Air Lease Corporation (NYSE:AL) Q4 2022 Earnings Call Transcript

Greg Willis: They’re not in the fleet count, because they’ve been written off, but they were contributing last year and not contributing this year.

Ron Epstein: Got it. Okay. That makes sense. And then not to sort of beat a dead horse, but I’m just trying to get a sense. I mean, potentially, how upside down are you guys given the lease rate rise, right? I mean, I thought that was something we didn’t have to worry about, that you’d be pretty duration matched on leases and debt, right? I mean, where did I get that wrong?

John Plueger: Well, let me answer that, Ron. I don’t think we’re upside down. I think we’ve heard some commentary, well, interest rates have doubled. Have your lease rates doubled? Well, no, lease rates have not quite doubled yet. It’s going to take some time. We’re very happy with our funding and the maturities of those fundings. We don’t have any huge towers. We are very happy with our funding in line going in for all of our deliveries of 2023 with all the sources that we have going forward. So I actually would say I don’t think we feel how to balance in anything.

Ron Epstein: Okay. Good. Great. Perfect. And then one last one if I may. I mean, your commentary around the aspirational delivery targets of the OEs, how far behind you think they really are? I mean, when we listen to a lot of the suppliers, the suppliers are all over the place. Airbus sort of — they’re behind. Boeing’s behind. Things are slipping. If we were — can you give us a sense on how you think about it? If I was running an airline today, and I was expecting an airplane in 12 months, I mean, realistically, what am I getting today?

John Plueger: I’ll give an answer, and then I’m going to turn it over to Steve also to answer. Look, I think our assessment is kind of what I hinted at in our remarks. We think we’re facing the supply chain constraints for the next at least two, possibly three years. And I know that the OEMs don’t like to — I mean, it’s a tough thing. We want our airplanes, too. But there’s just so many different factors, and the supply chain is so vast and labor problems. I mean, it’s really been tough to get labor back in. And you’ve seen the Boeing and Airbus hiring a lot more. It’s just really hard, Ron, to predict that supply chain. And the other aspect is many of the smaller suppliers who are on fixed rate contracts a couple of years ago and they are still on fixed rate contracts in terms of what they get for whatever widget or unit they have shipped are now having to restart that production in a much higher cost environment.

And that’s provided a financial strain. So — and then, Steve, you might want to comment on the engine side of things.