different envelope size that goes in the same transportation modes. So I think about Richard's business, the cargo, and the freighter conversion program.
For example, the 777s that we have in conversion, the engines from those aircraft, we have out on lease while the aircraft is in conversion. So in effect, those aircraft are still earning revenue even though they are in hangars or parked. This is a real differentiator. Peter talked about China Southern and selling more product to the same customer base. We have 57 engines through our SES franchise on lease to China Southern. This is a major advantage. And then I think Anton talked about GOL, where we used our spare engines to differentiate our aircraft in restructuring and then and therefore defend our position and keep our aircraft on lease. So they are the big synergies. Then like, you can add on all of the team, the legal, all of the functional support in the organization.
So it's just a perfect fit, Joe.
Yeah. I mean, I think that's the bit that really surprised me. I know certainly when the new business came in, it's just how fully integrated everything becomes. And I think that's something that it's very hard to display on a slide. It's very hard to show, or there's no kind of metric in our 20F that shows it. But it's something that over a long period of time just adds to the kind of the overall return profile of the business. I was a bit surprised, though, when I saw the helicopter business and the overlap between customers. Peter referenced, obviously, the China Southern deal. Is that an island, or are there more that you think could come from that?
Look, and I think intuitively you would think, given everything I've described, our customer basis would be poles apart. But more and more, we're seeing areas of overlap. I think China Southern was a good one in that it was a huge aircraft relationship that opened the door for us to first sell an S-92 to China Southern and then, as a follow-on transaction, develop a leasing relationship ourselves. And I think, as Peter alluded to, there's a few more in the pipeline where one part of the organization has opened up the door for another part of the organization to do business. They're the explicit ones. They're the obvious ones. I think what's less obvious is maybe some of the overlaps that there are even among the businesses on the stage here.
So, Tom's business leases and finance the entire spare engine pool for the CT7 engine, which is the engine type on our core products, the S-92 and the AW189. And also, I mean, I touched on my presentation what the OEM landscape looked like for rotary in terms of airframe manufacturers. But what I didn't mention was it's common engine OEMs across the platforms. So the relationships that Tom and his team and Aengus and the entire AerCap team have with GE, Safran, and Pratt & Whitney are instrumental in us being able to provide solutions to our customers that our competitors just can't.
So, I hadn't really appreciated that point either, that the idea of the engine OEMs. Obviously, I saw with the airframe OEMs are very different. But the engine OEMs are common. So who do you say were the three main manufacturers on the helicopter side?
Yeah. So the main engine OEMs for all our products are GE, Safran, and Pratt & Whitney. Familiar names.
Example. On the cargo side, clearly, there's a linkage between the customers and passenger aircraft and running cargo. Can you talk us through a few key wins there, Rich, on your side?
Yeah. So you know, Peter mentioned the Emirates relationship. And you know, they're on the 777 program, and it goes a lot deeper than that because, you know, Emirates is the largest operator of the 777. So they have huge experience on that aircraft type. And over the past three or four years, we've been working with the pilots and the engineers with IAI, our co-investor, to understand really that aircraft. And that's really helped us on simulator training and the pilots giving feedback to the IAI team on how to operate this aircraft going forward. And that helps translate to the Civil Aviation Authority of Israel and the FAA so that we have a very, you know, as I would say, protected and intellectual conversation with the authorities about the actual procedures of the aircraft, etc.
And then, you know, the actual program itself, we are actually partnered with Etihad. And they have Etihad Engineering. So Etihad is a customer of us on the A320. We lease A320s to them. But we're also developing 2 conversion lines in Abu Dhabi with the 777 program. So there's synergies there. There's another thing that not a lot of people know about the e-commerce market. And that's a lot of the e-commerce platforms do not have an AOC, which is an Air Operator Certificate. So I'll give an example. Amazon, they use Sun Country to operate some of our 737-800s. And they also use Hawaiian for A330s. So that's a classic synergy where.
Are we leasing to Amazon in that such situation, or to Sun Country?
Yeah. So we have a direct lease with Amazon. And they actually sublease that aircraft under what's called a CMI, which is a crew maintenance insurance contract. So that's with the airline. So Amazon have that benefit of all that infrastructure is on the actual airline itself rather than Amazon.
So we get the benefit of having a strong credit like Amazon, and they're outsourcing the operation of it on the cargo side, the day-to-day operations of it to another customer of ours. Okay. I realize we're coming relatively close to time, and we've had loads of questions coming through here. So we'll do a bit of a quick-fire round here. I'll just start with an easy one with you, Tom. What's the difference between SES and AerCap Engines? How would you differentiate them?
Right. So it's about focus. SES is totally focused on CFMI's product lines. And we're at AerCap Engines totally focused on widebody engines support for GE Aerospace.
One here for you, on the helicopter side. Are you closely following the eVTOL market's development, and what risk might that have for your business?
Yeah. As you can imagine, that's not the first time I've been on a panel and asked that question. Look, they take off vertically, and they have rotors. But that's really where the commonality ends between all the eVTOL platforms that are currently being developed, you know, and the aircraft that we invest in and that we own. You know, I talked a lot about mission-critical earlier. You know, if you're 150 miles out over the North Sea on a search and rescue mission, you do not want to be worried about the battery. If you're on the side of a mountain picking up a skier, there's nowhere to plug in.
So I think, you know, given the pace of development and more importantly, the pace of certification of all the platforms that are out there, I think it's really, you know, the end of the next decade, I think, before it even becomes a consideration in terms of competition for our products.
So not for today or tomorrow, it sounds like?
Not for today or tomorrow.
Rich, you said when do you expect the first 777s to deliver?
Well, as I said, mid-2024. And then we'll start to deliver all those aircraft in, you know, between 2024, 2025, and 2026.
Tom, do you worry at all about the long-term reliability of new technology engines, given all the issues we read about today?
I guess I'd split that question, Joe. I think we have to be worried about the near-term impact because it impacts the revenue of our customers and their ability to fly. But the long-term impact, I think, is, you know, we have a lot of experience in previous generations of engines where actually, the new technology it is now that's not as durable, but actually, it is doing better than the predecessor engines were that were at that stage of development, if you like. You know, it's just the predecessor engines had four or five generations of reinventing themselves in maturity. So in the long term, these engines, you know, Pratt & Whitney especially, will get on top of their issues, and these engines will mature.
But in the near term, you know, our investment in this space is supporting our customers to get through some of these challenges.
So what you're saying is the entry into service or the maturation issues. We're saying this is kind of this is bread and butter for a new engine program. Yes, it's disruptive for customers, but long term, you good health good health issues.
Absolutely, Joe.
One here for you, Pat. Why would someone like Ar amco need our services?
I'll tell you why, Joe. Look, Saudi Aramco is obviously one of the most valuable businesses companies in the world. And, you know, with all due respect to our treasury team sitting over there, I think they can probably raise financing as competitively as we can. And they can probably buy helicopters as cheap as I can buy helicopters. But when they look at us, I mean, they don't view us as a financier. They don't even view us as a lessor, right? When we talk to Saudi Aramco, they view us as a partner. They view us as a solutions provider. And they view us as somebody who delivers for them on time every time. And that's why they trust Milestone. That's why they trust AerCap.
I guess the same thing could be asked of you, Rich, as to why Amazon would use us.
Yeah. Look, similarly, an excellent credit and a great company. But we've got the program. We've got the assets. And we've got the skill sets to deliver the aircraft. And that's why they use us.
Well, I think, you know, rather than me summarizing, if GE, CFM, AerCap, and Amazon all trust these businesses to deliver for our customers every day of the week, I think that should be as good a synopsis or an endorsement as we can imagine. So without further ado, I'm going to invite Pete up to the stage. But first of all, we give the gentlemen a round of applause. Thank you.
All right. There we are. Where's the photo? Great. Thanks, Joe. Good morning, everyone. So you've heard from people across the AerCap business today about our competitive advantages across various areas. I'm going to take you through how those translate into our financial performance. So there are five key points I'd like to focus on today. The first, AerCap consistently outperforms from a financial standpoint. Second, and Gus touched on this, a strong balance sheet is the key foundation for this business. You need to have a strong balance sheet, access to diversified funding sources, and ample liquidity. Without those things, we wouldn't have been able to take advantage of the significant opportunities that have presented themselves, whether that be the ILFC transaction, the GECAS acquisition, or the engine deal that we announced earlier today.
Third, the business model produces consistent, predictable cash flows, which in turn provide significant financial flexibility. Fourth, we have a proven track record of allocating capital effectively to create long-term value for our investors. And finally, as we look out at the world today and given everything you've heard about the environment and about our position in the industry, we believe AerCap stock represents a compelling investment opportunity for investors who are focused on long-term value appreciation. So I'll start with financial performance. So 2023 was a record year for AerCap across many fronts. We had record net income of $2.4 billion on an adjusted basis over a $3 billion GAAP. We had record operating cash flow of $5.3 billion. We had record earnings per share on both a GAAP and an adjusted basis, almost $11 a share adjusted.
We sold $2.8 billion worth of assets at a 22% unlevered gain on sale margin. That's the highest margin that we've had in the past decade. All of this, all of this together created growth in book value per share of 25% during the course of the year. That is significant outperformance relative to our peers, relative to the guidance that we gave at the beginning of the year, and relative to many third-party estimates. The point with all of this is, at AerCap, we don't just perform; we outperform. 2023 was also a big year for ESG for us. We had a number of initiatives. In particular, we were upgraded by two of the leading ESG rating agencies, MSCI and Sustainalytics. MSCI took our ratings from A to AA, and they focused in particular on strong corporate governance as a key ratings positive.
Sustainalytics raised our rating from medium risk to low risk. Really, this is a continuation of a positive ratings trajectory that we've had for ESG ratings over the course of several years. Collaboration is a key part of our ESG focus. We spend a lot of time, through our government affairs and sustainability area, meeting with policymakers in the E.U., the U.S., the U.K., other countries on environmental initiatives. We think that given our position, our unique position within the aviation industry, that positions us well to play that role. So you heard from Peter and Gus about our fleet transformation, our fleet modernization strategy, which is important, obviously, in getting new in-demand aircraft that are going to be the aircraft of the future.
But it's also a big positive in terms of environmental issues and reducing CO2 emissions because, obviously, these new technology aircraft are producing significantly lower emissions than their predecessors. During 2023, we reached 70% new technology aircraft. Now we're at 71% at the end of the first quarter. So we're well on our way to reaching our target of 75%. And of course, after that, given that we have an all-new technology order book, over the next several years, we're obviously going to go above that level. We have an ESG committee at the board level. So that's at the highest level of the company, which considers both risks and opportunities in the ESG area. And ESG factors are an important consideration when we're making decisions, whether that's the management or the board.
Finally, for diversity and inclusion, we had a number of D&I initiatives during the course of the year. And really, we're focused on those issues that matter the most for our employees. So I mentioned the 2023 outperformance. That has continued into this year. The first quarter was very strong. We reported it last week. So we had $658 million of net income, $3.29 of EPS. So that's a strong start. Earlier this year, at the beginning of the year, we gave guidance for earnings per share for full year 2024 of $750-$850, excluding gains on sale. Now, with the strong first quarter behind us and a good outlook going forward, we're taking we raised our guidance last week to that top end of that range, which is $850 of EPS, again, excluding any gains on sale.
And when we add the $0.70 of gains we had in the first quarter, that takes us to $920 for the full year, and again, not including anything for the rest of the year. So as we look forward, we think the outlook continues to be very positive for the business. So now I'll turn to the next topic, liquidity and funding. As I said, this is a critical area of the company. We wouldn't be able to accomplish the things that we've had over our history without this strong backbone. And there are five key points that I'd really focus on here. So the first, broad access to capital. You need to have diverse sources of funding. And we are always trying to expand those and deepen those so that we're able to call upon various sources at various times, to fund our business. Second, liquidity.
So we run at a sources-to-uses coverage ratio of at least 1.2 times. That's what we target. And basically, that means we look at our uses of cash over the next 12 months, which is CapEx and debt maturities. And we always want to run at 1.2 times at least coverage of those uses. If you look at today, we've got $19 billion of available liquidity. That includes cash. That includes committed facilities, contracted sales, and expected operating cash flow over the next year. And that compares to about $6 billion of CapEx for the next year, $5 billion of debt maturities. So that's $11 billion total. That's $8 billion of excess liquidity or a sources-to-uses ratio of 1.7 times. The third element is our debt mix. So we fund on both an unsecured and a secured basis. So look, obviously, unsecured is the biggest market.
Unsecured bonds is the biggest market out there. That's where the depth is. And that's going to be most of our funding. But we also value the diversification of funding on a secured basis. And so if you look out today, we're about 14% secured debt to total assets. That's where we've been for the last several quarters. And I expect we'll continue to be around that level. But in any event, we're going to try and manage that below 20%. Fourth, and Gus mentioned this as well, interest rate risk. So obviously, that's a risk that you have to manage in this business. And we do that in two ways. First, most of our assets are fixed rate. Almost all of our leases are fixed-rate leases. And so we try to match our funding so that it's mostly fixed rate.
About 80%, give or take, of our debt is fixed rate. And we also fund on a floating-rate basis. And when we do that, we will swap those floating rates to fixed so that on an overall portfolio basis, we're matched. The second way we manage interest rate risk is from a tenor standpoint. We want to roughly match the duration of our assets with the duration of our liabilities. And finally, leverage. Obviously, leverage is a key metric that we focus on. And obviously, you guys, investors, lenders, rating agencies, all focus on this as well. Our target leverage ratio is 2.7-to-1. But right now, we're well below our target at 2.4-to-1. So let's look at this diversified funding model in a little more detail.
If you look at our balance sheet as of, on the left-hand side, that's, that is, all of our debt as of the end of the year. So we had $47 billion, roughly, in outstanding debt. And you can see the biggest component of that is a little over $30 billion of unsecured bonds. As I said, the deepest market, it makes sense that we would focus there. But we also have a little over $8 billion of secured debt. And that's mainly bank debt, also some institutional term loans. And the reason we do that, as I said, is for diversification purposes. We also have $3 billion of other unsecured debt, again, mainly bank debt.
What we've seen there and what we've tried to do and I'd say been successful at is expanding banks that will lend on rather than just on a secured basis, as they historically did in this industry, to also lend unsecured because that gives us more flexibility. We've seen that for many banks have gone from secured to unsecured over time. We also have $2.25 billion of hybrids, $1 billion of export credit agency funding, and finally, $1 billion of secured warehouse, which is our AerFunding secured warehouse, which we've had in place since 2006. Overall, if you look at that overall, it's about 80% unsecured, 15% secured, and 5% subordinated debt. This diversification is important.
And I think a good example of this would be, you know, the funding that we've done, the funding that we've done, on the bank side. So because we've allowed it's allowed us to attack those markets where you can see an opportunity, you can see better pricing. So during COVID, during May of 2020, obviously, there was distress in the unsecured bond market. Our spreads had blown out. But we were able to do bank deals with a number of European banks at rates that were well below our unsecured bond spreads. We wouldn't have been able to do that if we hadn't been relevant to those markets. And in order to be relevant to them, that means you have to be a frequent participant.
You don't have to do it all the time, but you have to be frequent so that they know who you are and they trust that they can rely on you. We also did ECA funding at the same time, you know, during the depths of COVID at significantly lower rates than we could have done in the bond market. So that's just another example of how that diversification works. If you look at 2023, so that's on the right-hand side, you can see the funding that we did last year. It's going to move around every year. That mix is going to change somewhat. But you can see that we accessed funding from a variety of sources. So capital markets, $2.8 billion, roughly, of unsecured bonds. But we also did $1.5 billion of bond exchanges.
We renewed our revolving credit facilities, a number of them for $5 billion. But we also did over $4 billion worth of bank transactions. And, you know, that includes things like expanding our relationships in Japan. We did a $500 million unsecured term loan in Japan with mainly regional banks in Japan. And we'd only be able to do that. That's the biggest deal we've ever done in Japan. We'd only be able to do that if we hadn't been going to Japan year after year to do business there. So I think that's a good illustration of how diversified our funding model is. And you can see this on the bank side, just to elaborate a little bit more. So we fund from over 100 banks around the world. You can see they're diversified among the Americas, EMEA, the Asia-Pacific region.
And even within those regions, so the U.S. and Canada, obviously, a lot of you here today, but also, many countries in Europe and many countries and an expanding number of countries in the Asia-Pacific region. And a good example of this, just last week, we did a $1 billion unsecured term loan with a number of Asian banks through from several different countries. So that's really what we're after in terms of trying to diversify as much as possible so we're never dependent on any one region or market. So next, I'll turn to financial flexibility. So GAAP, as we all know, GAAP can have limitations. Adjusted earnings can have limitations. People may adjust differently. There are things that aren't picked up there. And it may be hard sometimes to compare companies. But we think a good way to put things on the same footing is using cash.
AerCap produces best-in-class operating cash flow. I mentioned before, we had $5.3 billion of operating cash flow last year. We had $1.4 billion during the first quarter of this year. And obviously, those are big numbers. They're bigger than any other aircraft lessor. But you should expect that, really, because we're bigger than any other aircraft lessor. So the question is, how does that look on a relative basis? And so we created this chart because I think it illustrates it pretty well. AerCap is the blue line. Other lessors are the gray lines in there. And what you can see is, during COVID, that's when the chart starts, during COVID, everybody's operating cash flow was depressed. They were at low levels because of restructurings, because of bankruptcies, because aircraft just not flying around the world.
But coming out of, and you can see that lessors were affected to various or lesser degrees, but everybody was affected. What's interesting, though, is coming out of COVID and particularly coming out of the GECAS transaction, you can see how far above everyone else AerCap is. Now, in some of this in 2021 and 2022, some of this were things like the LATAM recoveries that we got or other things like that. But fundamentally, we are well above all of these other companies. And to put it in perspective, we're over 25% higher from an operating cash flow standpoint than any of them are. So if you think about it another way, for every $1 of assets that AerCap has, we produce 25% more cash flow than any of these competitors. That's a significant amount. And that's not going to change. That is going to persist.
I'd also point out that doesn't include, you know, we talk about gains on sale. That doesn't include anything for gains on sale because that's an investing cash flow. It doesn't include anything for insurance recoveries. That is just the assets that we have and what they produce on a cash basis. And Gus went through this a little bit, but I'll take you through it as well because I think it's important. So all of that cash needs to financial flexibility. And you can see that very well in our leverage ratio. So before COVID, we started out with around 2.7-to-1 debt-to-equity, which is our target leverage. While we were funding, while the GECAS transaction was pending, we de-levered because we weren't returning any capital to shareholders. Then we went up to 2.7-to-1 when we did that transaction.
Then in the first quarter of 2022, when Russia invaded Ukraine and we wrote off all our assets, we went up to 2.9-to-1 debt to equity. I think what's critical here is you can see that within two quarters, only two quarters, we went back down to our target leverage ratio of 2.7-to-1. That's really the power of this business to generate cash and capital. Even if you look at last year, we bought back 44 million shares, $2.6 billion worth of stock. You can see that we de-levered during that. I think that's significant. It's obviously a key part of our business. If you look at from a rating agency perspective, you can see that rating agencies have seen this, and they have raised their ratings as a result.
So after the ILFC transaction, we started out at BBB Plus with all three major rating agencies. In 2016 and 2017, we were upgraded to BBB Minus from all of them. And then last year to BBB Flat for all three rating agencies. And now we're on positive outlook from both Moody's and S&P. And we're hopeful that with both of them, that we'll be upgraded to Baa1 and BBB Plus during the course of this year. So that's a very positive story. And I think in many ways, it's a recognition of how we are outperforming the industry. So next, capital allocation. Obviously, that is a critical thing for the company. We spend a lot of time focusing on this. And really, what we're focused on, as Gus mentioned, is dynamically allocating capital to the most attractive opportunities over time.
There are really four ways that we can do this, four four avenues for capital deployment. The first, de-levering. And as I said, we did that. And we've done all of these in size at various times during the history of the company. And de-levering, I mentioned that during, after the ILFC acquisition, after the Russian invasion of Ukraine, those are good examples of that. Organic growth. Over the last 10 years, we bought $40 billion worth of aircraft that's delivered from our order book, aircraft and engines from our order book. That's a significant amount. And obviously, the new engine deal that we announced today, more organic growth. M&A, you're familiar with our acquisitions at Genesis, of ILFC, of GECAS, at significant values for the company. And finally, return of capital. We've bought back over $7 billion worth of stock over the last since 2015.
Now with the new dividend policy that we announced today, that's just another area that we will be able to deploy. I think it's useful to look at 2023 just to show how much capital we generate and how we deploy that capital. So if you look at the beginning of the year, you can see that at the bottom left, AerCap had $800 million of excess capital at the beginning of the year. We generated about $3.4 billion through what I'd call just regular way operations. And we generated $1.2 billion from insurance recoveries. Those are those two green bars. And then during the year, we bought about $6.2-$6.3 billion worth of assets. And we funded those using debt and equity. The equity portion of that is that $1.7 billion. That's that first gray bar. And as I said, we bought back $2.6 billion worth of stock.
So you can see that we ended the year with $1.1 billion of excess capital, about $300 million more than where we started. And I think this is something that will happen. It won't be the same every year. But as a general matter, we are both generating and deploying massive amounts of capital for this business. So we announced a dividend for the first time earlier today. It's the first dividend AerCap has ever paid. So it should prompt an obvious question: why pay a dividend? Why start now? And there are really three reasons why we did that. So the first, we thought it would broaden our investor base. As Gus mentioned, we spent many years talking to investors. And over the years, we had a lot of people who said, "Look, we're interested in the AerCap story. We think it makes sense. We think it's compelling.
But our investment mandate for our fund won't allow us to buy non-dividend-paying stocks." Second, we've talked a lot today about our predictable, consistent cash flows. And I think it does signal confidence in our expectation about the durability of those cash flows going forward, that we would pay a dividend now. And finally, as we look at other large companies, if you look at the S&P 500, 80% of S&P 500 companies pay a dividend. S&P Industrials, 87% pay a dividend. Financials, 97% pay a dividend. So in many ways, AerCap has been an outlier in not paying a dividend to date. And for some people, that was a reason not to own the stock. We're removing that reason today with this announcement. Now, the next question, I guess, would be, so we're paying a dividend. How do we size that dividend? And really, we thought about it.
We wanted to pay a dividend that was meaningful to investors, but that wouldn't crowd out other capital return or other capital deployment opportunities. That's how we thought about it. And so we thought, look, $0.25 quarterly dividend, $1 a share on an annualized basis, relative to our share price, which is a little higher now than the $85, but that's a little over 1% dividend yield. So that seemed to make sense and be pretty reasonable. We've got just under 200 million shares outstanding today. So that's about $200 million on an annual basis that would be allocated to dividends. And when we think about that relative to our latest guidance, it's $1.8 billion of net income for the year. So that's a payout ratio of a little over 10%, which also is very manageable.
When we compared that to what other companies have done, and this is initiations over the last 12 years for S&P companies, you can see that on average, their dividend yield was around 1.2%, their payout ratio 19%. So not far out of line with where we were with our announcement. But I think it's important to focus on three things to keep in mind. First, we are going to continue to target a 2.7-1 target leverage ratio. Obviously, we're below that over time, below that at the moment, but that's what we will manage to over time. Secondly, our capital return strategy is going to continue to be heavily weighted towards share repurchases because we've seen the significant benefit those produce for AerCap over time. And we want to continue that. So that's not going to change.
But the dividend also provides some regular return of capital to shareholders. And we think that's helpful. And finally, as we think about the amount of dividends and what should you expect for those going forward, so basically, we're allocating $200 million towards dividends. And as I said, today, that's $1 a share on an annual basis. We would plan to grow that over time on a per-share basis through the buybacks that we're doing. So as we buyback shares, we reduce the share count. That's going to be the primary driver of dividend per-share growth, not some larger allocation. I think it will remain somewhere around $200 million is what I would expect. So that takes us to the AerCap investment case. And look, I know that many of you, there are diverging views. Many of you think of AerCap as a financial company.
Many of you think of AerCap as an industrial company. So whether we're a financial, whether we're an industrial, whether we're a FinIndustrial, however you want to look at us, we think that stock is significantly undervalued. So if you think of financial companies, mostly valued on a return on equity versus price to book basis, industrials on a price to earnings or free cash flow basis, on both, or really on all of these metrics, AerCap is significantly undervalued. So let's take financials first. So what we've got here is every financial company listed in the US with a market cap over $10 billion. And what we're looking at is, call it return on market value. So what is that? So as I said, if you think of return on equity as a key measure for financial companies, really what we're looking at here is return on equity.
Normally, you'd say if you have a higher return on equity, you should trade at a higher price to book multiple. To normalize for that, here we're dividing return on equity by your price to book multiple to say, what's your return on market value? So what's the return that you as an investor get if you buy a share of that stock? And as you can see, AerCap's return on market value, 18%. We're in the top three of all of these companies. There are about 100 companies out there. So we think we look pretty cheap on that basis. Similarly, an industrial company, so again, this is all US-listed industrials with a market cap of over $10 billion. And this is their price to earnings multiples. And you can see there are a number of them over 100 times.
Most companies are, or a few of them, over 100x. Most of them are in the kind of 20x-30x multiple range. Then all the way, all the way in the far right corner is AerCap's 7.4x PE multiple. So we think on both of those bases, we are incredibly cheap compared to all of these companies that we would look at, really the whole universe. But not only do we think that we're cheap, but we're actually acting on it. So we are deploying capital on that basis. What we've done here is taken all of those same companies, so all 200 of them. Now, you might notice that there are not 200 bars there. What we're showing here is what the buybacks they've done.
That's because a lot of them would be zeros anyway because they didn't buy back any stock during the course of the year. But of those that did, you can see we bought back 18% of our market cap from the beginning of 2023. That's more than any other industrial company, more than any other financial company that was listed in the U.S. by a fair margin. And I think that's a key focus for us because you can really see we are not just saying these things, but we're putting our money where our mouth is. And we're putting our shareholders' money where our mouth is. So Gus talked a little bit about the measures that we think about. We get asked a lot about net spread and yield and things like that.
Look, obviously, we look at all of these measures because it's important to look at how the business is performing on various fronts. But the key things that we're focused on driving are maximizing EPS and maximizing book value per share because those are the things that drive valuation for this business. We know that if we can do that over time, that that is going to create value for our investors. A good illustration of that, over the last eight quarters, we've grown book value per share at a CAGR of 20%. That's significant value creation. You're seeing that in the stock price, frankly. But I think it's also important to look at what book value per share doesn't include. It includes a lot, but there are a number of things it doesn't include.
It doesn't include anything for the GECAS discount, $3.3 billion discount buying GECAS during the depths of the pandemic. It doesn't include anything for the asset inflation that we're seeing. We own hard assets. We're seeing, as you heard from Tom and others, about the value of those assets that is increasing, our aircraft, our engines, our helicopters. It doesn't include anything in there for that. Just to size that, when you think about, we've got roughly $60 billion in assets. So if you assume a 5% inflation on that, $3 billion, that's $15 a share, to put it in perspective. It also doesn't include anything for potential insurance recoveries. To date, we've recovered $1.3 billion, but we still have outstanding claims for $2.2 billion. So that's a significant number as well, that there's nothing in book value for that.
But I think, most importantly, what it doesn't include is any value whatsoever for the AerCap platform. And as you've heard today from people across the business, you've heard how the AerCap platform is key to creating value. You've heard about the various ways we do that, from having a strong balance sheet, diversify funding sources, ample liquidity. You've heard about the importance of buying the right assets at the right time and speccing them appropriately. You've heard from Peter and Tom and Rich and Pat about our leasing capabilities across aircraft, engines, cargo, and helicopters. And you've heard how we maximize value and try to extract the maximum value of our assets at every stage of their life cycles, whether that's through maintenance, through transitions, through cargo conversions, and of course, through trading and end-of-life activity. All of this together, this is the AerCap platform.
This is the AerCap advantage. And this is what has enabled us to produce superior returns in the past and will continue to enable us to produce superior returns into the future. So with that, that concludes my session. And I think I'll ask Gus and Joe to come up, and we will take some Q&A.
So we're going to start with ourselves. I told you the phone unit gives an opportunity to ask questions to the management team. And I've got a roving mic here, so feel free to put your hands up first, best dressed. Go ahead, Hillary.
Thank you, Hillary, from Deutsche Bank. So you had a very interesting slide. I think it was slide 24, where you showed that GAAP ROE has been 11.2% historically. So I guess going forward, with lease rates up 20%, net of other costs and interest costs, what do you think the average ROE could be on average going forward? Would you say 16%?
Well, I think it will continue to be around that range. I mean, because if you think about it, what we're saying is you've got kind of a base interest rate, right? And then ROE will be 800-1,200 basis points above that. So with interest rates higher, obviously, you're going to see those ROEs higher. I mean, we're seeing that somewhat today, right? But I think in the future, we'll continue to be somewhere in that range. It's going to move around a little bit because you have things like gains on sale when you monetize assets, and that can be lumpy. But overall, I'd expect to be pretty much in the same region.
Hillary, I think the key point of that slide was the durability and the stability of returns. You will hear headlines that sound they impact this business, but they don't. They may impact an airline in a particular region, but that has no impact on us. We are very different from airlines. And that's where I wanted to point out today, the tremendous stability. It can be up or down in any quarter or year, but you look back over 16 years of continuous profitability. Okay, we had COVID in Russia. But even despite all that, you saw the tremendous stability and the scale of the returns and what they empowered the business to do. And that's what I wanted to convey. The future for this business is not going to be any different. It's the demand for this product, what we give to the market. That's not going away.
It won't be overturned by anything to do on the supply side for the long term either.
So kind of as a follow-up to that, the question I get from investors, and it's kind of frustrating because they are so stuck on the view that lessors should trade at one-times book because of the residual value risk, I guess. But it seems like you can definitely argue, and you've gone through different valuation metrics, and you can argue for trading at premium to book just given the sustainability of value and earnings and things like that. So would you tell investors that they should be focused on maybe a different valuation metric or that AerCap should trade at premium to book? And is that the right metric to look at it?
Well, I think we should trade it at premium to book. I mean, if you think of even things like, obviously, Gus mentioned the durability of the cash flows and of the performance. But if you also think about we bought GECAS at a significant discount, but at 60% of book on an equity basis. So if you even do a combination of the two companies, you see that in the cash flows that are much stronger than others. That's all driving that. And then you've got other things going forward, like the asset inflation, like the potential insurance recoveries, all of which are upside. There's no downside to any of those items. So yes, I think there's a good argument that it should trade at a significant premium to book. And look, I mean, we just authorized a new share purchase authorization for $500 million.
So we obviously believe that the stock remains attractive today.
Chris.
Thanks, Joe.
Thanks for taking my question. Chris Stathoulopoulos, Susquehanna. Great presentation, very compelling story here, particularly around why you don't see any structural oversupply happening here. But I'm curious, given all of that in the engine investment, are there any targets beyond the guidance that you've put out for this year that we could think about? If I look back at your investor days, I think with the exception of 2019, there was usually an out-year plus one or two in terms of an EPS guide and some other metrics. Curious if beyond what you've given us this year, which you have raised, are there targets that we can think about? Thanks.
Guidance. Yeah, so look, we haven't given long-term targets today. We've given pretty precise, I'd say, guidance for the year. I've explained kind of how we came about that for this year. I think going forward, maybe the best way to think about that guidance is, as Hillary asked, what type of ROEs will we do over time? And I think we're going to continue to be in that ballpark of the 800-1,200 above. Some years, it may depend. We may produce higher returns because we sell more assets and recycle those. But fundamentally, I think that's the best in terms of looking out long term and what's the future of the business. I think that's the best way to look at it rather than telling you, "Okay, here's a range for EPS for next year or the year beyond.
Chris, what I'd add there is it's such a long-cycle business. The leases are 12 years. The assets are 25 years. The debt is long term. When you look into the P&L, you can see, "Okay, I know the cash flows they've got for a long time. I know the debt costs because they want to match book. The tax bill is known. The maintenance bill, as you heard today, that's the key controllable cost. That's really well managed." So you can see a long way into the future. Now, it'll move around depending on in a given year, do we have other gains and stuff like that. But directionally over the long term, you should see the type of stability you've seen in the past because you're always thinking in the long term.
Go to Helane, then I'll come back to you, Jennifer.
Thanks very much. Helane Becker with TD Cowen. So Aengus, with acquisitions that you've done in the past, they've always been in the same industry. Have you thought about diversification in M&A? Would you consider helicopter or engine acquisitions of other platforms?
Look, M&A is always something we're looking at, of course. But right now, we believe that the cheapest assets we can buy are our own shares, our own platform, our own aircraft. On the engine front, it is a business, of course, that is one that is so linked to everything we do ourselves. And we have that unique position where we are a critical part of the after-sale service of the two largest engine manufacturers in the world. So that's a position we want to keep and maintain. But you can rest assured, as long as I'm the boss, we are not overpaying for something. We're just not doing it. I mean, I don't care if we grow the business or don't. I couldn't care less. I care about are we creating value or are we making money? I've shrank this company twice. We've grown it very aggressively.
I would say I am the most reluctant buyer of aircraft in the world.
Okay, thank you. Just for a follow-up, I don't necessarily disagree with your slide that talked about and your comments about airline traffic doubling every decade or so, decade and a half. But there's this huge move in Europe to push people away from, especially two and a half or less flights, into rail. So I don't know if you have a thought about how that impacts your narrow-body aircraft in that market, if at all, or how you think about growth in traffic given maybe what they think are environmental concerns.
Yeah, I mean, what you're referring to is this move to have less than two-hour flights go by rail. That will probably happen over time. In Europe, the rail system is very advanced, and it's shorter distances. But that being said, I mean, Europe is still a huge market. But that's being outweighed by what Peter said today. If you think that every time you get on a narrow-body airplane in India, 15, that's 30 or 40% of the people, or 30 or 40 people on every single flight are getting on it for the first time. So yeah, of course, look, Western Europe has that. But the domestic element in Western Europe on flights is not nearly as big, I mean, to be fair. And that's not something I'm worried about. Thank you, though.
Good afternoon. Jamie Baker with J.P. Morgan. I'm going to draw inspiration from two of my competitors here following up on Chris's question. So portfolio optimization is essentially the business that you are in, and you've articulated that very well today, the recycling of capital. But obviously, aircraft gains are a core tenet of that model. Have you considered guiding on that going forward, just given how critical it is to the overall story? I mean, you emphasized that the guidance omits any future sales. And obviously, we're going to get them. I guess philosophically, I'm just curious why you omit that from guidance?
I guess from my perspective, I never sell an airplane for a gain. When we decide to sell a plane, I want to get as much as I can for it. That's obvious. That's a given. But we never want the driver of a sale is not to generate a gain. And I never want short-term thinking like that to overtake this business. I never, ever want us to fall into the trap of a company that just keeps giving, giving, giving to what short-term investors may want. We're in this for the 25-year business. And we could, of course, drive gain on sale much higher next year. But then I'd go back to what I said in my presentation. I take that money, might buy back stock in an inferior company because I'm selling my best to keep short-term targets being met and exceeded.
We all know that has been the nemesis of great companies in the past. We have to stay focused on the long term. You can trust us that we'll make the right long-term portfolio decision to maximize the long-term value of this business, to make sure that it's the industry leader. And that's the key. And how we create that value as well as there's a lot goes into it in maintaining the quality of the asset every day throughout its lifecycle.
A follow-up just on the environmental question. Given that we're not even back to 2017 production rates, given that current engine technology isn't where it is or where it needs to be, is it inevitable that the broader aviation ecosystem and the ESG targets that they've set are going to have to be pushed out because the R&D is just not taking place? Should we start discounting some of those dates that your airline customers have made?
We have to. I made this point in Brussels when I was asked about it. I said, "The cost of what you're proposing is trillions. The airline industry, at best, is marginally profitable." Many politicians have no understanding of that. They think the airlines are big business with limitless amounts of capital. They don't. They barely get by. That's why they're great customers. They'll always need me. They never go away, and they're essential infrastructure. So I think either the taxpayer has to foot the bill, which isn't going to happen, or politicians have to become realistic. They'll only do that, of course, at the last minute when they know it's not possible. No one's going to stand up and give everyone the inconvenient truth, as Al Gore says. That's the reality out there.
If we're going to spend trillions of dollars, it's better spent on other industries where you make a bigger bang for your buck.
Yes, good morning or excuse me, good afternoon. Steve Trent from Citi. I echo the gentleman from Susquehanna. Great presentation. Two questions for me. One, I appreciate what you mentioned about returns over treasuries, the 8%-10%. Any color on terms of what that might look like from a product perspective? Are you aiming for that for helicopters, planes, engines, or is there some differentiation there?
Sure. Do you want to?
Well, I would say, of course, at different times, Stephen, you're right. It can vary in each business. But the metrics we showed were for the legacy AerCap business over a very long period of time, which is predominantly aircraft-focused. I would say it can bounce around. You'll probably see, to be fair, the helicopter business is doing very well at the moment today. It is a much smaller part of the business, so it's not going to move the needle overall. The engine business has done well. The engine business, though, is one where you gain to the long-term view because at the start, your lease yield on an engine is lower than an aircraft. However, the big difference is that an engine doesn't really depreciate that much. It doesn't have lavs, galleys, seats, airframes that depreciate. It gets overhauled every seven or eight years.
In fact, oftentimes, it can actually go up. So over the longer run is where the engine is probably a lower-risk business but takes longer to create that value. It can move around depending on the business.
Super. Really appreciate that. And just one quick follow-up. I was intrigued by what you said about slowing down purchases of current-generation planes when you have some expectation of new technology coming. And I know it's not exactly your wheelhouse, but any high-level view what you're telegraphing to the market on your purchase patterns today with respect to your expectations on new technology?
We're not averse to buying aircraft, but I am a very reluctant buyer of aircraft. The last time we placed a large order was March of 2020. That was the time to buy airplanes. There was no one within 1,000 miles of Toulouse or Seattle. And anyone who was was running faster the other direction. So buying aircraft over the last few years, when it's been a seller's market, is not a value-creative thing to do for shareholders. You are going to wait longer than ever to get the aircraft. You're going to be subject to higher escalation, i.e., manufacturer inflation, for a longer period of time than you ever have before in the history of the industry. I'm sure there'll be times to buy. But you heard it's smallest if you heard an example. Okay, the engine business is a different animal because of our positioning in it.
It's not just about the financing of the business. It's the industrial offering we give. But I think a good example of a mentality Anton referenced, GOL is in difficulty. That's when you go in. Everyone else is running for the hills. There were people down in São Paulo queuing up to do sale-leasebacks a couple of years ago. No one there when we went to create leverage, to create a position in the airline. So that's where you'll see us buy aircraft. I mean, but I don't care if we don't ever buy another airplane. Right now, the cheapest airplane is to buy are the shares in AerCap. But we know our price point where we believe value is. And if we can get to that price point with an OEM, by all means, we'll buy. But it's the final delivery price, what Peter spoke about.
Most people who buy airplanes do it once in a management cycle. They're not buying them every day. They make mistakes. They don't really understand all the issues about escalation of how an engine escalates differently than an airframe. I shouldn't be saying this to the competitors, but how to spec an airplane, provision an airplane for the future. It's like when you build your home. If you've built 100 houses, you kind of know what a house needs in the future. And it's no different in understanding that. And what you spend money on today can come back in spades later on. But it's understanding the market and the dynamics for that. So a lot of things play into it. But if the price is right, we'll do it. If not, I don't care. We're here for you, not the shareholders of Boeing and Airbus. I've said that before.
James?
Thank you very much. Thanks for the slides, and thanks for taking my questions. James Fotheringham from BMO Capital Markets. My first question is about shareholder capital return. And I understand how the equity multiple, arbitrage, as you call it, affects your preference for share repurchases today. But you have a champagne problem. Your price-to-book multiple keeps going up. So at what price-to-book multiple, relative to gain on sale margins, would share repurchases no longer be your preferred method by which to return capital to shareholders?
Well, we never disclose the targets, of course, that we're willing to buy it. Every time we authorize a new program, of course, there's price targets in there. But clearly, as you can see today, we've authorized another $500 million. We're trading above book value. And so we're very confident in that this is an extremely sound investment. And as you can see from the ROEs we generate, it's not just about book value. The platform adds value every day. And you can see, as Pete said, there are certain components that aren't even part of the book value today that we continue to monetize. So we don't give guidance out on where our limitation is.
But by the virtue of the fact that we announced a very significant buyback program today, and we've been buying back shares in this year as well when we've been trading above book, gives you an indication of how we feel about the future. Anything to add, Pete?
Yeah. I know I agree.
Fair enough. My second question is about credit, if I may. Sorry. One more. So Anton's slide showed days receivables, which varied, I think, from 2-20 days over your history, which is quite a lot of volatility. So within that range, what has been, in terms of a macroeconomic factor, the best, most reliable leading indicator of changes in days receivables?
Well, days receivable, for the most part of the last 15 years, is just a few days. It's never more than a few days, really. It might pop out the odd time during COVID with something like that. But for the most part, it's de minimis numbers. So credit costs have never been a driver of the financial returns of the company. We average about 1% or less than 1% of lease revenue over the last 17 years driven by credit cost. Why is that? If we set up an airline here in New York and we put in $100 million to start it up, we lease some airplanes, things go south, airline goes bust next year, the $100 million is gone. The lessor AerCap will have those aircraft gone. We'll have had security deposits upfront to cover 3 months of rent, probably had some reserves.
The airplane will be on lease somewhere else within three or four months. So that's why credit costs are never a big driver in the business. It's very rare that you would have a credit event, and that's going back over 17 years, that have a significant impact on any annual, even a quarterly result, to be candid, because of the fact that the asset is so mobile. In that airline example, we could never pick up the AOC, the Air Operator Certificate, and move from New York to Jakarta. But we'll have the airplanes there in a matter of a couple of months.
I would just add. I'd say the biggest factor in those movements over time was when we bought ILFC. And within six months, we reduced the receivable balance by two-thirds. So it was obviously three times higher before that and afterward. So it was really a management issue.
Doug Runte from Deutsche Bank. At a conference a number of years ago, pre-COVID, pre-GECAS acquisition, when you had about 1,000 airplanes, you were asked, at what point do you think you might have diseconomies of scale or the thing would simply become unmanageable? Perhaps coincidentally, you said 2,000 airplanes, which was AerCap plus GECAS. Now that you've operated at that scale before, pulling back a bit, how would you answer that question today? And is there a risk at a certain point that you just become the market portfolio of airplanes?
Doug, I remember that conversation well. And indeed, post the GECAS acquisition, we were over 2,000 aircraft that we owned and managed. We sold a lot of lower-value assets. We had a confiscation event in Russia that reduced the size too. So certainly, we can operate north of 2,000 aircraft if we wish to. We demonstrated that. For me, talked about M&A. When we purchased GECAS, the key was, and I said this about M&A, do we have the internal systems and capabilities to keep moving airplanes? Because the day after closing, we're responsible for delivering every aircraft, every engine, every day. And so we were delivering at that number. So I'd be very confident that you could add on a significant number of assets to where we are today.
Thank you. Mark Streeter, J.P. Morgan. Gus. I love the slide on lease extensions and how they moved up from the 50s% into the 70% range. But I want to make sure that's not to imply that, call it, 25% of lease expiries are actually getting extended, right? Because you have airline customers buying aircraft. You're selling aircraft, etc. We were talking to another lessor last week who basically said, honestly, nothing's transitioning because if it is at a transition, we're selling it. We're getting rid of it. We're not even paying those costs right now. That's how strong the market is. So if we were to look at what percentage of your expiries are actually transitioning, where you're taking those costs, what percentage is it? It must be very low, right?
It's extremely low because what you'll also have there, Jamie, is just some assets just come back because they're at the end of their useful life. We'll sell them off. We'll give them to the engine business or our parts business and move them on. But the vast majority, as you can see, are just being extended. What we take back, not a lot of it will be available for onward. At least some of it is, of course, just because of our sheer size. But on a percentage basis, low numbers.
It's at the lowest ever, you would say?
It is, yeah. By the same token, though, you can't. I mean, I've got a very expensive bunch of sales guys. They got to earn too. And they got to make sure they get out there and hustle and see if there's a better deal on the table.
Okay. That's good. And then, Pete, just one for you. You put the long-term leverage target up there of 2.7x. You're at 2.4 now. You seem very comfortable running at 2.4-2.5. I think everyone expects or should expect that you're going to get to those high Triple-B ratings with this current leverage target. But have you thought about, have you done an analysis about if you tightened up the 2.7 to maybe 2.6 or 2.5 and shooting for even a low A rating because cost of capital is so critically important as a finance company, right? You're going to get to that Triple- B plus. What about going to the next level? Yeah. So that's a good question, Mark. And I think it is important to point out that I talked about the positive outlooks. And those are not premised on any lower leverage target.
So every conversation we've ever had with the rating agencies has always been assuming our existing leverage target. So that is not something that we are looking to change. It is an interesting question to say, well, if you were to lower that, could that be helpful there? I guess, as we think about it, so it was very important to go from Triple- B minus to triple- B flat just because otherwise, you run the risk of being a crossover credit. You could be downgraded below investment grade. And you just don't want that. So I'd say that was the most important step. From Triple- B flat to Triple- B plus, also helpful, right?
But as you look out today, I mean, there's tremendous, as you know probably more than anyone, there's so much spread compression out there that you wonder, what is the marginal benefit of going from triple B plus to S ingle- A minus, right? Are you going to really get enough bang for your buck to justify the essentially lower return? Can you offset that through lower financing costs? Can you offset the lower ROE that you would otherwise be getting on those assets? So I think that's the consideration today. I mean, we're just focused on the triple B plus first. We can think about that down the road. Well, thanks, everybody, for joining us today. Hopefully, you found it all informative. If not, and there's further questions, please feel free to reach out to me directly.
Without further ado, I'd like to thank Gus and Pete and everyone for joining us. We look forward to speaking to you soon.