DAY 3 Thursday 25th January 2018

20th Annual Global Airfinance Conference The Convention Centre Dublin – 23rd - 25th January, 2018 DAE eyes $2bn in annual portfolio growth

ubai Aerospace Enterprise DAE acquired the Irish lessor “This translates into financing D(DAE) will grow the platform to build its presence and gain steps for us: we are likely going beyond the AWAS acquisition the scale it needs to further back to the 144A market for a as it looks to increase its fleet to grow the business. transaction, Islamic financing 700 units. Tarapore says the AWAS and we will probably back in “The ideal range is somewhere acquisition ticked all the boxes, the market for a revolving credit between 400 and 700 assets. in terms of assets, platform and facility this year. All in the scale This is where we feel that our culture. of $2 billion growth a year and platform can perform at its peak “It transformed the company our commitment to the OEMs.” potential,” says Firoz Tarapore, into a solid platform that we can Tarapore says DAE would chief executive officer of DAE. you use to further accelerate like to return to the ABS market “Our teams on the the long term business we are but this market continues Firoz Tarapore, chief executive officer commercial side are properly building,” says Tarapore. to evolve. “We are equity of DAE aligned to handle somewhere “Our mandate in the near sold transactions, not equity between 400 and 700 aircraft. If term is clear. We are looking to repayment transactions. That whether that means once a year we want to go beyond, we have put on the book about $2 billion requires more planning.” or more than that. But ultimately to think about a Version 2 of the worth of assets over the next “We want to do a transaction we will be driven by the demand platform.” few years,” he adds. regularly in a foreseeable future, and pricing in the market.”

Banks and smart investors can see past HNA noise: Slattery

omhnal Slattery, the chief He adds: “The volatilities Dexecutive officer of , are around the edge of the seemed unfazed by claims marginal players. But in the that his lessor’s bond rates world of social media, all were not ‘not competitive’ and this stuff takes on classic ‘unsustainable’, saying that disproportions. We will never aviation banking community, react in a knee jerk way to along with smart, long-term bonds widening out, if the bond investors, fully understand franchise was in trouble we “the HNA noise”. would have a totally different “It was a really important situation. The franchise is week for us this week to reset Domhnal Slattery, chief executive officer, Avolon exactly where I expect it to the narrative a little bit,” he told be, in line with investment Airfinance Journal. “There was a of days we have been working anyone bought the bond last grade credit metrics and let the lot of noise in the last day or two very hard to get out the facts of Wednesday, you should be numbers speak for themselves.” about Avolon’s bonds, bonds the situation, the credit metrics buying me dinner tonight.” Speaking at Airfinance this and bonds that.” of Avolon, the fact that Avolon “When you put all that Journal’s Investor Day at the “I looked at the numbers this has access to multiple markets.” into a pot and put away the 20th Annual Global Airfinance morning, so we have several He points out that the speculation and the noise, I Conference in Dublin on 23 bonds issued by our benchmark company’s balance sheet is can’t control the HNA noise, but January, Mark Streeter said is a five-year, which is a 2022 leveraged at just over two to I don’t think that’s going away Avolon’s bonds are at “5.5 to expiry. It’s quite liquid.” one, saying it was “significantly anytime soon, by the way. What 6% levels” because of concerns The price of the bond has over equitised”, compared with I control is Avolon and what is with HNA. tightened by 13% and the yield Avolon’s peers. The company happening [there]. I think the “They need competitive on the bond has tightened by has around $5 billion of liquidity smart savvy investors get that bond market access and at 22% in the last five trading days. between cash and undrawn and frankly I think the bank the moment their rates are not “That tells me as the chief lines at the end of September. market that have supporting competitive given the problems executive of the business is that “You have the bonds, people us for many years fully get it with HNA,” he said. the bond market can be quite have woken up to say ‘this and I think the bond investors, “That is unsustainable where volatile and reactive to headline thing was trading single B’, it’s the serious long-term investors those bond levels are right news and over the last couple got ‘BBB’ credit metrics, so if get it.” now.”

www.airfinancejournal.com 1 Conference news

GECAS Appraisers say communication can be sporadic ppraisers indicate much you are including into a of concern. We provide an targets Aaircraft disparity in ABS valuation for a lease-attached opinion, the data – and the transaction can be due to a aircraft. world in which we operate is lack of information provided by There is reticence in the very opaque.” $6-7bn in the arrangers. market to not provide lease- ISTAT definitions are more “We get asked to value unencumbered values for ABS than 20 years old and Hatcher 2018 a portfolio of 35-aircraft,” transactions and it’s a standard believes they are “quite said Rikard de Jounge vice ISTAT-defined term. We have archaic”. About 25 years ago, president – asset valuations the same methodology but the leasing market was small ECAS is looking to at Avitas. ultimately we share different and back then aircraft were deploy $6-7 billion in G “No one tells you that views of the market.” trading as naked aircraft, he capital during the 12 months the valuation is for an ABS De Jounge disagrees: “We says. and is open to acquiring transaction. They just ask for follow the ISTAT definitions “You constantly have to other portfolios, said its chief market and base values,” he but we may not have the make adjustments. Base Alex Burger. adds. same data and the same values are a long-term trend “I think in terms of our Stuart Hatcher, head of methodology. Methodology rather than a market value, target, or $6-7 billion, that is intelligence at IBA Group, said is up to yourself, as long as which is an evolving point at a a big number, so you need it is still a “secretive market”. you can justify and show your point in time,” he recalls. to have some transactions “Providing that we are work, and have an acceptable De Jounge agrees: “The of scale, but we would dealing with sellers, the methodology, that’s fine with business has changed. We do absolutely look at other information is generally good. ISTAT.” not only trade naked aircraft. portfolios, sure.” The issue we tend to find is He adds: “Some variation Aircraft are now financial However, in terms of with the arrangers. And the in values should be a level instruments with cash flows growth via new aircraft communication can be quite of comfort. If we were all at and future residuals, and orders, Burger indicates sporadic,” he says. $0.5 million for the same that is a completely different he “feels great about the The other issue is how aircraft, that would be a source analysis.” skyline” at GECAS. “If you look over our last orders, we have put in significant orders for the Rising interest rates top SMBC’s list of concerns new 737 Maxs and new A320neos, so we feel great MBC Aviation Capital have on actual exchange rates Its shareholders Sumitomo about that. For the widebody Shighlights a changing and how this impacts the airlines Financial and Sumitomo aircraft, we ultimately would interest-rate environment as in the next 12-36 months.” have agreed to advance the be looking at sale and one of its biggest medium-term In regards to merger and equity, which will support SMBC leasebacks on those, as we concerns. acquisition activity, Barrett says AC’s growth plans, including the still have quite a widebody When asked what was the market needs to “look at funding of new aircraft delivered presence.” SMBC’s greatest concern the motivation of the parents to from 2019. Barrett adds that the GECAS will end the year in the current climate, chief understand the behaviour of the shareholders are taking a “long- 2017 with a $43 billion executive officer Peter Barrett sellers”. He adds: “But that has term view of the market”. portfolio, he says. Burger said: “Interest rates top my list. always been the case,so this The shareholders have envisions growing the fleet The interest rate-environment isn’t anything new.” also agreed that the primary to $44-45 billion in 2018. is going to be more of a thing Barrett reiterated SMBC leasing vehicle between both “That would be a great place in our market and the global Aviation Capital is due to receive companies, Sumitomo Mitsui to end up.” economy. It is not just interest- a shareholder capital injection of Finance and Leasing (SMFL), will Regarding the new tax rates, but the impact they will up to $1 billion by 31 March 2019. become a 50:50 joint venture. code under the Trump administration, Burger adds the move is “net positive” for GECAS on deals in the USA. “It is a slight pick for us Air Baltic to order more CSeries regarding US carriers, but ir Baltic will “most likely” and Latvia, but that the carrier main airports and having higher no impact for carriers based order more CSeries this feels a need to expand in other frequency.” around the world.” A year, the carrier’s chief financial Baltic countries. Jakovlevs adds: “Having Burger notes the officer has said. “We also feel that the a uniform fleet, going 100% sentiment at this year’s Speaking at the 20th Annual CSeries, with the 150-seat CSeries, with subsequent Global Airfinance event “is Global Airfinance Conference capacity, is actually a perfect savings on operational cost, as positive” as he has ever Dublin on 24 January, Vitolds aircraft for that region for maintenance, pilot, etc. – that seen in his three-year’s of Jakovlevs said that last year the thin routes between the would be a big part of this attendance. his airline changed its strategy capitals and these Nordic and strategy.” “I think the airlines across to become an all-CSeries eastern European cities,” he Airfinance Journal reported the board look really good operator. says. on 15 November that Air Baltic and the demand for aircraft “On top of our order now, “Part of our strategy is to has tapped EDC financing is really strong. I will come most likely we will order more make more point-to-point for its eighth CS300. The first away from here feeling solid in the coming months,” he says. connections. Following the lead seven were delivered from as the energy and overall Jakovlevs says that historically of the low-cost providers, but December 2016 and were sentiment is really strong.” Air Baltic has focused on Riga maybe connecting some of the financed by EDC.

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Client: Pratt & Whitney One Company Ad Title: GFT/PurePower - Go Beyond Publication: Airfinance Journal - Jan. 23-25 Trim: 210 x 286 mm • Bleed: 216 x 292 mm • Live: Lessor news Lessors play down IFRS 16 impact

ircraft lessors appear Thought Leadership, 79% In respect to currency, a officer of Fly Leasing. Arelatively unconcerned predict existing leases will be mitigating factor for some It is also the case that most about the impact of IFRS 16, renegotiated and standard terms large international airlines is analysts already adjust current despite wider industry sentiment for new leases will change to their dollar revenues from US (pre-IFRS 16) airline balance that the new accounting minimise the impact of IFRS 16 operations, which act as a sheets to include lease standard will change standard The aspects deemed most natural hedge against foreign payments. And while IFRS 16’s terms in lease contracts. likely to change are the duration exchange volatility. Thus, as far uses a distinct methodology By showing lease payments of leases, lease rates and as possible dollar revenues are for capitalising lease payments, as liabilities, IFRS 16 could security deposits. used to meet dollar liabilities. the difference is not significant incentivise airlines to seek Lease currency A potentially graver concern enough for airlines to change shorter lease terms to improve denominations may also be for lessors is if airlines respond fleet acquisition strategies, debt-related financial metrics. up for review since dollar to IFRS 16 by leasing fewer thinks Barry Flannery, chief Although IFRS 16 becomes lease liabilities would have aircraft. financial officer of SMBC effective in less than a year, to be converted to the local However, less than half the Aviation Capital. from 1 January 2019, some currency of airlines, pushing survey believe this will occur, “It appears that leases offer lessors report little reaction from additional foreign exchange and lessors appear confident limited “balance sheet benefit” their customers. volatility through profit and loss that leasing’s benefits will for airlines who either borrow in “We haven’t had statements. outweigh any misgivings about the public markets or deal with conversations with the airlines Breen, though, warns that its new accounting treatment. specialist financiers,” he says. to date about changing terms lessors will resist any attempt to “[By leasing] you are “Airlines will continue to of the lease contract or adding switch currencies. reducing your residual choose leasing for reasons incentives for shorter leases or “We don’t see a change in exposure and getting another such as price, advance rate, breaks within the lease,” says terms of the lease negotiations source of financing as a way term and availability.” David Breen, head of finance for and pulling that extra foreign to get aircraft quickly – those For full coverage of aviation’s Dublin-based lessor Avolon. exchange risk that was already factors will be more important response to IFRS 16, see Nonetheless, out of a survey inherent in a lease back to a to airlines than anything IFRS the Euromoney Thought of almost 400 air finance lessor due to a change in the 16 will do to them,” says Colm Leadership report, ‘Balancing executives by Euromoney [accounting] standard.” Barrington, chief executive the Books’.

A GLOBAL LEADER IN AIRCRAFT LEASING 908 153 64 aircraft customers countries

www.avolon.aero As at 31 December 2017, Avolon’s owned, managed and committed fl eet stood at 908 aircraft

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CS17259 AirFinance Journal Conference Ad 2018.indd 1 1/17/2018 1:22:46 PM OEM interview

Tim Myers, president Capital on sources of financing in 2018

oeing’s Current Aircraft movements. This made financing,” Myers says. BFinance Market Outlook Chinese banks’ pricing more But capital markets saw (CAFMO) expects commercial in line with other global banks an overall decline in activity bank debt to continue its and allowed more non- in 2017, partly due to airlines resurgence in 2018 as new Chinese banks to participate deleveraging risk and greater global banking regulations in financing deliveries into access to bank debt. Lessors drift further into the future. China. We are still seeing accounted for 70% of the Bank debt emerging from a trend of ‘China funding volume as they accessed Japanese banks is expected China’ due to the interest capital markets for unsecured to show the largest increase in the market and growth debt and ABS issuances to next year. of passenger travel in the finance their portfolios. “The growth in Japanese region.” “Most of the decline in banks’ role in aircraft finance Commercial bank debt commercial markets was due is attributable to two factors: is likely to again finance to rapid expansion in banking first Japanese regional banks the largest share of Boeing liquidity. We believe that the are joining Japanese global deliveries. bank market is not likely to banks in financing aircraft Boeing forecasts continued continue to expand at the and second, year-over-year strong demand for new rate that we saw last year. higher deliveries to Japanese commercial aircraft in 2018, Additionally, we are seeing a airlines,” explains Tim Myers, resulting in about $139 very rapid expansion of usage president of billion in deliveries by major of commercials markets by (BCC) in an interview with manufacturers. lessors - secured, unsecured Airfinance Journal. The annual aircraft borrowing and use of ABS “Japanese global banks financing requirements is market for portfolio sell-down Tim Myers, President, Boeing Capital like SMBC, DBJ and MUFG, expected to grow to $189 and financing,” says Myers. Corporation along with BCC, helped billion by 2022. The US manufacturer develop interest in aircraft “Financiers and investors anticipates that 2018 will see finance among Japanese continue to be attracted to an upward trend in capital markets.” regional banks, and this has the aircraft market, and part markets volume as lessors Airlines participation in allowed the global banks to of that appeal is because it’s continue to use the space the capital markets is less originate more deals and then a growth business with stable as their primary source of anticipated. sell some of them down to returns,” says Myers. “We’ve financing. “We expect new “Continued strong regional banks. Regarding remained in a robust market institutional investors entering liquidity in the bank market the second point, Japanese for some time now along the market to further stimulate and airlines’ continued airlines use domestic banks with consistently increasing the use of capital markets and deleveraging will mean that as the primary funding source growth in global diversity of EETCs.” we are not likely to see for their deliveries and last passenger travel, and this Aircraft leasing continues significant change in the scale year, new aircraft deliveries to has also spurred a steady to grow in absolute size while of commercial markets usage Japan were a bit higher than increase in the number of maintaining a 40% global by airlines. Airlines are seeing the previous year,” he adds. lessors entering the industry market share. ample profitability levels and According to CAFMO, worldwide.” Boeing expects lessors growth in many sectors, to China’s involvement is Myers says that this growth to sustain their growth include low-cost carriers. We expected to reduce in terms in need for aircraft financing throughout 2018 while taking are in year eight of above- of percentage points this year. is expected to be met in a advantage of record demand trend traffic growth. For the “Last year, Chinese airlines variety of ways. and strong liquidity. past three years we have reduced their appetite for “Looking ahead to 2018, “The ABS market remains been anticipating return to financing their deliveries in traditional funding means an important alternative for trend, but demand continues Reminbi and increased US like commercial banks and lessors to sell and/or finance to outpace our forecasts – dollar-denominated financing capital markets will continue portfolios of aircraft; it has when was the last time there as a result of currency to be the largest sources of fostered innovative structures was an empty seat next to you that help differentiate and on a flight?,” he asks. manage risk profiles of “We believe it is sustainable all ages of aircraft. These for the foreseeable future. Financiers and investors continue structures are expected to There’s increasing global facilitate portfolio liquidity diversity of travel - emerging to be attracted to the aircraft market, and create more efficient markets are emerging and part of that appeal is because risk management of aircraft stronger than we anticipated residual values. This should and tailwinds of deregulation it’s a growth business with stable allow lessors broader access in Europe and parts of Asia to financing both in the are giving a stronger demand returns secured and unsecured boost than what we expected.

6 20th Annual Global Airfinance Conference / Thursday 25th January OEM interview

By all objective measures we an efficient source of financing are in a very strong market. that complements other new About $1 billion in new deliveries Aircraft utilisation and load aircraft funding markets for were funded via AFIC in 2017, and it factors are at historical highs Boeing. and the parked fleet is stable. Myers anticipates AFIC has the potential to at least double. Demand growth is exceeding non-payment insurance Through AFIC, the insurance market’s capacity growth, so at this policy (ANPI) to increase its point, we do not see any marketshare this year. strong appetite for this kind of aviation fundamentals that AFIC is an important new pose risk to current market market that will be addressing innovation is expanding its capacity strength.” a full range of our customers’ and availability But Myers expects airlines financing requirements. to tap the private placement “About $1 billion in new market as a toll to fund their deliveries were funded via market that is available through Bank. The Ex-Im Bank is open, growth. AFIC in 2017, and it has the all phases of the cycle and it just can’t do deals greater “The private placement potential to at least double. I believe we have achieved than $10 million because of a market is likely to continue Through AFIC, the insurance that. Boeing Capital’s charter lack of quorum. We urge the to grow in usage by airlines market’s strong appetite for this is to innovate, and we’ve been full Senate to take up these because it is easier for kind of innovation is expanding doing that for 50 years so our nominees as soon as possible airlines to access. It requires its capacity and availability.” customers have the financing to restore quorum and full less structuring and it does “To date, AFIC has done they need and so that the operations of the bank.” not require rating agency every product in our delivery market can keep adapting.” He notes that markets have involvement.” stream – Boeing 737 Max, Myers calls for the US Senate been extraordinarily healthy, BCC has engaged in new 787, 777 and 747 (passenger to fully restore Export-Import specifically those for aircraft. market development to bring and freighter models), and we Bank operations. “However, should there be a insurance risk capital to aircraft see that continuing in 2018 as “As we saw on 19 December, downturn, export credit remains finance. BCC collaborated with the market gains even more the U.S. Senate Banking a necessary tool. This is a Marsh to facilitate the creation traction. Committee took major, competitive issue for Boeing of this new market in 2017. “It is important to add that bipartisan action by approving and a practical one for our Due to the strength of the the entire premise behind the four qualified nominees to international customers who insurance companies, AFIC is AFIC initiative was to create a sit on the board of the Ex-Im depend on the Ex-Im Bank.”

www.airfinancejournal.com 7 Engine news GTF’s Improving Performance Accelerates Orders and First Deliveries

ratt & Whitney ended fly. For example, the engine’s P2017 and began the new impressive reduction in the year on a high note with its overall noise footprint could revolutionary Geared Turbofan™ increase air travel at airports (GTF) engine family, due to where noise regulations have a flurry of first deliveries and limited the ability to fly at certain multiple new orders for Airbus times of the day. And reduced A320neo and Bombardier fuel burn with allow operators CSeries aircraft powered by the ability to extend routes by the GTF to airline customers using the same amount of fuel, around the globe. Several of the creating options for routes that airlines also signed multi-year didn’t exist before and making contracts for Pratt & Whitney’s point-to-point destinations more comprehensive EngineWise™ available to the flying public. Fleet Management Programs, It’s the industry-disrupting dedicated to sharing the technologies that set the GTF company’s engine expertise and apart from its competition fleet intelligence with customers Delta, Airbus and Pratt & Whitney and allow its game-changing so they can optimise engine performance. The company performance and keep their share the same commitment to safety, invested more than 20 years operations running smoothly. efficiency, innovation and continuously in the engine, maturing 48 new The recent wins add to a technologies that enable its GTF backlog that totals more improving the customer experience impressive results. To meet than 8,000 engine orders and the production demands of a Ed Bastian, chief executive officer, Delta’s commitments to more than 80 historic engine ramp, Pratt & customers. The most recent Whitney has invested more than deliveries continue to add to the for their Boeing 707 aircraft. Its the proven performance and $1.3 billion in its 21st century, ever-growing commercial fleet, relationship with Delta dates to environmental benefits that they global production facilities to fast approaching 150 aircraft, the 1930s. deliver.” deliver its products quicker since the engine entered Deliveries ranged from Current in-service engine and with the highest quality. service in early 2016. Pratt & Hawaiian Airlines accepting performance has more than Along with its MRO network Whitney also is on schedule its first Airbus A321neo aircraft lived up to the GTF’s early partners, the company is in developing and delivering on 17 November 2017 – the promise. Since entering the investing millions to increase GTF engines for Embraer’s first GTF operator to utilize the market, GTF engines have maintenance capability to E190-E2, scheduled to enter aircraft’s 180-minute Extended compiled more than 500,000 support the in-service fleet. customer service in April 2018 Range Operations (ETOPS) hours of passenger service To support that growth, the with Widerøe, and the E195-E2, certification and the first U.S. and demonstrated an ability to company is actively expanding slated to enter service in 2019. carrier to fly the GTF-powered reduce fuel burn by 16%, saving its workforce, with plans to hire The Mitsubishi MRJ and Irkut A321neo – to Korean Air customers a staggering 25 approximately 25,000 skilled MC-21, both GTF-powered, also receiving its first Bombardier million gallons of fuel, totalling employees by 2026. will enter service over the next CS300 aircraft, powered by the $45 million in savings. The Clearly, the investment in few years. GTF, on 22 December. GTF also reduces nitrogen infrastructure and people GTF orders during this recent Airline customers recently oxide emissions by 50% to the is paying off. Through its time period included Delta Air placing these orders and regulatory standard, which has demonstrated performance in Lines choosing the engine to accepting deliveries believe in led to a savings of 264,000 the field, the GTF is proving power 100 A321neo aircraft, the GTF. “Today we celebrate tonnes of carbon emissions to be everything it promised with an option for up to 100 delivery of our first GTF- so far, and lowers the noise to be. But don’t take our more (the largest A321neo powered CSeries aircraft,” said footprint by 75%. word for it. Again, just ask our aircraft order to date by a U.S. Soo-Keun Lee, chief technology Customers and pilots alike customers. “Delta, Airbus and airline operator); Air China and officer at Korean Air. “We are praising its performance. Pratt & Whitney share the same Shenzhen Airlines selecting the are excited for the dramatic Currently being operated by commitment to safety, efficiency, engine to power 60 A320neos; improvements in efficiency, more than 20 airlines, flying innovation and continuously ordering 20 emissions and noise that more than 250 flights per day, improving the customer GTF-powered A321neo aircraft; will enhance our operations to more than 500 destinations experience,” said Delta’s chief and Egyptair choosing the GTF and passenger experience.” on five continents and 98 executive officer Ed Bastian in to power up to 24 Bombardier In announcing his airline’s countries, engines in service announcing his airline’s recent CS300 aircraft. With a business selection on 11 November of are saving approximately 100 order. “This order for the state- based on longstanding the GTF to power new aircraft, gallons of fuel and reducing of-the-art A321neo with Pratt’s customer relationships, as Vietjet vice president Dinh CO2 emissions by one metric PurePower next-generation jet far back as the middle of the Viet Phuong said, “We are tonne per flight hour. engines reflects our long-term last century Pratt & Whitney delighted to add 10 additional The GTF’s performance commitment to these values provided several of these GTF-powered new aircraft to could have a significant impact for Delta people and all our airlines with P&W JT3D engines our fleet. We look forward to on how and where airlines constituents.”

8 20th Annual Global Airfinance Conference / Thursday 25th January CEO interview

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Visit www.kbra.com to view our latest aviation and aircraftwww.airfinancejournal.com ratings. 9 Technology interview Trading Loyalty Point-Backed Securities electronically

y the second half of 2018, pure profit, sometimes more.” demand for new credit cards, Binstitutional investors will Airlines use the revenue for increase the spend of credit be able to create and trade different purposes. Some have cards customers and create securities based on loyalty point pledged points, or even loyalty brand new banking and card currencies such as frequent program itself as collateral for products.” flyer, credit card points and other raising operating funds and ACE will support initial reward programmes, unlocking financing fleet overhaul. offerings and secondary a new asset class worth over $1 “We have seen examples trading of PBS to authorised trillion. where the loyalty programme is institutional buyers, utilising New York-based Affinity used as in-house financing for primary and secondary market Capital Exchange (ACE) in many airlines. Because they are venues to attract liquidity collaboration with Nasdaq plans able to generate revenues and providers and new investors. to launch an exchange that will profits at a significantly increased The exchange is also allow airlines, banks and financial Banks can use rate than they will normally get, working on developing sponsors to electronically trade multiple airlines have resorted a blockchain application loyalty points that are packaged loyalty point bonuses to supplementing their revenues to eliminate post-trade into Point-Backed Securities to stimulate demand via loyalty programme,” he adds. inefficiencies and enhance the (PBS). Although some airlines strategic value of the asset. Over the past year ACE has for new credit cards, have sold parts of their loyalty For hedge funds and private been working side by side with and create brand programme, Christov views an equity firms, the loyalty points Nasdaq to create a customized new banking and equity sale as giving up a “very backed security trading could matching engine for PBS as part valuable asset” which rarely form part of their diversification, of an end-to-end trading services card products makes sense in the long run. hedging and quantitative suite. According to the five-year Atanas Christov, Chief executive “This is where ACE comes strategy because of the risk technology and commercial officer, ACE in. We are trying to help airlines element and the stable and partnership agreement between monetise their loyalty currency uncorrelated nature between ACE and Nasdaq, market launch without giving up equity loyalty points and their parent of the exchange is slated for for commercial partners and ownership, giving issuers full programmes. mid-2018. institutional investors, leaving leverage over an unencumbered “It can become an element “Everything is on track on the marketing side of the loyalty asset while avoiding the long- which they can arbitrage the technology side, which programs untouched.”, adds term implication of equity stake when comparing with means our focus has shifted to Christov. sale,” he explains. multiple instruments across the regulatory and commercial Banks buy points sold by ACE aims to provide asset classes, sectors and preparations for launch,” says loyalty programmes such as a vehicle for institutional geographies,” says Christov. ACE’s chief executive officer, frequent flyer programmes as investors to gain exposure He is confident that ACE will Atanas Christov. part of co-branded credit card to the points market while improve pricing of the assets Christov says loyalty points portfolio deals. expanding the market for and bringing it closer in the line represent close to $100 billion- Christov says point sales by issuers, says Christov. with economic value - and at a worth of balance sheet value for airline exceed $50 billion a year, Banks and credit card issuers time when traditional sources airlines. “This is a conservative which come at a significant profit are the biggest customers of liquidity are subject to figure: the actual market value of to the issuer, exceeding many for loyalty point sales by regulatory and cyclical changes airlines’ loyalty points is several fold operating profitability of the airlines; credit cards benefit for the industry. ACE will enable times higher, especially including core business. from unique motivational new and existing liquidity points value as collateral for “Given that they control the value of loyalty points, directly providers to gain exposure airline and fleet financing”. redemption side and also the increasing customer lifetime to a valuable and currently “We will focus on supporting terms and conditions of the value for the issuers. untapped asset and help issuances of loyalty points, programme, it is an element of “Banks can use loyalty issuers unlock the economic packaged into tradable contracts their books that can fetch 80% of point bonuses to stimulate value of loyalty currencies.

20th Annual Global Airfinance Conference / 25th January 2018 About the conference

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www.airfinancejournal.com 11 20th Annual Global Airfinance Conference / Thursday 25th January About the conference

Thursday 25th January 2018, CCD, Dublin Day Two

08:00 Registration and morning refreshments 11:40 Data zone: LIVE DEMO - Financial Structures & Sources Over- Time: An introduction to The Deal Tracker Data by Airfinance Journal 09:00 Chairperson’s opening remarks 11.40 Primary sessions: What can we learn from the rise of LCCs & Christophe Schroeder, Head of non-US Sales, Wilmington Trust ULCCs in emerging markets? 09:10 Data zone: LIVE DEMO - Airline Credit Trends: Mike Powell, Executive Chairman & Interim Chief Financial Officer, Flybondi An introduction to The Airline Analyst Data by Airfinance Journal Jose Dougnac, Chief Financial Officer, Sky Airline Brian Mulvihill, Associate, Irelandia 09:10 Primary sessions: On-Stage Interview with Boom Supersonic Fernando Suarez Gerard, Chief Financial Officer, Volaris Chris Eoyang, Vice-President of Business Development and Global Moderated by: Albert Muntane Casanova, Senior Vice President, Projects, Boom Supersonic DVB Bank Interviewed by: Laura Mueller, Managing Director, Airfinance Journal 12:20 Data zone: How to minimise earnings volatility 09:40 Data zone: LIVE DEMO - Global Fleet Insight: An introduction Shane Matthews, Head of Strategic and Market Analysis, to The Fleet Tracker Data by Airfinance Journal SMBC Aviation Capital 12.20 Primary sessions: AFIC - Insurance markets delivering new 09:40 Primary sessions: Macro-economic risk demystified aircraft finance solutions Brian Pearce, Chief Economist, IATA Robert Morin, Managing Director – Transaction and Business Leader, Aircraft Finance Insurance Consortium (AFIC) 10:10 Data zone: The global aviation industry in numbers, trends & analysis 12:50 Turkish Airlines keynote presentation Michael Duff, Managing Director, The Airline Analyst Murat Seker PhD. Chief Financial Officer, Turkish Airlines

10.10 Primary sessions: How to run a successful airline in the 13:20 A ten year journey & the future for Chinese lessors Middle East Li Ling, Managing Director, Aviation, Bank of Communications Financial Stefan Pichler, Chief Executive Officer, Royal Jordanian Airlines Leasing Co. Ltd

10:30 Networking break 13:35 Chairperson’s closing remarks Christophe Schroeder, Head of non-US Sales, Wilmington Trust 11:00 Data zone: How to attract fixed income investors on a secured & unsecured basis? 13:40 Networking Lunch hosted by: Bocomm Leasing

11.00 Primary sessions: Ten golden rules for Asian lessors entering 14:50 NETWORKING – Open Lounge & Meeting Zones open for the aviation market meetings Gareth Delany, Executive Director and Chief Technical Officer, Ping An Our brand new meeting app allows you to pre-arrange meetings with Aircraft Leasing registered delegates and assigns you a space to meet in our dedicated Mr. Xing Zhen, Head of Sales & Trading, Aviation, Bocomm Leasing Meeting Zones. Alternatively, feel free to use our Open Lounge to meet David Wang, Managing Director, ICBC Financial Leasing Co.Ltd with registered and non-registered peers alike in an informal setting. David Walton, Chief Operating Officer BOC Aviation Limited One-on-one meeting service available for institutional investors, Airlines Mr. Patrick Toner, Chief Representative, Global HT AeroAsset and and Lessors to connect (please contact us for details). HaoTong AeroTech Limited (HaoTong Aviation Group) Moderated by: Geoffrey P. Burgess, Partner, Debevoise & Plimpton 18:00 Close of Event

2018 Event Calendar

Conference Date Location 20th Anniversary Global Airfinance Conference 23-25 January 2018 Dublin 2nd Annual Korean Airfinance Conference 27-28 February 2018 Seoul New York School of Aviation Finance 10-13 April 2018 New York 7th Annual Japan Airfinance Conference 19-20 April 2018 Tokyo 38th Annual North America Airfinance Conference 15-16 May 2018 Miami 16th Annual China Airfinance Conference 14-15 June 2018 Shanghai New: Inaugural Southeast Aerospace & Defence Conference 25-27 June 2018 Mobile Summer School of Aviation Finance 02-04 July 2018 Cambridge New: Latin America School of Aviation Finance 11-12 September 2018 Mexico City 14th Annual Latin America Airfinance Conference 13-14 September 2018 Mexico City www.airfinancejournal.com/events

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