Everest Events

Benchmarking Aircraft Asset Management

London

Tuesday, October 18, 2005

Objectives of Aircraft Asset Management Overview of Aircraft Asset Management Industry ExperienceTop 5 Major Leasing CompaniesMarket Churn & TrendsManaging the lease term

Asset Risk ManagementScope of Presentation

The Asset Management Objectives:– Maintain the rental stream for the term of the lease agreement– Maintain the value of the asset and wherever possible effect an

appreciation in value– Effect smooth transition from lease to lease– Minimise Asset Management cost burden– Minimise ‘off-lease’ time– Minimise refurbishment costs– Develop a good working relationship with Lessee

Through:– A structured, professional and efficient monitoring programme,

establishing a technical rapport with lessee– Risk driven and measured activity– To identify compliance with terms / covenants and lessee plans for

assets– Establish recommended actions and progress these

Asset Management

Aircraft are complex mobile assets that are highly susceptible to a range of factors which can significantly influence their values.The degree of influence is greater for maturing assets than for new assets.The $ value of the influence is greater in new assets than in mature assets.There are no sovereign risk lessees.All assets need management

Asset Management

Asset Management

COMMERCIAL TECHNICAL FINANCIAL LEGAL POLITICAL

OPERATING LEASE RISK

Asset ManagementAsset ManagementCommercial – Assess, monitor and advise the commercial well being of the lessee and the aircraft lease within the prevailingmarket and plan remarketing, renewals, sales and exits. Default resolution. Portfolio planning. Technical – Determine & manage any changes to specification, value, utility or marketability. Default resolution (operational).Financial – Manage the collection of income streams while maximising shareholder / bond holder value, minimising taxation burden. Management of cashflows, debt servicing, exchange rate hedging.Political – Assess, monitors and advises on current and developing changes in political environment for the operatorLegal - Assess, monitors and advises on current and developing legislative regulations impacting on the operator, the lease agreement and the lessor. Insurances, Default resolution, documentation.

Technical Asset Management Technical InspectionsUnderstand the Role Required

Lessee

Lessor’s Inspector

Asset Management

COMMERCIAL TECHNICAL FINANCIAL LEGAL POLITICAL

OPERATING LEASE RISK

Austen HallPeter MoylanPaul Rofe

Angus MackayColin Short

Mike SkinnerAngus Williamson

Terry McGaughan & Hanspeter Baserga

Even The Profitable And Good -Have Risks to Manage

There is only so much an airline can do to try and get cheap fuel

Where Does Our Asset Management Where Does Our Asset Management Sit In The Industry CycleSit In The Industry Cycle

Recovery TimescalesRecovery Timescales………………..

Aviation Economic Recovery In 2005 ?Recovery Dependent on:Recovery Dependent on:

Oil Prices ($69.91 / Oil Prices ($69.91 / Barrel 31Barrel 31stst August)August)Passenger loads being Passenger loads being maintainedmaintainedYields on airfares Yields on airfares increasingincreasingReduction in oil and Reduction in oil and fuel prices Increases fuel prices Increases in USA & European in USA & European GDPGDPIncreases in Increases in disposable incomedisposable incomeIncreases in consumer Increases in consumer confidenceconfidence

Industry Bad Signs Are They Here Industry Bad Signs Are They Here Again?Again?

Biggest Backlogs

8% 6%

4%

4%

3%

3%

2%

2%

2%

2%

64%

ILFC

J e t B l ue A i r wa y s

Ry a na i r

Ge ne r a l El e c t r i c Ca pi t a lGr oupUS A i r wa y s

AN A - A l l N i ppon Ai r wa y s

J a pa n A i r l i ne sCor por a t i onS out hwe st Ai r l i ne s

Ai r C a na da

Emi r a t e s A i r l i ne s

Ot he r s

Lessor Backlogs

52 %

2 6 %

6 %

5%4 %

3 % 2 % 2 %

I LFC

Ge ne r a l El e c t r i cCa pi t a l Gr oup

CI T Le a si ng Cor p

S i nga por e Ai r c r a f tLe a si ng Ent e r pr i se

De bi s A i r F i na nc e BV

The Fl ugl e i di rI c e l a nda i r Gr oup

Fi nna i r A i r c r a f tFi na nc e Lt d

A v i a t i on C a pi t a l Gr oup

Lessor Backlog

97.28570TOTAL

1.8811Aviation Capital Group

2.0512Finnair Aircraft Finance Ltd

2.5615The Flugleidir Icelandair Group

4.124Debis / AerCap BV

4.7828Singapore Aircraft Leasing Enterprise

5.9735CIT Leasing Corp

25.09147General Electric Capital Group

50.85298ILFC

% ShareTotal

AircraftBacklog -Operating Lease Companies

Biggest Backlogs

36.241305TOTAL

1.8366Emirates Airlines

1.8366Air Canada

2.0674Southwest Airlines

2.0875Japan Airlines Corporation

3.11112ANA - All Nippon Airways

3.22116US Airways

4.08147General Electric Capital Group

4.11148Ryanair

5.64203JetBlue Airways

8.28298ILFC

% ShareTotal AircraftBacklog -Top 10 Owners

Industry Participants

Lombard

Tombo

Sale

ALMOrix

FocusPegasusOasis

AMSGECASDebis / AerCapSaab

AirclaimsILFCBouliounAirbus

BACKCITBabcock & BrownBAE

IBAGATXAWASRolls Royce / Pembroke

SH&ESigmaAviation Capital Group

Boeing

Independent Supporter

Independent Lessor

Independent Servicer

Manufacturer

Industry Cycle – Polarisation Legacy Carriers vs Low Cost carriersAsset Types – Short Haul Vs Longhaul

- Boeing Vs AirbusAircraft Vs EnginesNorth American Market IssuesGeographic Dispersement

Market Churn

Aircraft Vs EnginesGeographics– North American Market Issues– Europe– Middle East– Asia Pacific

Asset Types– Wide Body Vs Narrow body– Freighter Vs Passenger– Boeing Vs Airbus

Portfolio Diversification

Top Lessors 2003

29.9%11.375.4%734.8IEM Airfinance20

2.9%12.61.4%842.7Aviation Capital Group19

-6.3%13.00.6%884.3Saab Aircraft Leasing18

-19.1%13.5**n/a915.6Lombard Aviation Capital17

-20.7%12.8-20.7%949.5Airbus Asset Management16

-6.2%12.517.3%1,022.3Tombo Aviation15

6.8% 10.61.7%1,274.9BAE Systems Regional14

15.0%12.443.7%1,542.4ORIX Aviation Systems13

13.3%13.843.5%1,721.1Pembroke Group12

-10.2%13.2-15.4%1,752.5Pegasus Aviation11

-0.9%10.929.0%1,773.5Boullioun Aviation Services10

16.3%10.838.3%1,920.6SALE9

-4.7%12.35.9%2,531.2Babcock & Brown8

-1.0%13.09.6%2,697.6GATX Air7

-4.4%13.448.3%2,877.6CIT6

-6.9%12.2-3.1%3,220.6AWAS5

-5.7%10.75.6%3,267.5debis / AerCap4

-15.3%11.330.2%3,843.3Boeing Capital3

1.2%34.616.2%20,263.0ILFC2

-0.7%18.713.6%26,589.7 GECAS1

ChangeAverage aircraft value $ million

ChangeFleet value $ million

Leasing companyRank 2003

Lessor ConsolidationLessor ConsolidationWho Is Next?Who Is Next?

There Are Worse Jobs In There Are Worse Jobs In Aviation!!Aviation!!

International Aviation Services Group

Module D, Jenner Road, Gatwick Airport, West Sussex RH10 9GA

Tel: +44 (0) 1293 456105 / 6Fax: +44 (0) 1293 456107Email: info@iasg.co.uk

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