John Plueger: And let me just add, as I stated in my prepared remarks, our lease placements are roughly two years ahead of the actual deliveries. So when you see this strengthening over the last year, you can just assume that what we’re delivering, for example, this year were largely leases that we struck in 2021 and early 2022.
Jamie Baker: Understood. Thanks for the color, John. Thanks Greg.
Operator: Alright, thank you Jamie. And our next question comes from the line of Hillary Cacanando with Deutsche Bank. Hillary, please go ahead.
Hillary Cacanando: Hi, thanks for taking my question. In the past, you used to break out China separately in your press release. It looks like this time around you combined it with Asia. Could you discover what the exposure to China was in the fourth quarter? And if you’re continuing to reduce the exposure to the country? Thank you.
Gregory Willis: Yes. We consolidated the reason because our exposure to China has gone down significantly below 10%. I think it was below 7% actually, and that’s disclosed in the details of the 10-K. And I know that, that just hit the wire at 1:00 Pacific Time. So it doesn’t surprise you that you weren’t able to find a detail there, but that’s the main reason.
Hillary Cacanando: Okay, got it. Thank you. And then previously, you said that the extension rate was about 90% given the tight market, has that increased at all in the recent quarter? And are you seeing any differences between the extension rates for narrow-body versus the wide-bodies? And then just in terms of economics, are you better off if the airlines extend and you have to incur the marketing costs? Or are you better off if you remarket those aircraft and maybe potentially get higher rates just given the tight market.
John Plueger: Yes, extension. The rates of lease extension have not softened. They continue to remain very strong, well north of 90%. I don’t have the specific calculation in front of me, I believe that’s pretty accurate. Lease rates in the extensions are going up for single aisle and tonal [ph] aircraft. And on that level, I wish we had more of them coming up this year. But we’re seeing a nice appreciation in lease rates. Steve gave some specific examples in an answer to a previous question that we’ve experienced, where in a few cases, we’ve had leases extend, either extend at higher rates or to a new lessee at higher rates than the original leases.
Hillary Cacanando: Okay. And then just, I guess, in terms of economics, are you better off if they extend because you don’t have to be in course of remarketing costs? Or could you get better rates if you remarket them?
John Plueger: That’s a good question, and it’s very much a case-by-case basis. We do look at that question on every single extension versus transferring to another carrier. So that is very much a part of the calculus.
Hillary Cacanando: Okay, got it. Thank you so much.
Operator: Alright thanks Hillary. [Operator Instructions] And our next question comes from the line of Terry Ma with Barclays. Terry, please go ahead.
Terry Ma: Hi, thanks, good afternoon. I think in the 10-K, you called out 22 returned aircraft this year. Any color you can give on how many of those have actually transitioned versus how many aircraft that are waiting the transition?
Gregory Willis: Terry, what I would point you to is our utilization percentage, and that’s at 99.9% and about — I mean, almost all of our airplanes are subject to lease at the current moment. I think a lot of these were regular returns. So we had a customer lined up to take the airplane at the return check. So it’s a pretty seamless operation.
Terry Ma: Got it. So even the 7 aircraft that were returned this quarter, they should be earning rental revenue in Q1.
Gregory Willis: Yes.
Terry Ma: Okay. Got it. That’s helpful. And then you mentioned lease rates on new deliveries are higher. Is there any color you can give even ballpark, how much higher the lease rates on 2024 deliveries and 2025 deliveries are relative to what’s on book today?
Gregory Willis: What you can do is you can look at — there’s a lot of appraisal data out there that has shown what’s going on with lease rates. And I’m a little hesitant directing you to the appraisal data because they typically lag the market by 6 to 12 months, but they’ve been very vocal in their views on what’s happening with lease rates, and you can see some very significant 10% to 15% increases in lease rates over the last period of time.
Steven Hazy: Well, also, please be reminded that many of our leases that we wrote in 2021, 2022, had interest rate adjusters. So when the aircraft delivers, we look at the 5-year treasury or 7-year treasury or some benchmark and then the lease is adjusted not only for the escalation from the manufacturer also for the prevalent interest rates at the time of delivery. So based on the current interest rate situation, you can mathematically derive that aircraft delivering today are at a higher lease rate than they were 12, 18 months ago.
Terry Ma: Got it. Thank you.
Operator: Okay, thank you Terry. And our next question comes from the line of Ron Epstein with Bank of America. Ron, please go ahead.
Ronald Epstein: Hey good evening guys. Just a couple of quick ones, if I can. And you mentioned this a little bit in the prepared remarks before, but how long do you think it’s going to take until the MAX gets back to some sort of regular rate of cadence, meaning and I guess this was asked in a sense before, I mean, how long do you think the supply and demand imbalance is going to be in the narrow-body market, right? I mean, it could be years, years, right? Are we thinking about this wrong?
