Helane Becker: Thanks very much, operator. Hi, everybody, and thank you for the time. I have exactly two questions. The first question is what’s your expectation for deliveries midway through the quarter? I know you said what you’re contracted to get. But how many of — how much of that do you think will actually be delivered?
John Plueger: It’s really hard to tell because both manufacturers are working hard to cram in as many deliveries as they can in November and December to get close to what they targeted and pronounce to Wall Street.
Helane Becker: Okay.
Steve Hazy: Our feeling at the moment, Helane, is that, neither of the two big players will reach the target deliveries that they forecast. And for two reasons, one, you’re well aware of the 737 MAX issues where they have to rework certain part of the structure and then the FAA has to sign off on each aircraft and then 787s are just perennially delayed in Charleston. And then on the Airbus side, the situation with engine suppliers, mainly Pratt & Whitney, is not enabling Airbus to meet their fourth quarter targets. And of course, a lot of engines are being diverted as spare engines to keep airlines flying. So we’re a little bit more cautious than others on fourth quarter deliveries.
John Plueger: Helane, that’s why we’ve done our best. In my remarks, I guided that, we’re expecting a range of maybe 900 million to about 1.1 billion of aircraft for the fourth quarter. And that would yield about for the entire year $4.3 billion to $4.5 billion. But for the reasons Steve indicated, this could be — this could be off.
Steve Hazy: And let me just point out something to all of you who are listening in, whether we get an aircraft in, say, early December or middle of January, has almost no financial impact on the company because on a 12-year lease, we’re still going to get the same cash flows, particularly in 2024-’25 and onwards. So missing a delivery at the end of the year has minimal impact on Air Lease. Missing the delivery in the first half of the year has a much greater impact because it reduces the number of rental months for the remainder of the year. So while it’s upsetting to us, I don’t believe that some of aircraft that will slide into early January of ’24 will really affect our financial performance.
Helane Becker: That’s really helpful. Thank you. And then my other question is, I don’t think you have any freighters, and that all of a sudden among leasing companies became very popular for whatever reason. And I’m wondering how you think about that, how you think about the freighter market?
John Plueger: Well, clearly the cargo market has softened a little bit as was to be expected with the large return to capacity of the passenger airliners post-COVID and the strong recovery we’ve seen. So this is sort of a normal fluctuation that we see. Having said that, we only have one freighter aircraft in our fleet today.
Steve Hazy: Well, it’s a partial freighter.
John Plueger: Partial freighter conversion.
Steve Hazy: It doesn’t have the cargo door.
John Plueger: So for us, it really — doesn’t really have much of an impact on us today.
Helane Becker: Okay. Thank you very much.
John Plueger: Welcome.
Operator: Your next question comes from the line of Jamie Baker from JP Morgan. Your line is open.
James Kirby: Hey, this is James on for Jamie. Thanks for taking my questions. Just starting off, in the US, there has been pressure on the ultra low-cost carrier business model. Just wanted to hear your thoughts if you’re also seeing that and if that would impact your decision to do business with an airline, that is an ultra low-cost carrier?
John Plueger: No, I tried to cover that in my opening remarks, James. The bottom line is, no, we don’t have any concerns from the airlines of the world and if there is softening aircraft demand. I gave you a contrast between a few LLCs in Europe and the US over the past month or two reporting some softening, and yet in the last several days, Southwest and Lufthansa have reported very strong bookings earnings. So if nothing else, we — our gut tells us this is just a return to normal seasonal demand.
Steve Hazy: And we don’t make placements decisions for 2026/2027 on results for a few weeks or a month of an airline because while they may report some softness in some reservations, maybe they’ll have a record Thanksgiving, and then everything changes. I think the media tends to be very trigger-happy and we try to look at more of the long-term trends of each airline customer.
James Kirby: Got it. That makes sense. That’s it from me. Thanks.
John Plueger: Okay.
Operator: Your next question comes from the line of Vincent Caintic from Stephens. Your line is open.
Vincent Caintic: Hi, good morning. Good morning. Thanks for taking my questions. And I have two of them. So I’ll just ask them both. The first one on the dynamic between aircraft deliveries and aircraft sales. So it’s nice to see that the large aircraft sales pipeline of that $1.8 billion. So that’s even at the high end of the year 2023 guidance of the $1 billion to $1.2 billion. And I think historically the pipeline of sales have been tied with purchases. So you had a strong sales activity and strong delivery activity. So I’m just curious if maybe we’re talking about these delivery delays, but maybe the outlook is better or how you’re thinking about that dynamic between the two? And then just a second question, if you can update us on how you’re thinking about lease rates versus your cost of funds, I know the cost of funds have been going up, but so have the lease rates, maybe you can just talk about that? Thank you.
John Plueger: Yeah. Thanks, Vincent. I’ll take the first one. Look, I think, you have to realize going back, during COVID pandemic, we significantly slowed down aircraft sales. In fact, we virtually stopped them. So we’ve now returned to a more normalized pace, and we’ve been deliver — dealing with delivery delays now for a number of years. So in the big picture, given those delays, those were kind of normalized out. And as Steve mentioned in an answer to an earlier question, if we have a delay of a delivery in the fourth quarter into the first quarter, it doesn’t really impact us. We have now returned based upon robust aircraft values to a normalcy of aircraft sales. So our goal is to consider delivering and to continue delivering a fairly normal pace quarter to quarter to quarter of aircraft sales. So I would just say in the grand scheme of things, those two things have sort of evened out.
