GE Commercial Aviation Services - General Electric · PDF fileGE Commercial Aviation Services...
Transcript of GE Commercial Aviation Services - General Electric · PDF fileGE Commercial Aviation Services...
GECommercial Aviation Services
Henry HubschmanPresident and CEOGE Commercial Aviation Services (GECAS)June 19, 2007
“This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.”
Pitch Title 09-01-04/22
Agenda
• GECAS Overview
• Aviation Market Snapshot
• Core Growth
• Innovative Edge
• Portfolio
Pitch Title 09-01-04/33
GECAS Overview
• Over 1750 owned and managed aircraft
• ~230 airline customers in over 70 countries
• Worldwide presence with 26 offices
• Product breadth – lessor, financier & solutions provider
• Deep domain expertise
Pitch Title 09-01-04/44
~ 230 Global Customers
157
230
2000 2007
46%
Pitch Title 09-01-04/55
Broad Global Footprint
Shannon
Luxembourg
Vienna
Tokyo
Hong Kong
StamfordNew York
Singapore
Miami
Phoenix
Beijing
Dubai
Toulouse
MoscowCincinnati
Sao Paulo
Mexico CityLondon
Delhi
Toronto
Shanghai
Memphis
Austin
Baltimore
Oslo
Frankfurt
Since 2001, seventeen new offices
Pitch Title 09-01-04/66
Extensive Product Offerings
Narrowbodies Widebodies Regional Jets Freighters
StructuredFinance/Debt
Engine Leasing & Financing
Parts Trading, Financing & Optimization
Airport & Cargo Facility Financing
From aircraft to airports
Pitch Title 09-01-04/77
Deep Domain Expertise
• 40+ years experience
• Successfully managed through multiple cycles
• First-in-class technical department
• Structured finance and capital markets skills for large, value-added transactions
• Innovative mindset and ability to execute new ideas
• Pricing and risk discipline with proactive portfolio focus
• Backed by the GE brand
Pitch Title 09-01-04/88
Aviation Market Snapshot
Pitch Title 09-01-04/99
Strong Market Environment
Tight Aircraft Supply
• Manufacturers largely sold out to 2010+
• Significant order backlog
• Lessor availability tight to 2009+
Excess Liquidity
• Global savings glut … trade surpluses, petro $, retirement assets, etc
• Usual players active + many new entrants
– Hedge funds, private equity, emerging market investors, public REIT-type players
• Purchase prices bid up; equity yields/debt spreads compressing
• China, India, SE Asia boom
• Resource rich economies benefit: M. East, Russia, Brazil, Africa
• EU, Japan in upswing
Strong Global Growth
Market Strong for Placing Metal and Selling Assets
Pitch Title 09-01-04/1010
Core Growth
• Low cost carriers
• Cargo
• Emerging markets: China, India, Russia, Brazil
Pitch Title 09-01-04/1111
LCC’s ... Fleet Up Almost 4x Since 1999
59
218
9 29
1999 2006 2010F
~500
60+LCC Airline Customers
Source: GECAS estimate
# of Aircraft
Pitch Title 09-01-04/1212
Cargo … Exponential Growth Since 2000
51
•Global cargo is growing at twice the rate of passenger sector
•GECAS actions
– Finance new production freighters e.g. 777LRF, 747-400F
– Convert used aircraft to freighters e.g. Air China 747F, EVA 747F, TNT 737F
– Provide debt financing
•Placed order for 777 freighters
’10F
3x 737-300SF
11x 767-200SF
7x 737-300SF
4x 747-400F
2x MD11F
2x 747-400SF
CAGR49%
’00 ’07
$.1
$2.7
$5.3 ($B)
Pitch Title 09-01-04/1313
Emerging Markets … Up 3.5x Since 2004
Brazil
Russia
India
China
0 2.5 5 7.5 10
2004
EST 2010
$B Assets
�1990’s: Pioneer
�1998-2006: Growth Leader
�2007+: Innovator
�Huge growth potential
• US - 22 aircraft per MM people
• Emerging markets - .6 aircraft per MM people
Pitch Title 09-01-04/1414
China ... 200+ Aircraft / $5.6B Assets (Includes Commitments)
Financed multiple national carriers
Expanded to key regional players and low cost carriers
Broadening product offerings to parts financing and airports with ongoing LCC focus
1990’s
Pioneer
1998-2005
Growth Leader
2005+
Innovator
Pitch Title 09-01-04/1515
India ... 40+ Aircraft / $1.4B Assets (Includes Commitments)
2004-2006Growth Leader
1st deal with Jet in 1994
Expanded to leading low cost carriers
Growing core leasing business and pushing multi-product menu: cargo, engine leasing, RJ, airports infrastructure
1990’s
Pioneer
2007+Innovator
Pitch Title 09-01-04/1616
Russia ... 90+ Aircraft / $2.2B (Includes Commitments)
Leased first Aeroflot aircraft in 1997
Expanded to leading low cost carriers … now presence at 9 of top 15 Russian carriers.
Continuing core leasing growth and pushing multi-product menu: cargo, engine leasing, parts & rotables
2004-2006Growth Leader
1990’s
Pioneer
2007+Innovator
Pitch Title 09-01-04/1717
Brazil ... ~80 Aircraft / $2.3B Assets (Includes Commitments)
Early player with flagship carrier and key regional player
Broadening product offerings to RJ’s e.g. BRA and exploring parts financing
1990’s HighlightsPioneer
Late 1990’s -2006 Growth Leader
2007+Innovator
• Helped TAM grow from regional to flag carrier
• Leased GOL’s first four aircraft• Successfully redeployed 36
VARIG aircraft
Pitch Title 09-01-04/1818
GECAS applies innovative edge to
enter new segments
Pitch Title 09-01-04/1919
Airports Financing'07
Aircraft Debt (PK) '00
Engine leasing'99
Freighter Conversion '02
Aircraft Parts Trading '06
GECAS Created '93
Unparalleled Innovation
Pitch Title 09-01-04/2020
Expanding Into Parts Financing Segment
• Parts trading, stub leases & financings
• Significant GECAS commercial synergies
–Use portfolio roll-off as part-out feedstock
–Grow parts financing book utilizing Memphis redistribution capabilities
–Provide airframe support pools for used aircraft
• Completes full life cycle solutions … from new order aircraft to parts trading
In 2006 acquired The Memphis Group, world’s 3rd largest parts trader
Pitch Title 09-01-04/2121
Building three platforms:
• Global Infrastructure Partners (GIP)
– Acquire large airports, e.g. bought London City in 2006
• Lynxs Cargo Group (“Cargo In a Box”)
– Develop and acquire air cargo facilities
– Build standardized, modularized low cost air cargo facilities
• Avia Solutions (“Airport in a Box”)
– Develop/acquire & improve regional/LCC terminals
– Modular, eco-friendly designs
Expanding into Airports InfrastructureUtilizing GECAS aviation expertise/ relationships to capture share of ~$250B segment with large annual capex spend
Pitch Title 09-01-04/2222
GECAS portfolio and skyline are
in great shape
Pitch Title 09-01-04/2323
Loans
15%
Finance
Leases
24%
Op Leases
61%
Loans
7%
Finance
Leases
48%
Op Leases
45%
More Diversified Portfolio2000
2006
�Balancing product mix on equipment types
�Increased lower risk operating leases to 61% of portfolio
�More than doubled loan exposure
Risk Management Actions
Pitch Title 09-01-04/2424
Excellent Fleet Composition
Wide Body
21%
RJ
17%
Cargo
7%
Narrow
Body
55%
�Good assets with broad operating base
�Not more than 3 AOG’s in past two years
�82% of narrowbody fleet is attractive A320 and 737NG aircraft
�98% widebody fleet is high demand 767, 747, 777 and A330’s
Note: 1,419 owned aircraft as of YE’06
Pitch Title 09-01-04/2525
Younger Fleet ... Age Down 25% Since 2004
�Pro-actively managed fleet
– Disposition of older assets
– New order purchases
�Aligned with demand for younger, more fuel efficient aircraft
�Skyline in great shape
– New order 100% placed out in ’07/’08
– Existing fleet 99% placed in ’07, 75% in ‘08
2004 2006
8.4
6.3
NOTES: Average age total book =total # a/cTotal Book
Pitch Title 09-01-04/2626
GECAS Financial Snapshot
15% CAGR
2000 2006
Net Income
$0.5
$1.1
A Proven Growth Business
$44
�High growth, diversified portfolio
�Growing in emerging markets
�Broadening products … Airports, The Memphis Group
�Great customer relationships
�Veteran team with significant domain expertise
16% CAGR
$18
Assets
($ in billions)
Pitch Title 09-01-04/2727
There are Risks That Remain…
Event Risk/ Terrorism
• Global economy is stable
• Aircraft and passenger traffic outlook is positive
• GECAS: Extensive restructuring/bankruptcy/experience
Infrastructure Challenges in Emerging Markets
• Rapid growth in aviation sector may be challenged by supply side constraints, e.g. pilots and airports, Air Traffic Control
• GECAS: Expanding from aircraft to airport & transportation infrastructure to support development in emerging markets
Energy/ Environmental Factors
• Fuel costs stable at <$70/barrel, airlines pushing most of cost to passengers
• Accelerating pressure for newer, fuel efficient aircraft
• GECAS: Global fleet rollover and financing experience
GECAS Will Manage Risk With Extensive Experience & Data-Driven Discipline
Pitch Title 09-01-04/2828
GECAS Well Positioned for Continued Growth
• Excellence in cycle management
• Veteran team
• Extensive geographical footprint
• Broad product array
• “Great customer relationships”
Pitch Title 09-01-04/2929