Good day, ladies and gentlemen, and welcome to the Air Lease Corporation’s Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instruction will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ryan McKenna, Vice President and Head of Strategic Planning. Please begin.

Good afternoon, everyone, and welcome to Air Lease Corporation’s second quarter 2015 earnings call. This is Ryan McKenna. And 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 second quarter 2015 results. A copy of our earnings release is available on the Investors section of our website at www.airleasecorp.com. This conference call is being webcast and recorded today, Thursday, August 6, 2015, 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 certain 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, August 6, 2015. 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 pretax income and adjusted diluted earnings per share, are non-GAAP measures and have been adjusted to exclude charges relating to litigation settlement. A description of our reasons for utilizing these non-GAAP measures, as well as our definition of them and the reconciliation to corresponding GAAP measures can be found in the earnings release and 10-Q we issued today. This release can be found in both the investors and press section of our website at www.airleasecorp.com. Unauthorized recording of this conference call is not permitted. I would now like to turn the call over to our Chairman and Chief Executive Officer, Steve Hazy.

Thanks, Ryan. Good afternoon all of you and thank you for joining us today. I’m pleased to report that for the second quarter of 2015 Air Lease grew our top line revenues to $305 million versus $256 million in 2014, that represents an increase of 18.9%. Our income before taxes increased to $118 million from $96 million in Q2 of 2014 representing a growth in our earnings of 23.5%. Additionally, our diluted EPS grew to $0.70 per share, compared to $0.58 per share in the second quarter of 2014, which is an increase of 20.7%. And finally, we delivered the highest pretax profit margin in the history of ALC at 39%. Our financial returns and metrics were excellent across the board and indicate the strength of our core leasing business, the inherent value of our aircraft in order book and our investment grade capital structure and very conservative leverage. Globally, passenger traffic continues to grow ahead of our expectations and we see steady strong demand for our aircraft. We have been reporting this for many quarters now but it is notable that passenger traffic growth worldwide remains strong with an increase of 6.3% as published today by IATA through June of this year. We global system wide low factored averaging 79.4%. Passengers keep flying in record numbers and this represents one of the strongest indicators of demand for aircraft. These statistics are overwhelmingly positive for the help of the industry and overall global airline profitability to continue to along very nicely. On that note, let me comment on the Chinese economy. We cannot be more clear and steady, that our airline customers in China are performing extremely well and we continue to see healthy demand for aircrafts in this market. Just as our business performed at a very high levels,…

Thanks, Steve. Our core leasing operations remain strong and our customers are performing well. We set a number of company record this quarter. So in addition to record quarterly profitability in pre-tax margin, we took delivery of 18 new aircrafts from an order book representing over $1.3 billion in CapEx, our largest quarter deliveries and CapEx since inception. In addition, we sold 14 aircrafts from our operating recent portfolio generating $457 million in sales proceeds, our larger quarter of sales since inception. And for the first time, we transferred four aircrafts into held for sale category, as we described in note 10, our financial statements. These aircraft have a carrying value on our balance sheet of $145.8 million, now included under other assets on our balance sheet and we have a specific buyer under contract for these aircrafts, which we expect will close by the end of the year. The management side of our business continues to increase nicely. During the quarter, we increased our managed fleet by 26% from 19 aircraft to 24 aircraft. Record capital one continues to ramp up and we now have more than $500 million of aircraft assets in that fund. Our marketing team is using this pool of flexible capital, as another tool to help us out compete in the marketplace. As we fill up that $2 billion fund, we will look to grow our management business even further with subsequent funds at the appropriate time. As we look forward to the back half of 2015, the aircraft delivery quantities will be significantly reduced from the peak we’ve just seen in Q2. Now, let me be clear, we design our order book to have elevated delivery numbers in Q2, specifically to maximize value in the marketplace for pre-summer travel season deliveries. As a result,…

Thanks, John. As Steve mentioned, we increased our top line revenues for the second quarter of 2015 by 18.9% to $305 million versus 2014. Our income before taxes increased to $118 million with a record high pretax margin of 39%, resulting in diluted earnings per share of $0.70. The second quarter was our largest quarter on record in terms of capital expenditure and aircraft sales. Looking forward to the third quarter, we have ten new aircrafts schedule to deliver representing $407 million in capital expenditures. I want to remind everyone that our rental revenues are a function of the size of our fleet. This quarter maintenance reserves – maintenance revenues only comprise 1.1% of rental revenue, which consistent with our conservative accounting policies. As you forecast, the remainder of 2015 in your financial models, you’ll need to start with the ending net book value of asset and apply a lease rate factor to properly forecast our results for the second half of the year. We ended the second quarter at our target debt equity ratio of 2.5 to 1 and there is no change in our long-term target debt equity ratio of 2.5 to 1. On the financing side of the business, we close an amendment to our unsecured revolving credit facility. We increased the size of the facility to $2.7 billion and extended the final maturity to 2019 and maintained pricing at LIBOR plus 125 basis points with no LIBOR for. This facility provides us with a substantial amount of financial flexibility. We ended the quarter with a strong liquidity balance of $2.5 billion. I'm very pleased to report that our composite cost of fund stick down slightly to 3.6%. Our fixed rate debt was 77%, which demonstrates the stability and predictability of our funding structure. As we execute our financing strategy, our investment grade credit metrics have continued to improve. This concludes my review of the result and financing activities of the company and I’ll now turn it back to Ryan.

Thanks, Greg. That concludes management’s remarks, for the question-and-answer session, each participants will be allowed one question and one follow-up. Now, I’d like to hand the call back over to the operator. Operator?

Thank you. [Operator Instructions] The first question is from Scott Valentin of FBR and Company. Your line is open.

Thanks. Good afternoon and thanks for taking my question. Just with regard to, I the – increase regarding lease extensions from some of the airlines. Just wondering, do you foresee that having an impact on demand or lease rates for the NEO/MAX given – as you look the airlines are going to stay with all the aircraft’s little bit longer?

No. Not at all, in fact I would say if the office that we continue to see the same or increased level demand for NEOs and MAXs. We’ve been asking the manufactures for additional deliver, positions to support those – support that demands Scott, I’m already just saying and if you look forward I believe we disclose our forward lease expires. We actually have a pretty small number of lease expertise going forward, over marketing. But my point to the comment is that we are getting increase from the airlines. Bit what I would say, it’s is a large rush, I would say it’s just an increased level. But it just tend to support the notion that whether or we have these out there, since a pretty good, or in a pretty position for extensions at reasonable rates.

Actually Scott, we’ve got some transactions where – airlines has airplanes are released from us, they’re extending those leases and they are coupling with the lease of incremental A321neo, 737 MAX 8 and in some cases even wide body aircraft.

Okay, thanks. That’s helpful and then one follow-up question. Your coverage going pretty well, certainly you can man there is still very strong, just what we are hear in the media. But just wondering other emerging markets where the exposures just what you’re seeing there when you talk to airlines, any concerns with regard to demand there or watch list?

Not really. I mean we’re still seeing very strong growth in a lot of areas. I would say outside of Brazil, Latin America is still growing significantly, many of those countries are grow in double-digit rate. Eastern Europe right now is doing really, really well. We’re seeing a lot of traffic flows between Eastern and Western Europe and also from Eastern Europe, down to Turkey and Middle East. Asia is still strong, North Asia is strong, Southeast Asia is strong, New Zealand and Australia, with the lower exchange rates are attracting record number of tourists. So we’re not really seeing any – really bad spots anywhere. Obviously we’re watching the Russian situation, Ukraine, that’s pretty much.

Yes. Scott our focus as I mentioned earlier, as we’re actually looking to add more positions to add more growth.

What we are finding is we did not order enough airplanes which is I think by design, we on the orders and now we’re working with Airbus and Boeing to accelerate some of the position into earlier slot. And this is very…

Okay.

Yes. For example, we just picked up, we just announced an incremental new A330 placement with line airline that wasn’t on our – in our order pipeline three, four months ago. But this opportunity came to us that just one example, we announced that I don’t know, couple of weeks ago.

Yes. They are accelerating the retirement of their oldest 767. So it just a natural sort of replacement cycle that continues to be robust.

Okay. Thank you.

You’re welcome.

Thank you. The next question is from Vincent Caintic of Macquarie. Your line is open.

Hey, thanks very much guys. So great volume of sales this quarter and just to want to get a sense of generally how much demand there is for sales and understanding that the second half is going to be slower for sales, but how do you think about say monetizing the value of your current fleet versus the ongoing be [indiscernible] income. Thanks.

Well, that’s an analysis that we sort of constantly do Vincent. And every sale we do when they could determination of sales proceeds versus its forward earning power. So the bottom line is there is a strong demand. It’s more – more up to up in our management team to decide how much we want to sell. I think the results today year-to-date on our sales and what we actually did in the fourth quarter of last year just continue to show the strength in market as its more up to us the how much we want to monetize that. Now, as suppose to looking at our forward earning. So I can't really give you – I can't really give you a prediction of our forward forecast except to say that their market for our fleet in the aircraft in our fleet continues to be strong and we continue to have multiple approaches. We are focusing on adding aircraft to black board on the buy side sourcing those from third parties incrementally more now. But its more for us to manage I mean the increase just keep coming in the door. So it’s more on us just to how much we want to sale and that’s an exercise to go through quite a bit. And so we're quite happy with what we think the value is of those aircraft on our books and our ability to obtain value and gains on those.

Yes. We think our portfolio is significantly undervalued. In other words the liquid value of those assets substantially exceeds our carrying cost as demonstrated by the sale. And we could essentially sell a lot more aircraft in the second half. But we are trying to grow the business, grow the portfolio, grow our lease revenues. So we are purposefully sort of holding back selling a lot of the assets that we are built back in 2008, 2009, 2010, where we are seeing demand, we have buyers that like buy those aircraft, but these airplanes are leases that to the five, six, seven, eight years to go. On the leases and we are generating very significant earnings on those cash flow. So every day, we are doing this trade off analysis, should we keep the airplanes should we sell it, and we judiciously move forward on a plane back to [indiscernible]

Great, thank you. And on a related note, you touched on Blackbird and that the $2 billion filling up quickly, just want to get a sense of how much demand might be out there for doing more of those?

Well, I’d say we continue to source in the market place where about on track. We are looking forward to building out that $2 billion, but I think we are pursuance to see this comments about from own fleet, we are looking at sourcing opportunities more outside of our flight for Blackbird Capital in next several quarters and that’s all in process. And I think it will make a normal course, but we are – we do see overall the ability to get there on the $2 billion. And so what’s kind of now sort of think about whether or not we should do Blackbird two or three and that’s always on the radar.

Got it, thanks very much.

We’ve already identified the numbers of aircrafts from external sources, from manufactures and also airlines sale leaseback, combination of both new and these aircrafts there are good candidates for Blackbird and we are evaluating those and the plan as John said is the key adding into that portfolio and build it up to $2 billion by the end of 2016.

Great color. Thanks so much guys.

Thank you. The next question is from the line of Nathan Hong with Morgan Stanley. Your line is open.

Hi, thanks for taking the question. Can I just want to follow-up on the 2017 placement, it seems like you’re making good progress, but can you give us an update on how placement specifically are going. And I know in the past air lease noted that they can holding out from actually placing aircrafts too early given that I guess the robust of environment. I’m wondering how is to quantify to upside or you guess risky word of waiting maybe six to twelve months versus placing those aircraft today.

Okay. Let me explained that. First of all, it’s important to understand for marketplace that we are very, very conservative in the threshold that we used to define what a lease placement is. So for example, when we talk about 2017, we are only talking abut aircraft that we have firm leases already signed. However, there are additional aircrafts that we’ve already placed, while we have binding letters of intent and deposits. But we do not list those as firm lease placements until the actual leases are signed.

Okay. And I guess just a follow-up on your growth strategy. I know the order book is primary focus. But given the strong demand in terms of [indiscernible] doesn’t seem like there is any really – real worry in placing those when the times comes. And you also didn’t’ make that note that you guys have on the order aircraft. But I’m curious to see your thoughts on why there is as much of a shift and focused to doing more sale leaseback opportunities can the circumstance?

We are looking at sale leaseback opportunity, but what we are finding is that the lease yield in other words the percentage of the rental came in, as a percentage of the aircraft cost tends to be lower on a lot of these sale leaseback, particularly those that are competed to an RFP process. As compared to our leases, our own portfolio retracts. From time to time, we do come across situations where we can do a sale leaseback at profitable levels. But most of the time, we signed at the lease yields do not measure up to our sort of performance standards.

It speaks to the core strategy may that we got to have strategic placements that we work with airlines to put together, as supposed to the spot market business that looking into those lot of add them is available. But there is no change to the core, working with airlines to really work under long-term fleet planning and that’s done through the order book.

It’s helpful, thank you.

Now Blackbird, it’s a different situation, if we can find third party airline sale leasebacks that system portfolio of Blackbird, because it is a different structure than their lease and it’s utilizing secured financing. We will certainly entertain those and hopefully, a portion of that $2 billion Blackbird portfolio will ultimately be comprised of some sale leaseback.

That’s helpful. Thank you.

Thank you. The next question is from Jason Arnold of RBC Capital Markets. Your line is open.

Hi, good afternoon, guys. Just on continuing on the comment there on hoping we have more plans I guess, could you comment on whether or not you feel there’s going to be some bigger airline order cancellations or dropping around the books there that might creates an opportunity for you opportunistically jump in and add some additional aircraft.

Well, I mean, I think the way to answer this Jason is, yes, but that is kind of always fairly the case. I mean, we if you look back over across all industry conditions in a long time, things are always being doubled in the pipeline of the manufacturers and we always act upon that. But I think the answer is yes, I think we will have opportunities of aircraft that some of the manufacturer have pushed out, for example American pushed out some deliveries, a few other carriers have change in deliveries around. Now whether that represents the 10 airplanes for us, 20 airplanes for us or two, it’s hard to say. But I’m pretty confident, and I'm saying there will be some work for opportunities, I just mentioned the Hawaiian A330 single unit. But if we can grave a block of 10 or 15 at good pricing, of course we will. Now also please understand that the manufacturers have overbooked particularly on the single aisle 737, A320, A321 78 overbooked. In other words, they’ve taken more orders in 2015, 2016, 2017 than the actual production rates. And so when an airline differed or maybe we change their order book, then first have to make sure that they can build enough airplanes to satisfy the actual orders they have, that will result in deliveries. And only when that satisfied, can lead and, move-in, and pickup incremental capacity. And campaigns are ongoing Jason, globally, such that the manufacturer book Boeing and Airbus, if they are in the middle of the campaign and I need some key positions, and somebody differed us out, they’re going to grab that for their best interest. So we fortunately or involved specifically in many of those campaigns. We can benefit by that fine, but to Steve’s point, they’ve got all their own book of deliveries A, and B, there is always campaigns ongoing that deferrals and cancellations actually help their competitive position.

Super, thanks. And then just one follow-up, I think one of your peers was commenting recently in opening up of Iran is an opportunity for less orders and maybe during perhaps even given Cuba in spite of being a lot smaller into the mix as well. What are your thoughts here?

Well, we’re waiting, what happens in congress and we’re waiting for ratification of these understanding. We find, understand all of the side letters that a company these arrangements some of which are currently filled, not available to the public. And we will see what opportunities may arrive, but currently we are more of a spectator in the process. There is no question for handful, but there is so many political regulatory our financial issues that need to be tackle before we can really entertaining some serious over there.

It makes sense. Thanks so much for the color guys.

Thank you. And the next question is from Michael Linenberg of Deutsche Bank. Your line is open.

Yes, hey, good afternoon, everyone. Just a couple of questions here.

Hi, Michael.

Hey, hi, Steve. When I look at your performance, your financials and your track record, I mean it’s the impressive over the past three years, and yes, when I look at sort of where the stock price was at the year stock and where it is today. Is there a point of where the – at what point that the stock have to get or maybe get there or maybe it makes, its more accretive to buy back stock then to invest in aircraft. Or are they opportunities in aircraft that much superior, that much more accretive or is it concerns about putting the investment grade, credit rating at jeopardy. What's your thinking on that, how do you think about that at this juncture?

Look, I think you have to mail on the one point you at least still believe that we can generate more value to our shareholders in greater returns of the long-term by investing in aircraft. That’s the bottom line. And well, certainly the sector has been under pressure for various seasons over the course of the summer, et cetera.

Okay.

Overtime, the various attitude opened your comment or remark like consistent oriented performance we believe overtime wins out and the core cases of our business and the business model that we have in the high pre-tax margins we have. I think yield in a good return on equity for shareholders. We just don’t see any change in that mix going forward. Mike, the other issue that perhaps it falls in that magnifying sufficiently as, I think you are the analyst and the street look at our cash earnings [indiscernible] after tax earnings. This company is not paying taxes. So for example in this quarter, our real earnings were more like $1.10 per share, north of a $1.10 per share on a cash basis. There is no, it’s a tax provision, it’s a accounting entry, there is no tax paid. So when here also the company domiciled in Ireland that saying at 12% to 15% range, it looks like cosmetically that their earnings per share of maybe higher of just based on the fact that there is a different tax provision.

Yes.

I think the marketplace needs to look at early at the zero taxpayer so long as we keep buying more new airplanes, there is no tax liability. So in effect, when people do our EPS calculations and what our ratios are, you really need to look at pretax. Because it’s an air [ph] tax number…

Yes.

…it’s simply a statistics [ph] number. And a real number has to be the cash earnings of the company. I mean, Mike, you see our liquidity that we’ve talked about and I think we believe it’s true today. I haven’t done the sum, but I believe it’s true, we’ve been stating – we are the only company I think that has firmly contracted cash flows that exceed our debt balance. So I think the bottom-line is this. We need to highlight, and probably as to Steve’s point, do a better job of educating investors on a tremendous cash power of our business.

Yes, I agree. The owners are not so well. Now thanks for that, just a quick second one, just with the XM going away for the time being and I guess there is a real concern that XM could disappear, lose all funding September 30. Have you had any customers or airlines that you worked with that have historically done some financing where they’ve come to you and said, we want to do more business because the XM situation already seen more business or is it too early?

Well, I can give you an actual example because we’re going to be making a release very shortly on this. We are just finalizing a transaction with a large foreign airline that originally set forth a policy that they’re going to modernize their fleet and they will lease 40% of their fleet and buy 60% of fleet. And these include single aisle aircraft in the 150 to 200 seat range. And they also include wide body aircraft in the 300 seat category. So the combination of fleet monetization that involves both single aisle and twin aisle aircrafts. Because of this XM uncertainty, the airline has changed their tactics and to a 40/60 lease and buy, in other words they transposed the majority of the aircraft they will acquire will be leased 60% and 40% they will purchase and they will rely primarily on commercial bank financing and internally generated funds to buy that 40%. Whereas six months ago, the game plan was to buy 60% and lease 40% and we are doing a transaction that actually fills that differential.

That’s great insight, Steve. Really appreciate that. Thank you.

Thank you. The next question is from Moshe Orenbuch of Credit Suisse. Your line is open.

Great, thanks. Over the last few months we’ve seen a couple of instances where Asian leasing companies have made investments in publicly traded less source. And in each of those two cases, I think they’ve done some incremental business because of it. If you kind of thought about whether there are opportunities from that standpoint to – in someway kind of link up and create a greater kind of business opportunity?

When you talk about Asia it sound like Chinese.

Well, one of them was Chinese, one of them was Japanese, I guess if the two that we’re seeing.

Yes. We’ve not seen any airlines leasing activity in either one of those areas where they’re linked it some ownership of a locally based entity. I think we have placed some more aircraft in China, for example, in the last three years in any other Western [indiscernible]. So we’ve not see any linkage, we do see Asian enterprises flexible at source, tend to favorite dollar-based assets and the new aircraft has a good dollar-based assets, that generates dollar-based revenues. So I think that’s a just natural outcome of their investment strategy. But we’re not seeing the balance shift from Western [indiscernible].

Got it. On a separate – Greg, you kind of alluded to the cost of funds coming down a little bit. Are there other opportunities from your debt stack to kind of make further improvements in the balance of the year?

No. Absolutely in January of 2015 we have $500 million – excuse me, 2016. Q1 2015 we have $500 million volume coming to $4.5 million that we’re looking to refinance at a level of significantly inside it. Also in 2017, we have a $1 billion coming to which gives a $2.58 million. So those are two pretty easy examples to point to where we look to replace some of those initials unrated bonds with investment grade bonds. Hopefully, just to drive savings on cost of funds.

Great. Okay, thanks so much.

The point is that it keeps rack-sitting down the average cost of funds and maintaining a good balance of amortizing those obligations from cash flows.

Okay, thank you.

Thank you. The next question is from [indiscernible] of JPMorgan. Your line is open.

Hi, this is [indiscernible] sitting in for Jamie Baker here. A lot of my questions have already been answered. But one thing that I was wondering is, what is the kind of strength and weakness that you’ve seen for the first Blackbird and how do you feel about Blackbird two and three and whether even, what change of you may, I mean, make?

The Blackbird Capital, as you know, was a private, is the private entity. So in our discussions, we give you sort of the total that were filling up, I think you’ve heard from us that this entity is on track making progress, we are searching for more assets to source into that entity to meet that’s return criteria. But we do believe that entity will be fully funded at $2 billion by the end of 2016, and so we now actually are going to look toward follow entities. And I think we also commented in my remarks that see Blackbird as an additional tool for Air Lease and our competiveness. Effectively they extend our buying power or incremental transactional opportunities by $2 billion. Because we see that entity air junk with ALC as we go into campaign, as we look at sale lease back should and look at all market opportunities. So its on track, its on schedule, its going to be built out, I really can’t comment any further we don’t comment on the performance of entity, we don’t comment on that, it’s privately held fun.

I mean the performances, so far so good, is the answer in the template is worked, it given as the flexible capital we wanted in talking about specifics I think it’s inappropriate, given the private natures John mentioned but the temple has been working great and the relationships are fantastic with the LTEs and then with the other end with the bird and I think it is really a great kind of what we can do going forward with more of them?

If it wasn’t we wouldn’t be talking about a Blackbird capital two to three. The investors they are in that front continue to supply the capital at asset continue to incrementally added to that fleet, absolutely. So they dissatisfied, they wouldn’t won their respective office.

Okay, thank you.

Thank you. Your next question is from Kristine Liwag of Bank of America. Your line is open.

Hi good afternoon.

Hi, Kristine.

When we think about your overall aircraft exit strategy or you still thinking of disposing aircraft on here eight, and also for a modeling purposes is to $700 million of aircrafts disposal on an annual basis in the future still a good base case?

Well, we can’t we don’t provide future guidance on that Kristine, but I can only say that our overall philosophy remains that we look to dispose an aircraft is that about a third of its 25-year life. So yes, about eight years in change on average if we take delivery new aircraft, we take delivery of a used aircraft miscellany and depreciated to 25-year life based upon original data manufacturer. And so we take that into account. But yes, we have not changed. We still believe that that is the sweet spot of selling the aircraft both from an overall return point of view, where it is in its life and its maintenance life, it still a young airplane at the end of 10 years. So none of that has changed, that’s what we keep our fleet young. As we buying new, we still sell aircraft on their pretty young. But we don’t put a marker on every plan and say we can hit the eight birth day you are sold I mean please understand that each transaction is different the relationship will be underlying airline let see might be different. So some aircraft might be sold to six-years.

Exactly…

Some might be sold at nine years. Some might be sold at 11 years. Some might be sold in early year and then all depends on our portfolio management, our risk exposure to that one airline. For example, as we have a large transaction where we could face ten motor aircrafts and an airline and we only have 10 planes there. We might sell a few of those ten there already there, a little earlier to accommodate the new incoming airplane. But as I said, we don’t put a label in every planes say when you hit eight years of age, bye, bye.

But as an overall philosophy, yes, that’s just consistent from day one.

[Audio Dip] So you won't have an aircraft available.

That is never happened in my 40 years and being an aircraft leasing business and it has never happened to us this management team. It has happened to airlines, where they don’t have the financing in place, but we’ve always had aircraft less fees lined up. We have had situations in our prior lives where the original airline that signed up may have evaporated but then we had another airline that we substituted. So we're not in the aircraft parking business and we just don’t really that’s not an issue that’s in a problem for us in our tenure in the business.

It all comes down Kristine, if you pick the right aircraft, they are marketable and they are in demand whether it is a year from delivery, two years from delivery or two months from delivery.

And as we said earlier, our strategy into place these aircrafts 18 to 36 months. We’ve had transactions where the deliveries four years away and so those transactions have turned down. We get substantial deposit from the respective airlines. So the risk is really minimal. And if there’s couple of times, and we know in advance that that airline may not be able to be ready at the right time, we’ll take early action to find an alternate, let’s see [ph].

Yes, we have time.

But we don’t wait till the day before delivery to find out if the airline is going to show up. I mean, we are much more proactive than that.

Sure. Actually to be clear my question actually is the other way. Where if Boeing and Airbus are over selling their slots, and then when it comes to taking delivery everyone who actually ordered an airplane shows up instead of – some not showing up. Is there a risk that when you are taking delivery of your airplane for the next year and all the airlines show up, and all the customers show up, there won’t be an aircraft available for you.

No, we have a contract, that’s solid and our planes will delivered as per the schedule. We are not - parties are not subject to financing or board approvals, they’ve already been bound.

No, I think we are seeing today…

Boeing source that out before they get there, it seems.

Yes, definitely.

So they double booked farther out, and as you get sort of within the nine month, the six month, the two month range, the number of guys that they’ve double booked have been pushed out. So it’s just a number of slots they have. So that’s not an issue.

This is a routine part of their management, and both on the Airbus side and the Boeing side. And look, there’s many ways for them to skin that gap. If they got really press, really hard, and they’re short one aircraft in a given months, there’s always a financial compensation to the airline if it slide into the next month. So frankly, it’s…

This is not a new thing.

…not a new thing. And its - even though the order books are all-time full I think the manufactures done a pretty good job. And if they really get stuck, it’s the matter of what’s the cost. So what really happens in the real-world is that we get closer to the time of delivery that overbooking is trimmed down and basically hits the neutral point of several months before delivery. So when Boeing is doing the final production in Airbus, the final production on the airplane, it’s already clear, where that’s going to. And they don’t really play Russian roulette up to the last minute.

Great. Thank you very much.

You’re welcome.

Thank you. The next question is from Jason Arnold of RBC Capital Markets. Your line is open.

Hey, guys, just a quick follow-up. Recently there was an unforced bid [ph] put in for another leisure [ph] in the space on which, I guess that is a reflection of the misbalance of publicly traded [indiscernible] multiples being too lower sustained lying economics of the business. But just curious if you have any thoughts around this front as well.

Well, I think - look, I think the aircraft leasing business is a good business. And aircraft restaurants had preformed remarkably well across all conditions, I think look it is an affirmation of value. I think it also shows that companies are still in a very substantial companies and serious companies are very interested in the space. And that is a good thing for all of us. So look, good on them for tracking attender, but I think the future remains to be seen. But, I think the bottom line is smart companies and smart people know where value is and know good businesses. And I think the aircraft leasing business is a good business.

I think what we are hearing from large financial investors both in the U.S. and overseas is that, when they look at the industry and they look at the airline transportation industry, the leasing sector, as a whole has performed much better and more predictably during the down cycle versus the airlines. And so, in terms of long-term horizons, there is greater stability in the aircraft leasing sector than in the airline business.

We – Jason we all agree with your contract with our steady and growing earnings profile that we produce every quarter. As Steve mentioned really and think about that cash earnings is really critical. As John alluded to with the sales – strong sales we’ve had this year really as opposed to sort of in theory saying our book is really valuable. We are demonstrating into through actual sales. So showing that not only the earnings are strong going forward, but the book that underpins them is just a strong and we will produce those results. When you think about the expanding ROE multiples that we continue to post quarter-after-quarter, you think about the ability to continue to reduce the funding costs as Greg mentioned. All of those things come into summary with a 39% pre-tax profit margin that we think is outstanding, clearly best in class. And you certainly would have to think that would all those consistent results quarter-after-quarter. That’s the market the public equity market will star to more accurately reflect the value of the business that we built. Because certainly it is starting to get reflected with private transactions and when that flow through happens to the public markets, we certainly think it’s high time that the markets are recognize just what we’ve done and what we sort of build.

Couldn’t agree Mark, hats off thanks for the color.

Thank you. At this time, I would like to turn the call back over for any closing remarks.

Thank you very much, that concludes our call for today. We all appreciate your participation and we will speak with you following Q3 results next quarter.