Jamie Baker: Excellent. Thank you for that. And if you don’t mind me saying, it’s examples like that that I think really do resonate with investors. So, I really appreciate the comment. A quick follow-up though, I appreciate what John said in his prepared remarks, also the response that Greg just gave. But on the net spread contracting, is there also, I don’t know, maybe a power by the hour nuance or maybe the increased sales? I don’t want to beat a dead horse on this. I know you touched on it. I guess Mark and I are just still a little bit surprised by the contraction. That’s all.
John Plueger: Well, let me just add, Jamie, that, yes, there was a little bit of contraction from the first quarter of last year. But there was actually about a tenth of a basis point increase from the fourth quarter of 2025. So, look timing does change quarter-to-quarter. The timing of the aircraft sales as well as when we take asset deliveries. The new aircraft we deliver today will enjoy an increasing lease rate margin over the projected eight years or so that we will own the aircraft. Why? Because, as you know, we lease the aircraft out at a fixed lease rate, but the aircraft depreciate over time, which is why when we sell these older aircraft, they tend to be at the higher end of our lease yields during our holding period time and when we first take them until they’re a little bit lower.
So I understand your thought and your continued kind of thinking about this, but I would encourage you again, it’s not a quarter-to-quarter sort of analogy, look at a pretty positive trend. We’ve told you now our margins are probably going to stay about where they are through the end of 2024 and then increase thereafter. That’s about the best overall outlook we can give.
Jamie Baker: Okay, perfect. I appreciate the added color. Thank you, gentlemen.
John Plueger: Thanks, Jamie.
Operator: And we’ll take our next question from Stephen Trent with Citigroup. Your line is open.
Stephen Trent: Yes, good afternoon, gentlemen, and thanks for taking my question. The first is if you could refresh my memory on where things stand with the potential insurance proceeds you could get from the aircraft trapped in Eastern Europe.
John Plueger: Steve, you want to talk about that?
Steven Hazy: Yes. So let me just explain how the aircraft insurance works for these types of situations. So the primary insurance for these aircraft is carried by the airline itself. Okay? The airlines in Russia insure them through the Western markets, but there was a conduit, which is a Russian insurance company broker. Okay? But the insurance is spread among many, many underwriters that are primarily European. There was a few in Japan and in the U.S. Okay. Then there’s a second layer of insurance, which Air Lease procures for its entire fleet, which is to cover us in case the airline’s coverage for some reason is either not valid or those carriers do not meet their obligations. So we’re engaged in a two-pronged activity. One is to solidify an arrangement that has already happened with some of our aircraft through a designated Russian insurance company, which has been approved by the Russian government and also approved by OFAC [ph] here in the U.S. And then we’re pursuing legal action against our carriers, where we acquired this additional layer of insurance to cover all of our planes that were seized.
And we’re pursuing those activities. So there’s ongoing negotiations. There’s court cases that are actually taking hold starting next month in Europe. So there’s multiple actions to work very hard and diligently to recover our planes. And hopefully, if all goes well, in the coming quarters, we’ll be able to report some progress on all of these fronts.
Stephen Trent: Okay, that’s super helpful. I really appreciate it. And just one follow-up, kind of a follow-up to Helane’s question. I saw on a sequential basis, it looks like your net exposure, geographically speaking, looks like it went up in Europe and it went up in North America and went down in some of the other markets. Am I reading too much into that? That’s just kind of a short-term nuance and you’re still thinking kind of some of the Asian markets as places for long-term growth?
John Plueger: I’ll take that one. So, no, this is just part of our natural plan. Well before COVID and when we were much earlier in our development, we had a very heavy exposure into China. At one point, it was 22%. We did great leases there at the beginning phase of our company, but they were a little bit disproportional. That percentage was disproportional for any country. It didn’t really matter who it was. And so we progressively, as we grew our balance sheet, moderated our exposure a bit more into China and have been naturally going forward and renewing some leases there, taking some aircraft back, but now have moderated over the course of the past three to four years such that China is now — we used to disclose China separately as an item, but now it is insignificant.
It’s about — well, not insignificant. It’s about 6%, so we didn’t feel that warranted breakout. In the meantime, our lease placement activity has been very robust in Europe, which has been a primary market for us for a long time. So I would just call it a natural evolution of nothing more than what we’ve been doing over the past three to four years.
Steven Hazy: Just to add to John’s comments, we have sold a number of aircraft that we have on lease to Chinese airlines, to Chinese institutions that have an appetite for those assets. But what you don’t see in our release is that we have a large number of new aircraft that we’ll deliver later this year and in 2025 that are destined to go to airlines in Asia, particularly in South East Asia. In places like Malaysia and Thailand that are recovering and Vietnam. And these are airlines that are national flag carriers where traffic is recovering at a very rapid pace, high double-digit rates. So while our China exposure is coming down, we do have a lot of aircraft, new aircraft, both Boeing and Airbus, going into Asian markets, but not necessarily mainland China.
