Barclays Global Financial Services Conference
September 11, 2019
• 09/11/2019 Barclays Global Financial Services Conference 1 Forward-Looking Statements / Property of Aircastle
All statements included or incorporated by reference in this presentation, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA, Adjusted Net Income, Cash Return on Equity and Net Cash Interest Margin and the global aviation industry and aircraft leasing sector. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “may,” “will,” “would,” “could,” “should,” “seeks,” “estimates” and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this presentation. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle’s filings with the SEC and previously disclosed under “Risk Factors” in Item 1A of Aircastle’s 2018 Annual Report on Form 10-K, and our Form 10-Q filed for the quarter ended June 30, 2019. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this presentation. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances. The information contained herein is the property of Aircastle and shall not be disclosed, copied, distributed or transmitted, or used for any purpose, without the express written consent of Aircastle.
• 09/11/2019 Barclays Global Financial Services Conference 2 Airline Industry Overview
Continued momentum in 2019 Traffic Growth Resilient Through Downturns and Robust Through History
• 2.7% global GDP growth for 2019 1000 8% Tech bubble Financial 900 Recession 1st Gulf War Asian / Sept. 11 7% • 5.0% RPK traffic growth for 2019 Crisis Crisis 800 6% • 82.1% load factor for 2019 700 5% • 5.0% operating profit margin 600 4% 500 3% 400 2% Real GDP Growth 300 1% Indexed RPKs + Real GDP Single aisle remains strong 200 0% 100 -1% • A320 production to 60/mth in 2019 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
• 737 production to 57/mth in 2020, GDP Growth RPK Real GDP after recent cut to 42/mth • Both to 63/mth in 2020 Record Airline Profitability and Load Factors Driving New Aircraft Demand
6% 85%
4% 83% 40,000
81% 74% Uncertainties remain 2% 30,000 79% • Direction of interest rates, fuel, trade 0% 20,000 policies and FX volatility may have 2004 2007 2010 2013 2016 2019F 77% 69% -2% impact on airlines 75% 10,000 65% -4% Load Factor Passenger • Wide-body weakness and recent order Airline Net Profit Margin 73% 0 cancellations -6% 71% 1997 2017 2037 Regional jet Single aisle Widebody
Source: (Top) IATA, ICAO, IMF; (Bottom) IATA, Boeing Commercial Market Outlook
• 09/11/2019 Barclays Global Financial Services Conference 3 Leasing Market Overview
Stable profits through various Stable, Pre-Tax Net Income Uncorrelated to Airline Cycles 35% economic cycles 31% 30% 30% 30% 30% 28% 29% 29% 29% 27% • Airlines continue to rely on operating 30% 27% 24% 24% 23% leases in good and bad economic 25% 22% 22% 22% 21% 20% 20% 20% 20% periods 18% 20% 18%
15% 9% 10% 9% 10% 7% 8% 7% 6% 7% 6% 7% 5% 5% 5% 4% 4% Growing share of owned fleet 5% 3% 3% 1% 1%
Tax Income Margin (%) (2)% (2)% (2)% by lessors - 0% (3)% (4)% '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Pre • Leasing provides fleet managing (5)% flexibility for airlines and lower capex Airline Pre-Tax Net Income Margin (%) Aircraft Lessor Pre-Tax Net Income Margin % costs Increased Reliance on Leasing
40,000 50% 35,000 45% Market reshaped by new 30,000 40% entrants 25,000 35% 20,000 30% • Foreign capital and alternative asset 15,000 25% managers investing in aircraft 10,000 20% 5,000 15% 0 10% 1998 2003 2008 2013 2018 Source: (Top) Company filings, Boeing; (Bottom) Flightglobal Note: Based on weighted average of airline and aircraft lessor peers. Total Leased Fleet Total Fleet % Leased Aircraft Lessors include: ILFC, Air Lease, AerCap, Aircastle and BOC Aviation. Airlines include: Delta, United Continental, Northwest, AirTran, ExpressJet, Frontline, JetBlue, Mesa Air, SkyWest, Southwest, Virgin America, Alaska, American, Spirit, Hawaiian, Allegiant, Pinnacle, Republic, Midwest, Russian Airlines, Air France, Finnair, IAG, Lufthansa, SAS, Turkish Airlines, easyJet, Norwegian , Pegasus, Ryanair, Wizz Air, Air China, ANA, Cathay, China Eastern, Garuda, Hainan, Japan Airlines, China Southern, Qantas, Singapore Airlines, Thai Airways, Virgin Australia , AirAsia, Asia Aviation, Cebu, InterGlobe, SpiceJet, Aeroméxico, Avianca, Volaris, Copa, LATAM , Azul and GOL.
• 09/11/2019 Barclays Global Financial Services Conference 4 Multiple Players Across Age Spectrum
Crowded new/young aircraft Aircraft Lessors with Large Blended Fleets AerCap segment GECAS 0 200 400 600 800 1000 1200 1400 • Growth via large order books • May be exposed to wide-body aircraft Primarily New and Young Aircraft Lessors Avolon Air Lease • Abundant capital chasing lower yields SMBC <6-8 Yrs BOC Aviation 1 ACG Avg Age ICBC Leasing CDB Aviation CALC ORIX Aviation In Service On Order As an early entrant in the mid-life Goshawk BoComm Leasing Jackson Square ALAFCO space Aircastle is known to be the Standard Chartered sector specialist 0 200 400 600 800 1000 1200 1400 • IPO in 2006 • Only mid-life lessor to be Investment Grade Primarily Mid-life Aircraft Lessors rated by Moody’s / S&P / Fitch DAE Capital 9-12 Yrs Aircastle 1 Macquarie • Mid-life strategy driven by higher risk/reward Avg Age Merx – newer a/c if justified by returns Altavair Wings Capital 0 50 100 150 200 250 300 AerCap and GECAS have sizable fleets across the age spectrum Primarily Late-life Aircraft Lessors • Size dictates a more diverse strategy and Carlyle Aviation portfolio 13+ Yrs Castlelake Avg Age1 Genesis • Consistent sellers of mid-life assets Fortress 0 50 100 150 200 250 300 Source: Flightglobal; Boeing and Airbus narrow and wide-body passenger aircraft as of Mar. 2019 1:. Fleet ages are simple average of Flightglobal fleet data
• 09/11/2019 Barclays Global Financial Services Conference 5 Industry Trend Towards Larger/Younger Portfolios
Largest lessors have low average aged Mid-Aged Aircraft Significant Portion of Lessor Fleets
Weighted Avg Fleet Age fleet and growing proportion of mid-life 800 6.3Yrs 18+ 7.9Yrs1 aircraft 700 12-18 Fleet Age • Many have an explicit objective of managing to a 600 6-12 Ranges maximum fleet age threshold 500 0-6 5.0Yrs 400 4.5Yrs 5.8Yrs1 3.0Yrs 3.8Yrs 300 6.2Yrs 200
Sales will be required to manage fleet 100
age 0 • Mid-life and late-life aircraft will be primary assets AerCap GECAS Avolon SMBC BOCA ACG DAE Air Lease sold to other lessors and other buyers Large Delivery Stream in Next 5 Yrs Will Drive Mid-Aged Portfolio Sales
300 Aircastle’s platform, capital structure, and track record has positioned it 250 perfectly to capture growing mid-life 200
opportunity set 150 • Only permanently capitalized player focused on the segment 100
50
0 Source: (Top) Company filings; (Bottom) Flightglobal AerCap Air Lease SMBC GECAS BOCA Avolon CDB ACG 1. WAvg age not disclosed in public filings; AYR estimate
• 09/11/2019 Barclays Global Financial Services Conference 6 Key Corporate Milestones New Investor OTPP takes ~10% ownership stake1 Bond Financings New Largest Shareholder Raised over $4.2 billion to date Marubeni buys 12.3 million shares ~15% Achieved Investment Grade Raised stake to ~27.5% in 2016 Credit Ratings
21-May-18: S&P upgrade to BBB- Reached Significant Scale Acquired Portfolio 29-May-18: Awarded BBB- by Fitch Assets exceed $5.0 billion for the first 13-Aug-18: Moody’s upgrade to $1.5 billion / 35 Aircraft time Baa3
2005 - 2006 2007 - 2008 2009 – 2010 2011 - 2013 2014 - 2018
Founded Follow–on Equity Offerings Obtained Export Credit Support 10 Year Anniversary Started from private equity Feb 2007: $512 million For Airbus A330 Order Since founding and IPO Oct 2007: $700 million IPO and Listed on NYSE ($350 million Primary/$350 27-Jul-10: Achieved Public Credit Expanding Markets million Secondary) Ratings Ticker: AYR JV with IBJ Leasing (IBJL) Ba2/BB+ from Moody’s and S&P
Evolution of Aircraft Portfolio 15 12 13 13 2 5 5 248 268 32 193 224 3 133 130 129 136 144 159 162 148 162 69 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2:19
Owned Managed Source: Company filings 1. Divested stake in May 2018
• 09/11/2019 Barclays Global Financial Services Conference 7 Aircastle Overview
$8.6 Billion $921 Million 89 Lessees
Total Assets Total Revenue1 47 Countries
Owned $1.1 Billion 2.5x 268 Aircraft
Managed Available Liquidity2 Debt to Equity 15 Aircraft
$1.2 Billion 78% Baa3 / BBB- / BBB-
Dividends + Share Unsecured Debt / Investment Grade Rated Repurchases Total Debt Moody’s / S&P / Fitch
Source: Company filings Note: Financial information as of June 30, 2019. 1. Represents last twelve months as of June 30, 2019. 2. Includes undrawn revolving credit facilities and unrestricted cash.
• 09/11/2019 Barclays Global Financial Services Conference 8 Investment Approach
Dependability and flexibility as a lessor and trading partner
Disciplined investment strategy emphasizing profitable, organic growth
Acquired 237 and sold 116 aircraft since 2015
Gain on Sale of $201 million from 2015 through Q2:19
Capital not tied up with large, long-term commitments
As of June 30, 2019.
• 09/11/2019 Barclays Global Financial Services Conference 9 2019 Accomplishments
Acquired 24 NB aircraft during 1H:19 – Total 2019 closed and committed acquisitions of $1.2 billion
Successfully transitioned eighteen aircraft repossessed from Avianca Brazil and Jet Airways
Issued $650 million of 4.25% senior unsecured notes due 2026
Raised $485 million of attractive five year bank financing; weighted average fixed rate of 3.45%
Declared our 53rd consecutive quarterly dividend payable in the third quarter
As of June 30, 2019.
• 09/11/2019 Barclays Global Financial Services Conference 10 Diversified and Liquid Portfolio
High Utilization All Avianca Brazil Average utilization has been 98.9% for the last 10 years and Jet Airways 100% aircraft have 99.2%97.9%98.5%98.6%98.8%98.7%99.6%99.3%98.9%99.3%99.6% 90% 94.0% successfully 9.5 Yrs Weighted Average Age 80% transitioned
70% 4.6 Yrs Weighted Average Lease Term 60%
50% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2:19
Strong Top 10 Credit Exposure Narrow-body Focus Geographically Diverse
South African LATAM, 10 Off-lease Airways, 4 3% South America Aerolineas Freighter 13% Argentinas, 5 easyJet, 20 4% Wide-body TAP Portugal, 6 22% Asia Pacific North America 38% 11% Jeju Air, 9 IndiGo, 19 Middle East & Africa Interjet, 11 Narrow-body 8% Iberia, 15 74% Lion Air, 11 Europe 27%
Source: Company filings Note: Information as of June 30, 2019.
• 09/11/2019 Barclays Global Financial Services Conference 11 Robust Portfolio Management with an Active Asset Strategy
283 aircraft owned and managed at Q2:19 Since 2015 Acquired 237 aircraft Sold 116 aircraft Generated $201 million of gains from sales and net proceeds of $2.5 billion
80 68 70 60 60 50 46 39 40 37 31 30 30 24 20 Number of Number aircraft 14 10 4 0 2015 2016 2017 2018 H1:19 Purchases Sales Total # of Aircraft Owned and Managed 167 206 236 261 283
• 09/11/2019 Barclays Global Financial Services Conference 12 Balance Sheet Evolution
Aug-06: Founded Jan-07: Acquired 2018: Credit Rating Upgrades Started from private Portfolio Sep-10: Obtained Export 21-May-18: S&P equity firm Fortress $1.5 billion / 35 Aircraft Credit Support Jun-18: Upsize Revolver Investment Group upgrade to BBB- For Airbus A330 Order 29-May-18: Awarded BBB- by Fitch Upsized unsecured 13-Aug-18: Moody’s revolver to $800 million st Jun- 07: Completed 2nd Jun-06: 1 ABS upgrade to Baa3 from $675 million Transaction ABS Transaction Jul-10: Achieved Public Credit Ratings Raised $560 million Raised $1.17 billion Sep-18: Debut Rated Ba2/BB+ from Investment Grade Bond Moody’s and S&P in 2008: Initial Secured $650 million @ 4.4% conjunction with initial Bank Market Raise unsecured bond offering Raised ~$990 million of $300 million Apr-19: Second IG Bond
$650 million @ 4.25%
100% 100% 100% 100% Metrics In-Line with IG Rating 89% 85% 2.5x 2.5x 2.5x 2.3x 2.3x 2.3x 2.3x 2.2x 2.2x 2.1x 2.0x 1.9x 1.9x 1.6x 51% 42% 37% 29% 27% 20% 22% 17%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2:19
Debt / Equity Secured Debt / Total Debt Source: Company filings
• 09/11/2019 Barclays Global Financial Services Conference 13 Strong Financing Track Record
Extensive experience raising debt in varied markets, with over $15 billion of debt raised across secured, unsecured, and ECA financing
Upsized and extended unsecured revolver to $800 million from $675 million in June 2018
– Borrowing margin reduced by 75 basis points
– Strong lending relationships with: Goldman Sachs, Citi, JP Morgan Chase, RBC Capital Markets, BNP Paribas, Revolving Credit Credit Agricole, MUFG, and Wells Fargo Facilities $300 million unsecured revolving credit facility closed December 2018 in Asian market to replace the existing $135 million Asian facility
– Banks include: DBS Bank, Cathay United, State Bank of India, Aozora Bank, Apple Bank, Bank of Communications, CIC, KDB, Shinsei Bank, and Woori Bank
Unsecured Debt Raised $5.8 billion of senior unsecured debt since inception.
Export Credit Agency Raised approximately $875 million of ECA financing since inception Financing
Raised $2.5 billion in secured bank financings since inception. Marubeni shareholding helped attract strong Bank Facilities Japanese banking support in both secured and unsecured facilities.
Asset Backed Bonds Raised over $1.7 billion in securitization market since inception
Third Party Equity Raised over $1.7 billion in equity from private, public, and strategic investors
Source: Company filings Note: Financial information as of June 30, 2019
• 09/11/2019 Barclays Global Financial Services Conference 14 Q2:19 Capital Structure
Strong liquidity profile and low financial leverage; minimal forward commitments
Net debt to equity of 2.5x; 78% of total debt was unsecured at quarter-end
Average remaining life of debt is 3.6 years; $650 million of 4.25% coupon senior unsecured notes issued in June 2019
$1.1 billion in available revolver capacity and unrestricted cash of $500 million at quarter-end
$6.0 billion of unencumbered flight equipment comprised of 226 aircraft
As of June 30, 2019.
• 09/11/2019 Barclays Global Financial Services Conference 15 Questions and Answers
• 09/11/2019 Barclays Global Financial Services Conference 16