Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Air Lease Corporation Earnings Conference Call. My name is Jeff, and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Ryan McKenna, Head of Strategic Planning and Investor Relations; and you have a floor sir.

Thank you. Good afternoon, everyone and welcome to Air Lease Corporation’s third quarter 2012 earnings call. This is Ryan McKenna, Assistant Vice President, Strategic Planning and Investor Relations. I’m joined this afternoon by Steve Hazy, our Chairman and Chief Executive Officer; John Plueger, our President and Chief Operating Officer; and Greg Willis, our Senior Vice President and Chief Financial Officer. Earlier today, we published our third quarter results for fiscal year 2012. A copy of our earnings release is available on the Investor section of our website at www.airleasecorp.com. This conference call is being webcast and recorded today, Thursday, November 8, 2012. And the webcast will be available for replay on our website. At this time, all participants to this call are in listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session. Before we begin, please note that certain statements in this conference call, including answers to your questions are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including without limitation, statements regarding our future operations and performance, revenues, operating expenses, other income and expense, and stock-based compensation expense. These statements and any projections as to the company’s future performance represent management’s estimates of future results and speak only as of today, November 8, 2012. These estimates involve risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our filings with the Securities and Exchange Commission for a more detailed description of the risk factors that may affect our results. Air Lease Corporation assumes no obligation to update any forward-looking statements or information in light of new information or future events. In addition, certain financial measures we will use during this call, such as adjusted EBITDA and adjusted net income are non-GAAP…

Thanks Steve. During the third quarter, we took delivery of five aircraft from our new order pipeline, finishing the quarter with a 142 aircraft spread across the diverse and balanced operator base of 66 airline spread over a 37 countries. As mentioned during the prior earnings call, our order book is designed to match the industries demand for aircraft. Therefore Q2s large number of deliveries owing to the heightened demand from airlines in the Northern Hemisphere prior to the busy summer season were followed by a light Q3 deliveries as demand in mid summer trials off. Our average fleet age remains very low, 3.4 years at the end of the third quarter. Excluding future prop up transactions, we have the 11 aircraft in our pipeline delivering during the final period of 2012, and our team is focused on delivering those aircraft sufficiently. Let me we also note that a significant number of these 11 pipeline aircraft delivering in the fourth quarter or delivering in the back half of the quarter with several in December. Therefore, those aircraft will not have the full quarter impact on our revenues and profits in the fourth quarter. Over the past 18 months, ALC choose to place on new aircraft with its much lead time as possible. This strategy is proven very successful as we’ve walked in attractive lease rates on long-term contracts. This gives us the ability to pursue incremental growth transactions and seize upon well priced opportunities, which for the third quarter included the purchase and simultaneous sales of one Boeing 737-300 with a gain included in our other incomes line. Our lessees are performing well, and we’ve got no significant insurance about any customers in our fleet. That being said, Passaredo, our Brazilian regional airline, which leases three ATR 72-600 turboprop aircraft…

Thank you, John. During the quarter, our rental revenue nearly doubled from the prior year to $172.9 million, up $90.5 million recorded in the third quarter of 2011. Additionally, our overhaul revenue percentage remained relatively flat increasing 20 bps to 3.9% as compared to the third quarter of 2011. During the last week of the quarter, ALC lunched our second debt capital market transaction of the year, raising an additional $500 million in unsecured debt the markets have been very receptive to our strong credit metrics. This has allowed us to construct a debt portfolio with a low composite cost of funds of 3.97%, our weighted average life of 5.1 years, all being nearly 60% unsecured. This financing strategy provides our management team with the operational flexibility that translates into a competitive advantage for ALC in the marketplace. A key aspect of our financing strategy is that, we look to opportunistically cap the markets, maintaining high level of liquidity, while minimizing interest expense. This provides us with a financial strength to optimize the funding of order book and to capitalize on aircraft opportunities that are presented to us. We are able to minimize the cost of carry associated with a $500 million on senior notes by closely matching the timing of the issuance with the intended use of proceeds. This resulted in our pre-tax margin rising to 32.7% for the quarter. We continue to execute on our plan to modestly increase our debt to equity ratio, but not to exceed 2.5:1. This will enhance the return on equity for our shareholders, but with a dampening insight on pre-tax margin over the long run. In May of this year, we announced the closing of our unsecured $853 million revolving bank facility prior to LIBOR plus 175 with no LIBOR floor. Subsequently, we have added three additional banks on the same trends adding an incremental $190 million of capacity. The result is an upsize revolver, there is now 1.043 billion in total size. We are very appreciative of the continuing support from our banking group as we continue to grow the company. Our SG&A and stock-based compensation expense were both down from the prior quarter. While quarterly variations will persist, SG&A will continue to decline as a percent of total revenue over the long run. We will continue to build a conservative and robust balance sheet to allow us the financial flexibility to deal with dynamic market conditions. With that, I will now turn it back to Ryan.

Thanks, Greg. I’ll hand it over to moderator for the question-and-answer session

All right. Thank you. (Operator Instructions) Our first question comes from the line of John Godyn with Morgan Stanley. Please proceed. John D. Godyn – Morgan Stanley & Co. LLC: Hey, thanks a lot for taking my question. First, can you just talk about the process for identifying the outlook for additional growth transactions, you had that commentary about further M&A. When we think about growth transactions, should we be focused on sale leasebacks, or is there potential for sort of a large secondary market transaction to occur?

Hey, John, it’s John Plueger. Thanks for your question, it's a good one. John, we continue to look all the way across the spectrum. Just by the way of reminder during the second quarter, we bought three additional aircraft. And those were primarily on a sale leaseback basis, couple from other lessors. During this quarter, we did a simultaneous buy sale of a 777-300, but we made a profit, it wasn't a big one, but it was opportunistic. And we continue to work with our airline customers as we actually do see some more appetite for sale leaseback transactions, but we are also investigating a couple of portfolio sales of aircraft from other lessors, typically that happened during the fourth quarter as lessors tend to rebalance their different portfolios. They’re looking at the exposure to set up et cetera. But the Steve’s comments about M&A, we’re focused on our core growth, but we never discount and we always look at in our possibility of that presumptuous. So to the process is actually in multiprong, it is looking at every single segment and I think that this what we’ve done today on the sale-leaseback to small buy, so we did on 737 indicates the best of what is out there and we’re actually pretty optimistic about further incremental transactions above our pipeline. Steven F. Udvar-Házy: Just to amplify with John, this is Steve, I think we’ve been more focused on asset acquisitions rather than acquiring organization, because we already have the core talent here. We had the infrastructure to grow our fleet and so our focus is on airplanes or clusters of airplanes rather than corporate entity. John D. Godyn – Morgan Stanley & Co. LLC: Okay, that’s very helpful. And just one more question sometimes people present the argument that…

Yeah, let me remind you that this management team has been buying new aircraft under larger-scale purchase agreements with the manufacturers for more than 20 years, almost 25 years. So it’s actually been quite a long and quite a routine process for it, and I think we know how to optimize our position and our pricing on these purchase agreements. John D. Godyn – Morgan Stanley & Co. LLC: Okay, great. Thanks a lot guys.

Just to comment overall, if you look at our lease rental revenue as a percentage of our average assets in any quarter, it’s probably superior to get lessors, so we could not achieve that unless our acquisition costs were attractive.

Our next question comes from the line of Michael Linenberg with Deutsche Bank. Please proceed. Richa Talwar – Deutsche Bank Securities, Inc.: Hi, everyone. This is actually Richa Talwar filling in for Mike. Thanks for the opportunity to ask a question. So first, I just wanted to follow up Steve, on your comments regarding the A319 and A320 stabilization of lease rates. I wanted to know if you could flush out maybe a little bit more detail on that, what you think might be causing that stabilization, and then in the same context, if you could specifically comment on lease rates for other aircraft if you’ve noticed any material changes either negative or positive in the market? Thanks.

,: So that having been said, we have always predicted that as the order pipeline gets delivered by lessors on an ongoing basis, the supply demand balance will stabilize over time. And we actually think that we are seeing some evidence of that. And let me repeat that, we have not been in the A320 market ourselves for current generation placements, because we are done. What we are commenting on is transactions that we have seen and witnessed in the marketplace that are our new and younger A320 aircraft that we see some evidence of those lease rates now are stabilizing. We don’t see any further decline at this point in time.

But that vis-à-vis third parties, not our own.

Not our own.

Our last A320 delivers next year and that aircraft was already placed more than a year ago. And virtually all of our new A320s and A321s that we’ve leased out in the last few years are long-term 8, 10, 12-year leases. So short-term aberrations and lease rates on A320s has no effect on our financial performance, because our lease rates already locked in on a long-term basis. Richa Talwar – Deutsche Bank Securities, Inc.: And anything as usual or you can comment on to other aircraft? Steven F. Udvar-Házy: No, the 737-800 continues to be a very strong player. I think in many, many surveys, the airline leasing community and the financial community has voted the 737-800 is one of the strongest assets. We’ve seen very strong demand for our A330, 777. All of our A330s are placed. We currently have only one 777 that’s unplaced for delivery in 2015. So I think on a widebody front, we’re in good shape. On the 737-800, we’re seeing strong momentum. And again as John as indicated, we’re fully placed in 2012, 2013, 2014 and we’re now working on the back end of 2015 and 2016. So I think among all the lessors, we’re the best position in terms at a ratio of aircraft that have already been placed over the next 36 months. Richa Talwar – Deutsche Bank Securities, Inc.: Okay, great. That’s it from me. Thank you. Steven F. Udvar-Házy: You’re welcome.

Our next question comes from the line of Jamie Baker with JPMorgan. Please proceed. Jamie Baker – JPMorgan: Hey, good afternoon everybody. Steve, any thoughts on the 787-10 authority offer and whether you might be interested in serving as to launch customers? Steven F. Udvar-Házy: Ryan McKenna’s telephone number is 80206378821. The only thing I can say is that our team including myself and John Plueger and our purchasing management team, we were up in Seattle last week. We were up there again yesterday. We’re working very closely with Boeing on the 787 family evolution and definition. And I think the commercial airplane group in Seattle is working closely with Chicago to get that program kicked off in a very near future. I can’t give you an exact date, because that’s the Board decision… Jamie Baker – JPMorgan: Okay. Steven F. Udvar-Házy: …at the corporate level, but I would say from all of our observations, the 787-10 will be launched or will be offerable to customer before any new derivatives of the 777, 787 coming first.

I would add that based on we’ve seen today that 787-10 looks encouraging. Jamie Baker – JPMorgan: Okay. Steven F. Udvar-Házy: The airplane was really good. We’re talking Boeing about increasing the range a little more tweaking the pay load characteristic to get it out to about 7,000 nautical miles. And with the additional 40 to 50 seat on that aircraft and the added cargo capacity, we think that -10 as we find by some of our latest inputs is going to be a really powerful airplane. Jamie Baker – JPMorgan: Okay, excellent color. In light of the gyrations at Iberia and Vueling, can you remind us if you have any exposure there?

We currently have a couple of A320s at Vueling. They have been performing very well under our leases. As you know they have a significantly lower cost structure in Iberia. Iberia has been having labor issues as they’ve always had and I think that was partly by their intend to start-up a company called Iberia Express, that has not gone well with labor, particularly in the pilots. So I think Vueling will increasingly take on more and more of the both domestic Spain and intra-European network, because they can do it in much lower unit cost in Iberia Jamie Baker – JPMorgan: And lastly, both you and John talked about the Chinese replacement cycle in your comments, I’ve recalled last handful of leases that you’ve done there have been for durations that are significantly longer than your current portfolio or average, should be assume that trend continues and is that specific to China?

Yeah, I mean it’s strongest in China, all those leases were 12 years Jamie, and that is longer than average, but that’s also what is going to help continue to drive our average remaining lease term across the fleet, to lengthen over time. It's a function of supply and demand. We have the right aircraft at the right time. We hit the right to profiles of Air China, China Southern, and China Eastern, all of these aircrafts that we placed and across those three airlines, which is the largest three in China, we placed 53 single-aisle aircraft. And every single one of those is replacing 737-300s or 400s or the first generation earliest A320s. And we see that continuing. I mean, these airlines in China have now bought a lot of Western aircraft over the last 15 to 20 years and they are in a replacement cycle. So that's why we say that we think that, it’s really going to offset whatever macroeconomic numbers are showing up and being put it in The Wall Street Journal and other financial publications, that combined with a huge infrastructure buildup, they’ve got more airports, they are building there and anywhere else on the global. And the ATC upgrade modernization. So, but generally speaking over and China, yes, we have also lengthened our typical lease durations on single-aisle aircraft more towards the 9, 10, 11 and 12-year range.

And just to echo what John said, Jamie, we’re seeing at same sort of halo effect in the region surrounding China whether it’s Korea, Japan, Southeast Asia, Vietnam, Indonesia, Thailand, we are seeing the same sort of tendencies, where a lot of the aircraft that were built in the late 80s, early 90s are not coming up for replacement, and I think that trend will continue, and we feel pretty good about it. We made a lot of trips out to Asia in last few months and notwithstanding the slower rate of growth in the region both economically and in travel and cargo. We’re seeing a giant replacement market. That will actually build momentum as we go into the later part of this decade. Jamie Baker – JPMorgan: Got it. Thanks for taking my question gentlemen. Steven F. Udvar-Házy: Okay, thanks Jamie. Good to hear from you.

(Operator Instructions) Our next question comes from the line of Scott Valentin with FBR Capital Markets. Please proceed. Scott Valentin – FBR Capital Markets: Good afternoon. Thanks for taking my question. Just with regard to the watch list that has been in a couple comments about going into the cash flow period for airline travel and there’s been a couple of airlines having some problems. Just wondering if you see any changes in the watch list on a seasonal basis maybe worse than a last year?

Our watch list or in general? Scott Valentin – FBR Capital Markets: Your watch list. Steven F. Udvar-Házy: No.

No, not really. No, we look very careful and very focused on our placements. And as I said in my remarks, we have no significant concerns about anybody. Again Passaredo with three to eight years, they have just 600, very small capital dollars with us. But nevertheless, the type of its called judicial recuperation, they’re doing down there, allows them to pay their key suppliers on ongoing basis. Without our aircraft, they can’t fly. They don’t have an operation. They can’t pay other creditors. So that’s a pretty small capital dollar for us. And as a remainder, we did pull out our single A320 with Kingfisher long time ago, in the May time period. We did not get stuck there like other people did. But the real answer is no. I mean I think the whole purposes Steve’s comment, and the reason why emphasize Europe is actually for the summer period in the beginning of the year. There was always gloom and doom about people were afraid, they were going to have job, they were going to travel during this summer, load factors going to plumb and in fact they didn’t. Load factors went up strongly and nicely. And there’s been a lot of capacity rationalization. So we continue to get lease demand from Europe. We have a team, actually two teams over there, right now, talking about some additional transaction. So actually the industry was going through some yield compression and typically you do see that especially going into the fourth quarter. The overall industry is actually held up better than I think what we all thought could have been in the first quarter of 2012. Steven F. Udvar-Házy: Yeah, John and I were in Europe last week. We spent time with KLM and British Airways, Air France, Lufthansa. Those airlines have used a very disciplined approach on capacity control. There is massive cost reduction, initiatives going on. And we think that lot of those customers of ours are pretty well positioned to get through the flow season of the winter and are well prepared to go to 2013. Scott Valentin – FBR Capital Markets: Okay. And just a follow-up to the earlier comment, you mentioned that the Japanese banks buying into the leasing sector. I'm just wondering, obviously you have a lot of different competitors in the space, but is there any concern that with the lower cost of capital, some of your new competitors have an advantage, maybe bring in some price competition?

We haven't seen any competitive advantage from the Japanese lessors. We haven’t seen that translate it to any kind of a financial or lease flexibility, or rate advantage to-date.

And let's not forget, Scott, it takes more than money. Scott Valentin – FBR Capital Markets: Right. (Inaudible) other guys low cost of capital as well. Okay, thanks very much.

Okay.

Our next question comes from the line of Arren Cyganovich with Evercore Partners. Please proceed. Arren Cyganovich – Evercore Partners (Securities): Thank you. Just a question on portfolio management, would you expect to repair back some of the planes or so to rotate out of some of your aircraft maybe starting in 2013 as you are getting, I guess, you are not too close to your leverage target, but I think in 2013 you are probably sort to get close to?

: So we do have some aircraft despite just a little over three-year average fleet aircraft that are in that space. So the bottom like is in 2013 if we see a good opportunity to sell aircraft that’s going to be profitable for us. And we always balance what is the best deal, is it better to run a present value for us to keep it and enjoy the remaining lease stream and profitability over time on aircraft our opportunity to sell how much do we make keeping on lease versus fell, you could see some potential sales from our fleet in 2013 to carryout that part of our business model. But obviously we are primarily seeing and we are primarily working on building our fleet. It more depends upon on the opportunities that we see and if we see a good transactional basis, we’ll seize upon it, but there is nothing specific I can comment you over and above that. Arren Cyganovich – Evercore Partners (Securities): Okay, thanks. And then lastly, is there any update on the ILS [CAG] lawsuit any timing or anything you can add with color with respect to that? Steven F. Udvar-Házy: There is no new development. There has been no new filings, the two legal size are in communication. But there is nothing at this point to report. And our official position remains as we published back in April that we don’t believe that suite has merit. We had strong defenses and management is not really devolving a lot of resources to that project right now. Arren Cyganovich – Evercore Partners (Securities): All right, thank you very much. Steven F. Udvar-Házy: Okay.

Our next question comes from the line of Glenn Engel with Bank of America/Merrill Lynch. Please proceed. Glenn D. Engel – Bank of America/Merrill Lynch: Good afternoon. Two questions, one you don’t have this issue as much as others, but you do have planes coming off lease over the next year. Can you talk about the few planes you’ve had come off lease? How to extend to release and how the rates have held up and what 2013 looks like? Steven F. Udvar-Házy: Yeah, we had two A320s that came off lease this year. One was a repo from Kingfisher, which will lease to an airline in Eastern Europe. We also had an A320 coming off to scheduled lease from Aer Lingus, which we lease to a scheduled airline in Central Asia. We only have one A319 that will come off lease next year, and we had one A320 coming off lease from a Chinese airline, which we extended for three more years. We do not have any widebody aircraft coming off lease next year. We do have only one 737, which is a 737-700 that scheduled to come off lease in November of 2013. We are discussing the extension of that lease or alternatively we’re talking about two different airlines about taking over that aircraft. So basically it’s minimal lease expiries in 2013. Glenn D. Engel – Bank of America/Merrill Lynch: And the one that have expired or the Kingfisher one, what percentage rate reduction do you see in 10%, 20%? Steven F. Udvar-Házy: The way we look at those and only think I can comment, we don’t comment on lease rates in particular. But I can just tell you that the lease rates we have gotten on the following aircraft have been pretty close in terms of the rate of the function of our net book value, pretty close when we bought them. Glenn D. Engel – Bank of America/Merrill Lynch: Second question is one financing. Looking at your I think Europe 54% fixed rate, I guess go through again what’s the ideal fixed rate and when you’re fixed rate, what’s the ideal term of that fixed rate?

Hi, Glenn, this is Greg. Our fixed floating rate target is 7030 and we’re going to see that over time. We look to match the weighted-average life for debt with the weighted-average life for leases. The weighted-average life of our debt as I mentioned in my remarks is 5.1 years. The weighted-average life of our leases is 7 years. So as we’ll continue to manage that fixed floating ratio by layering on longer-term fixed rate paper, to bring up that fixed floating ratio as well as to lengthen out the weighted-average situation of our portfolio. Glenn D. Engel – Bank of America/Merrill Lynch: So the average length of the fixed rate that is 5.1 years, or just the average length of your debt in general is 5.1 years?

All of our debt, all.

That includes unsecured bonds, it includes institutional, private placements, and it includes term loans that we have. Glenn D. Engel – Bank of America/Merrill Lynch: I mean you are locking in fixed debt, are you trying to do it for three years, five years, ten years, what’s the right number to pick?

Well, for example, last year we did a five-year billion-dollar bond. We did a seven-year facility. The previous November, we did another seven-year convertible bond. So it’s a matrix on maturities that goes anywhere from, say, three to seven years. But as Greg indicated, our target now is to lengthen maturities, taking advantage of the low interest rates in 2013. Glenn D. Engel – Bank of America/Merrill Lynch: Thank you very much.

Ladies and gentlemen, since there are no further questions in queue, I’d now like to turn the call over to Mr. Ryan McKenna for closing remarks.

That concludes our call for today. Thank you all for your participation. We’ll talk you in few months.