Aircraft Lessors Credit Overview

Mark Wasden, V.P. – Senior Credit Officer, FIG October, 2018

Agenda 1. Aircraft leasing sector overview 2. Differentiating company risk profiles 3. Trends in key risk indicators 4. Proposed update of Moody’s risk rating framework

Aircraft lessors, October 2018 3 1 Sector overview Leasing a key source of aircraft finance Leasing now accounts for about 40% of the global fleet

Source: Boeing Capital

Aircraft lessors, October 2018 5 Dynamics favor long-term growth

» Strong aircraft demand – Air travel estimated to grow 4.5%+ annually thru 2037, doubling traffic within 15 years – Replacement demand growing as existing fleet ages and is taken out of service; over 40% of new delivers are for replacement – Robust growth of middle class in Asia emerging markets a key source of growth in travel demand » Airlines continue to value the flexibility of leasing as an important aspect of efficiently deploying capital and managing fleet risks » Positive capital market conditions – Investors attracted to industry growth prospects that support favorable aircraft return expectations » Airline sector profitability improvements are positive, but are not evenly distributed globally; for new and weaker airlines, leasing is an accessible way to fund aircraft acquisitions

Aircraft lessors, October 2018 6 Asia Pacific region leads traffic growth

China, India and Indonesia growth is outpacing; ME now tapering » Asia Pacific air travel growth is forecast to slip to a still strong 9.5% in 2018 from 10.9% in 2017, reflecting some moderation in GDP growth » China is second largest domestic air travel market next to US, but growing much faster at > 10% versus 4% in US; China likely to surpass US domestic market within next decade » By 2035 the middle class in emerging countries is expected to double to 3.5 billion people Air travel growth (RPK), globally and by region

Source: IATA

Aircraft lessors, October 2018 7 RPK growth still outpaces ASK growth

» Reported traffic stats beat IATA’s forecast for 2017, same so far in 2018 » Demand drivers…steady / improving economic activity, loosening regulations, expanding disposable incomes, particularly in Asia; resiliency following external shocks (e.g. terror events) » Capacity growth spurred by demand growth (developing markets), low-cost carriers, still attractive fuel cost, up-gauging

Sources: IATA and Moody’s estimates

Aircraft lessors, October 2018 8 Global fleet will double in size by 2037 Global fleet “walk” from 2017 to 2037 » Deliveries of new aircraft over next 20 years will reach 42,730, per Boeing » 56% of deliveries for fleet growth, 44% for replacement of aircraft removed from service » Single Aisle ~ 73% (55% by market value), a growing share; 65% in 1997 » Lessors share at 45%

Source: Boeing

Deliveries by region/country » Forecast deliveries to China are largest among all countries at 7,690; 74% are narrow-body aircraft » China aircraft in service grows to 8,630 from 3,550; share of global fleet will increase to over 18% in 2037 from 15% in 2017; Asia Pacific overall to 37% from 30% » North America share of global fleet declines to 21% from 30%, as most deliveries are for replacement

Source: Boeing

Aircraft lessors, October 2018 9 Stable outlook for airlines through 2019

» Modest decline in operating margin » Passenger demand growth to mitigate cost pressures » Fares to increase modestly… low-cost operators continue to outgrow legacy carriers, higher fuel; capacity reductions post-summer

Sources: Company filings and Moody’s estimates, reported basis; $-amounts in x-axis labels are the average price of Brent

Aircraft lessors, October 2018 10 Leasing outlook continues to be stable

» Moderate decline in operating margins due to competition, but not destabilizing » Strong passenger demand growth to sustain demand for aircraft » Airline performance slipping but still strong » Continued effective capital and liquidity discipline among established lessors

What could change the outlook to negative » Net interest margin declining to less than 7.5% » Air travel growth sliding to less than 4% and/or capacity growth exceeds air travel growth » Airline credit risks increasing, based on operating profit margin of less than 3% or decrease of operating profit by more than 20% when margin is above 5%

The Industry Outlook (positive, stable or negative) indicates our forward-looking assessment of fundamental credit conditions that will affect the creditworthiness of the aircraft leasing industry over the next 12-18 months. As such, the outlook provides our view of how the operating environment for the aircraft leasing industry, including macroeconomic, competitive and regulatory trends, will affect, among other things, asset quality, capital, funding, liquidity and profitability. Since outlooks represent our forward-looking view on credit conditions that factor into our ratings, a negative (positive) outlook suggests that negative (positive) rating actions are more likely on average. However, the outlook does not represent a sum of upgrades, downgrades or ratings under review, or an average of the rating outlooks of issuers in the industry, but rather our assessment of the direction of credit fundamentals overall within the industry broadly.

Aircraft lessors, October 2018 11 Aircraft leasing – outlook drivers Competition from new entrants to pressure lease yields

» Net interest margins will remain healthy but competition from new entrants is a growing concern – Strong aircraft demand and low funding costs to sustain margins and cash flows – Aggressive competition from new entrants, particularly from China, is pressuring lease yields and weakening collateral protections in sale-leaseback transactions » Growth in global air travel to exceed long-term average; supply growth will be balanced – Economic growth and an expanding middle class in emerging markets, especially China, is stimulating global air travel growth above the 10-year average of about 5.5%, increasing demand for new aircraft; replacement demand in mature markets also strong – Capacity growth is in line with demand and reflects airline growth in developing markets and expansion of low-cost carriers

Aircraft lessors, October 2018 12 Aircraft leasing – outlook drivers Capital flows to support fleet growth and risk management

» Airline credit risks will remain stable, reflecting expected strong global airline operating margins – Growing disposable incomes in emerging economies, affordable airfares as fuel costs remain reasonable are contributing to strong traffic volumes

– Capacity discipline amid traffic growth is keeping load factors at all-time highs – Operating margins slipping, but demand growth, fare increases to mitigate cost pressures » Strong public and private capital flows facilitating fleet growth and fleet risk management – Investor interest giving rise to new investment/funding structures, improved access to secured and unsecured debt

– Investor interest in aircraft across the age spectrum has enabled efficient fleet risk management – New capital has also driven increased competition, commoditizing the sale-leaseback business, as well as consolidation to build scale

Aircraft lessors, October 2018 13 What Are We Watching? Aircraft leasing companies:

» New entrants…disruptive effects on lease rate factors and profitability » Market liquidity…funding for new deliveries and trading activity relies on healthy markets » Wide-body exposure…demand growth strongest for narrow-body; wide-body exposed to increasing remarketing risks » Fleet shifts to emerging markets…growth is strongest in markets with more volatile economic performance » Interest Rates…extent and pace of lease yields to reflect rising interest rates » Capital and liquidity discipline . . . Extended cycle suggests need for continued capital and liquidity strength

Aircraft lessors, October 2018 14 What Are We Watching? Airlines:

» Fuel Cost…airlines’ ability to pass higher cost to customers » Capacity Discipline…commitment to return on capital strategy, particularly for US airlines » Low Cost Carrier Growth » Low-Cost Long-Haul…growth rate and legacy operators response – US: to what extent will US Big 3 use “basic economy” on international routes? – Europe: performance of Level, Joon, Eurowings, Norwegian Air Shuttle » System Constraints…e.g. pilots, airport infrastructure, availability of slots, gates, routes » Brent Price…Moody’s assumes $45 to $65 through 2019, uses $55 and $60 in analyses vs. recent price of $74 » Interest Rates…pace and extent of increases in interest rates a potential weight on credit metrics, all else equal

Aircraft lessors, October 2018 15 2 Differentiating risk profiles Lessor investment strategies Aircraft investment strategies affect franchise strength, liquidity risks

Aircraft acquisition & lease origination strategy

Multi-channel Secondary market Specialists

» Procure aircraft from OEMs, » Procure aircraft primarily » Procure assets from primary sale-leaseback, secondary through sale-leaseback and and secondary sources market trades secondary market trades » Specialize in niche operating » Larger scale; broad access to » Fewer purchase commitments, assets, such as regional jets, airlines and funding sources which aids financial flexibility turboprops, wide-bodies, engine spares and APUs » Orders provide transparency » Narrower scope of transaction w/r/t fleet replenishment, opportunities; less likely to » Specialize based on funding strengthen business achieve large scale source, such as securitization, proposition to airlines institutional private » More susceptible to competition » New orders are speculative from new entrants placement, tax lease and entail funding and lease » Issuers: » Issuers: placement risks – Aircastle – Nordic Aviation » Issuers: – Intrepid – AerCap – Fly Leasing – Willis Lease – GECAS – AWAS (now part of DAE) – Element – Avolon – Air Lease Corp. – BBAM

Aircraft lessors, October 2018 17 Aircraft lessor franchise positioning Key considerations for determining franchise strength

Products & Investing in aircraft services that are with strong long- competitively term demand differentiated and prospects helps resilient strengthen stabilize franchise and sustain positioning franchise position Market Position and Sustainability Advantages in Expertise in fleet sourcing new trading and aircraft transactions from return and airlines and new remarketing risk aircraft from OEMs management are strengthen key differentiators operating margins

Aircraft lessors, October 2018 18 Aircraft lessor risk positioning Aircraft leasing sector specific considerations

Governance & Management

» Management experience in aircraft leasing » Board independence » Organizational complexity; owner profile Asset/Cash Flow Volatility Risk Management

» Fleet composition: wide/narrow body; in/out of » Adherence to defined risk appetite production; model/vintage; geographic distribution » Airline risk assessment & monitoring competency » Average age, average remaining lease term » Independence of risk management function

Relationship Concentrations Liquidity Management

» Top 10 airline exposures % net book value » Liquidity composition » Largest exposure % net book value » Liquidity % debt maturity and purchase obligations » OEM/model concentrations Insert Text» Diversity of funding sources and maturity profile

Aircraft lessor risk positioning

Aircraft lessors, October 2018 19 Trends in financial 3 indicators Certain lessors are reducing fleet risks Sales of older and out of production aircraft helping to contain residual risks

Fleet average age 2015 2016 2017 16 14 12 10 8 6 4 2 0 Aercap Aircastle Avolon DAE Fly (Ba3/NEG) Air Lease (NR) CDB Leasing FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP) (Ba2/POS) (ba3/STA) Average remaining lease term also improved at AER due to aggressive fleet management

2015 2016 2017 Average remaining lease term 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Aercap Aircastle Avolon DAE Fly (Ba3/NEG) Air Lease (NR) CDB Leasing FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP) (Ba2/POS) (ba3/STA)

Source: Company financials Aircraft lessors, October 2018 21 Fleet mix, airline concentrations AYR, ALC fleet mix improved; concentrations high at FLY, FTAI Fleet composition

» AYR and FLY sold freighters and older aircraft, acquired newer models, lowering residual risk » AER wide-body exposure up versus 2010, reflecting acquisition of ILFC in 2014 » ALC focused on newer, widely utilized narrow-body aircraft

Source: Company financials Top 10 airline exposures % fleet net book value

60 » Due to its large scale, AER has moderate airline concentrations, 50 good granularity of exposures 40

» Concentrations higher at 30 smaller-scale AYR, FLY and 20 FTAI 10 » Avolon mix and concentrations 0 levels well-balanced 2015 2017 (3Q 2017) Q1 2017 2Q 2018 2Q 2018 Aercap (Baa3/STA) Aircastle (Baa3/STA) ACG (NR) Avolon Pro Forma DAE (Ba2/POS) Fly (Ba3/NEG) (Ba2/RURUP) Source: Company financials

Aircraft lessors, October 2018 22 Aircraft leasing is globally diverse Exposures are shifting to high growth regions, esp. Asia » Shift likely to continue, given large disparity in relative GDP growth rates of developing and developed economies » Expansion of middle classes stimulating air travel, but lessors more highly exposed to less stable economies

Aircraft lessor fleet geographic mix

Figures in yellow bars represent growth in Asia geographic exposure since 2010 (where data is available)

Asia & Pacific Europe North America Middle East & Africa Latin America 100% 90% 80% 70% 60% 50% 40% +30% +20% 73% 30% +9% +4% 20% 51% 48% 46% 45% 29% 10% 35% 30% 0% 2017 2Q 2018 2Q 2018 2017 3Q 2017 2017 2Q 2018 2Q 2018 Aercap Aircastle Avolon Air Lease (NR) ACG (NR) CDB Leasing Fly (Ba3/NEG) DAE (Ba2/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP) (ba3/STA)

Source: Company financials

Aircraft lessors, October 2018 23 Capital buffers are adequate AER reduced post-acquisition leverage, most others holding steady Debt % tangible common equity

2015 2016 2017 5.0

4.0

3.0

2.0

1.0

- Aercap (Baa3/STA) Aircastle Air Lease (NR) Avolon DAE (Ba2/POS) Fly (Ba3/NEG) FTAI (B1/POS) (Baa3/STA) (Ba2/RURUP) Tangible common equity % tangible managed assets 2015 2016 2017 70%

60%

50%

40%

30%

20%

10%

0% Aercap Aircastle Air Lease (NR) Avolon DAE (Ba2/POS) Fly (Ba3/NEG) FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP) Source: Moody’s Financial Metrics; Company financials Aircraft lessors, October 2018 24 Cash flow providing improved flexibility Measures likely to moderate in light of strong competition Debt / EBITDA

2015 2016 2017 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 - Aercap Aircastle Air Lease (NR) Avolon DAE (Ba2/POS) Fly (Ba3/NEG) FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP) Funds from operations % debt 2015 2016 2017 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Aercap (Baa3/STA) Aircastle (Baa3/STA) Air Lease (NR) Avolon (Ba2/RURUP) DAE (Ba2/POS) Fly (Ba3/NEG)

Source: Moody’s Financial Metrics; Company financials Aircraft lessors, October 2018 25 Funding mix improving, liquidity ample But reliance on secured debt remains high for Avolon, FLY, DAE Secured debt / gross tangible assets

2015 2016 2017 70%

60%

50%

40%

30%

20%

10%

0% Aercap Aircastle Air Lease (NR) Avolon DAE (Ba2/POS) Fly (Ba3/NEG) FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP)

Source: Moody’s Financial Metrics; Company financials Liquidity ratio buildup (2 year horizon) AerCap Aircastle Fly Avolon Cash + Lines (2yrs) (A) % Recourse Debt Maturities 89.2% 164.7% 292.7% 137.7% (A) % Total Debt Maturities (B) 89.2% 164.7% 113.1% 124.9% (A) + Undrawn Sec. Funding (@50%) (C) % (B) 111.1% 179.9% 133.8% 124.9% (C) + FFO (D) % (B) + Purchase Commitments (E) 85.7% 201.0% 136.8% 97.0% (D) + Net Sale Proceeds % (E) 96.8% 211.2% 148.8% 136.4%

Source: Moody’s, audited financial statements Aircraft lessors, October 2018 26 Profitability comparisons mixed Competition, fleet rejuvenation, integration costs are factors Pre-tax profit % average managed assets 2015 2016 2017 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Aercap Aircastle Air Lease (NR) Avolon DAE (Ba2/POS) Fly (Ba3/NEG) FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP) Net income % average managed assets

2015 2016 2017 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Aercap Aircastle Air Lease (NR) Avolon DAE (Ba2/POS) Fly (Ba3/NEG) FTAI (B1/POS) (Baa3/STA) (Baa3/STA) (Ba2/RURUP)

Source: Moody’s Financial Metrics; Company financials Aircraft lessors, October 2018 27 Proposed risk rating 6 framework update Moody’s rates 11 aircraft lessors China SOE entities have multi-line finance and leasing operations Moody's Rated Aircraft Lessors By senior unsecured rating Ratings Issuer CFR Sr Unsec. Outlook Stand-alone Date Latest Rating Action

CCB Financial Leasing Corporation Ltd. - A1 STA Ba3 May 24, 2017 Ratings affirmed; outlook to STA from NEG

China Development Bank Financial Leasing Co. - A1 STA Ba3 May 24, 2017 Ratings downgraded one notch

ICBC Financial Leasing Co. Ltd. - A1 STA Ba3 May 24, 2017 Ratings affirmed; outlook to STA from NEG

GE Capital Global Holdings, LLC - A2 NEG Ba1 Jun 26, 2018 Ratings affirmed; outlook remains negative (GE Capital Aviation Services)

CMB Financial Leasing Co., Ltd. - A3 STA Ba3 May 30, 2018 Ratings upgraded one notch

AerCap Holdings NV - Baa3 STA Feb 14, 2017 Ratings upgraded one notch (AerCap Ireland Capital D.A.C.)

Aircastle Limited - Baa3 STA Aug 13, 2018 Ratings upgraded one notch

Avolon Holdings Limited Ba2 Ba3 RUR Aug 8, 2018 Ratings under review for upgrade

Dubai Aerospace Enterprise (DAE) Ltd Ba2 Ba3 POS Jul 24, 2018 Ratings affirmed; outlook to POS from STA

Fly Leasing Limited Ba3 B1 NEG Mar 1, 2018 Outlook revised to negative

Fortress Transportation & Infrastructure Investors LLC B1 B1 POS Sep 13, 2018 Outlook revised to positive

Aircraft lessors, October 2018 29 Why update the Finance Companies rating methodology?

» Proposed Finance Company Methodology covers a variety of non-bank financial services companies that provide commercial and consumer financing and associated services - Consumer and Commercial lenders – e.g., residential mortgage lenders, commercial real estate lenders, auto finance lenders, student lenders and payday lenders - Aircraft and Equipment Lessors - Business Development Companies - Services Providers and Other – e.g., debt purchasers, payment services » The proposed methodology features: - Simplified scorecards that focus on key financial metrics - Less qualitative weights; key qualitative factors considered separately from the financial profile, and displayed more prominently - Aligned support (JDA framework) and notching (including LGD model for speculative-grade service providers) guidance » Broadened the operating environment framework: - Reflected in the credit profile only to the extent that it exerts a downward influence - Dynamic weighting, with weak operating environment scores weighted increasingly higher

We expect implementation to result in relatively few rating changes

Aircraft lessors, October 2018 30 Profile of global rated finance & leasing companies

» We currently rate 131 Finance Companies » Most of the Finance Companies are Lenders globally*, with the largest concentration in the US:

Service Provider/Other BDC 1% A-Pac 11% 23%

US 41% Lessor 12% Canada 2%

EMEA Lender 25% 76% Lat Am 9%

* Public ratings only, as of 30 June 2018

Aircraft lessors, October 2018 31 Finance & leasing company characteristics

» High degree of fragmentation across business model types and geographies » Wholesale funding reliance – Reliance on bank facilities, parental funding, securitization, and capital markets » Business line concentration – Operational concentrations (business line and geographic) – Reliance on a small number of key relationships / suppliers » Exposure to sudden shifts in market position or regulatory structure – Past defaults show significant risk of changes in regulatory structure (US and UK payday lenders, Japanese consumer finance companies) – Some companies exposed to changes to market structure and/or disruptive innovation » Most of Finance Companies globally are rated non-investment grade:

35

30

25

20

15

10

5

0 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3

*Rating distribution is based on standalone ratings; includes 131 publicly rated issuers as of 30 June 2018 Aircraft lessors, October 2018 32 New rating structure – parallels Banks, Securities Firms

Finance Companies

Standalone Assessment

Business Profile Operating Support Instrument Level Financial Profile and Financial Assigned Environment Provision Considerations Policy Rating(s)

Assesses the Finance Assesses the Finance Assesses the Finance’s JDA framew ork: Assess how the liability Company’s: Company’s operating Company’s: -Affiliate support structure of the firm affects - Profitability environment by - Business -Government support the loss incurred by - Capital Adequacy and incorporating a Macro- Diversification, corporate instruments Leverage Level indicator factor and Concentration and based on differences in - Asset Quality an Industry Risk factor Franchise Positioning security and priority of - Cash Flow and Liquidity - Opacity and claim in the event of Complexity default - Corporate Behavior / Risk Management - Liquidity Management

*Any definitive rating(s) would be made by a rating committee

Aircraft lessors, October 2018 33 Financial Profile – ratios and weights

Se rvic e Providers & Le nde rs Le ssors Othe r BDCs Profitability Net Income / Average Managed Assets 10% X 10% X 10% X 10% X EBITDA / Interest Expense 5% X 20% X Capital Adequacy and Leverage Tangible Common Equity / Tangible Managed Assets 25% X 15% X 10% X Debt/EBITDA 10% X 25% X Asset Coverage Ratio 35% X Asset Quality Problem Loans/Gross Loans 10% X 10% X Net Charge- Offs / Average Gross Loans 10% X Lease Residual Value Exposure / TCE 15% X Senior Secured Loans % Total Investments 10% X Cash Flow and Liquidity 12- month Coverage Ratio excl. FFO 10% X 10% X 10% X 20% X FFO /Total Debt 15% X 15% X 25% X Secured Debt / Gross Tangible Assets 20% X 20% X 15% X 100% 100% 100% 100%

Aircraft lessors, October 2018 34 Overview of the Operating Environment score

The Operating Environment score is determined using a dynamic weighting to combine the Macro-Level Indicator and the Industry Risk factor scores

Economic Competitive Strength: Position 25%

Institutional Macro-Level Industry Industry Strength: Indicator Risk Stability 50%

Susceptibility to Product Event Risk: Risk 25% OPERATING ENVIRONMENT SCORE

Aircraft lessors, October 2018 35 Industry Risk score for aircraft leasing is Baa2

» We assigned a preliminary Industry Risk score of “Baa” to aircraft lessors:

Product Competitive Industry Risk Position Stability

– Barriers to entry are limited – Normal cyclicality – Product represents high asset risk given targeted – High event risk – Pricing power is limited demographics – No alternatives available – Technological obsolescence – Leasing is a growing sector because it represents an essential component of aircraft acquisition for airlines – Growing demand for travel globally

 In the case of firms operating in a number of business lines or across multiple countries or regions, we typically use a weighted average Industry Risk score, with the weights corresponding to the proportion of each business line in each country or region

Aircraft lessors, October 2018 36 Leasing company scorecard example » Assigned Financial Profile scores incorporates forward-looking expectations, ratios and qualitative considerations » Initial Financial Profile Score of Ba3 » Assigned Financial Profile Score of Ba3

Business Line ► Lessor Enter Obligor Name Here ► Enter Fiscal Year-End Date Here ►

Financial Profile Historical Assigned

Factor Weights (% Of Total Historical Ratio Initial Score Assigned Score Key driver #1 Key driver #2 Financial Profile Weight)

Profitability Net Income / Average Managed Assets (%) 10% -0.50% Caa1 Baa3 Expected trend EBITDA / (Interest Expense & Preferred Dividends) (x) 5% 2.50x B1 Ba3 Expected trend Weighted Average Profitability Score B3 Ba1 Capital Adequacy and Leverage Tangible Common Equity / Tangible Managed Assets (%) 15% 16.00% Ba2 Ba2 Debt / EBITDA (x) 10% 8.00x Caa2 B3 Expected trend Weighted Average Capital Adequacy and Leverage Score B1 B1 Asset Risk Lease Residual Value Exposure / Tangible Common Equity (%) 15% 230.00% Ba1 Ba1 Cash Flow and Liquidity 12-month Coverage Ratio (%) 10% 300.00% Aa3 Aa3 FFO / Total Debt (%) 15% 7.00% B3 B3 Secured Debt / Gross Tangible Assets (%) 20% 55.00% B2 B2 Weighted Average Cash Flow and Liquidity Score Ba3 Ba3 Total Financial Profile Weight 100% Financial Profile Score 100% Ba3 Ba3

Aircraft lessors, October 2018 37 Leasing company scorecard example

Operating Environment

» Scorecard weighs the lower Operating Environment of the A1 Macro Level Home Country Factor Weights Qualitative Scale Score Macro Level Indicator 0% A1 Indicator and the Baa2 Economic Strength 25% Very High - Institutional Strength 50% High + Industry Risk Score Susceptibility to Event Risk 25% Low Industry Risk 100% Baa » The Operating Environment Home Country Operating Environment Score Baa2

receives 0% weight because Factor Weights Score it is higher than the Ba3 Operating Environment Score 0% Baa2 Assigned Financial Profile ADJUSTED FINANCIAL PROFILE Score Score Adjusted Financial Profile Score Ba3 Financial Profile Weight 100% Operating Environment Weight 0% Business Profile and Financial Policy Business Profile and Financial Policy Adjustment » Positive or negative Business Diversification, Concentration and Franchise Positioning 0 Opacity and Complexity 0 adjustments can be made for: Corporate Behavior / Risk Management 0 Liquidity Management 0 » Business Diversification, Total Business Profile and Financial Policy Adjustments Ba3 Concentration and Sovereign or Parent Constraint A1 Franchise Positioning

» Opacity and Complexity Standalone Assessment Range ba2 - b1

» Corporate Behavior Midpoint of Standalone Assessment Range ba3

» Liquidity Management Assigned Standalone Assessment ba3

*Scorecards based on consolidated financial statements are oriented to the standalone assessment for the corporate family

Aircraft lessors, October 2018 38 Mark Wasden Brian Harris V.P. – Sr. Credit Officer Senior Vice President / Team Leader 212-553-4866 212-553-4705 [email protected] [email protected]

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