SKY Leasing The Future of Aircraft Leasing A View From a Veteran - - PowerPoint PPT Presentation

PRELIMINARY │ SUBJECT TO FURTHER REVIEW AND EVALUATION CONFIDENTIAL

SKY Leasing

The Future of Aircraft Leasing – A View From a Veteran

October/November 2017

CONFIDENTIAL

Successful History of Creating World Class Aircraft Leasing Companies

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1988-1995

Pegasus founded by Rich Wiley

• Acquired 300+ aircraft

valued at over $3.0B

1997-2001

PALS Securitizations

• Launched four aircraft

securitizations raising

• ver $3.0B

2004

Pegasus management team founded PAFCO

• Equity capital of $300M

provided from Oaktree Capital and management

2007

PAFCO sold in its entirety to Terra Firma/AWAS for $5.2B

• Since 2004, PAFCO
• riginated a fleet of 86

aircraft and 39 commitments valued at over $5.0B

• Fleet had an appraised value
• f $3.7B

2010

JSA founded

§ Equity capital of $500M provided from Oaktree Capital and management

2012

JSA sold in its entirety to Mitsubishi UFJ and Leasing (“MUL”), the largest leasing company in Japan

• Since 2010, originated a

fleet of 80 aircraft and 15 commitments valued at over $3.3B

2015

SKY founded by SKY management, ATL, and PSP

• $250M initial committed

capital with additional capital available as required

2016

SKY originates 18 aircraft worth $1.0B+

• Closed 14 aircraft
• Raised $750M debt

facility with DB, BAML, and CA as JLAs

Present

AWAS successfully merged with DAE to create one of the largest aircraft leasing companies with a total value

• f over $14B

Present

JSA has continued to scale the platform through organic growth to become a $7.0B+ platform

2017

SKY continues strong fleet growth

• In year-to-date 2017, SKY

has originated a total of 23 additional aircraft bringing the closed and committed portfolio to 41 aircraft worth

• ver $2.5B

Present

SKY continues to scale its existing platform targeting $1.0B+ annually in fleet growth

CONFIDENTIAL

SKY Leasing Facts and Figures

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Q ATL Partners, PSP Investments, and SKY Management Ownership Total aircraft Q 41 owned / committed Aircraft portfolio 1,3 Q 64% Narrowbody, 21% Medium Widebody, 15% Freighter Aircraft manufacturer 1 Q 51% Airbus, 49% Boeing Aircraft age 1,2 Q Under 3.0 years Customers Q 23 airlines in 17 countries across 5 major geographic regions Remaining lease term 1,2 Q Over 8.0 years Global presence Q 31 employees across Ireland, San Francisco, and Hong Kong 4 Leadership Q Rich Wiley, Austin Wiley, and Steve Patch Fleet value 1 Q Over $2.5B

1. Fleet Values provided by MBA, ASG, and IBA as of September 2017 2. Calculated as of September 2017 3. Medium widebody = B787 family and A330 family (200-300 passenger seats) 4. Hong Kong office to be established Q1-2018

CONFIDENTIAL

Major Aircraft Leasing Trends

Aircraft Replacement Cycle Increased Production from the OEMs Increased Lessor Participation Increased Institutional Investment Lessor and Institutional M&A Activity

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CONFIDENTIAL

Demand for New Aircraft Replacing Older Fleets

Demand for new and young aircraft derived from increases in traffic growth and from the need to replace older, less-efficient aircraft

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Source: ICF Analysis - July 2017

~18,000 new aircraft required to satisfy demand fueled by growth of 8,000 aircraft and replacement of 10,000 aircraft

2017 – 2026 FLEET FORECAST COMMERCIAL JETS

Replacement Fleet

• Includes older current

generation aircraft

• Less fuel efficient

Retained and Growth Fleet

• Enhanced fuel efficiency
• Lower maintenance costs
• Improved capacity, range,

and reliability

• Mitigates obsolescence

risk 9,989 24,846 15,650 8,102 10,000 20,000 30,000 40,000 2017 2026 Replacement Retained Fleet Growth

CONFIDENTIAL

5,000 10,000 15,000 20,000 25,000 30,000 Pre 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cumulative Aircraft Count by Vintage

Cumulative A/C

Demand for New Aircraft Replacing Older Fleets Cont’d

Fuel efficiency, maintenance costs, capacity and range, reliability, and consumer preference are driving fleet replacement

Aircraft from 2005 and older are expected to be replaced by young current generation and next generation assets

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Source: ICF, Ascend, SKY Analysis

9,989 Replacement Aircraft

CFM56-7B/3 and CFM56-5B/3 Enter into Service CFM56-7BE/PIP and CFM56- 5BE/PIP Enter into Service V2500- Select One Enter into Service Sharklets Enter into Service

CONFIDENTIAL

OEM Production Rate at All Time Highs

The average number of aircraft deliveries per airline has increased by over 2x This has increased airline concentrations for lessors and the need for active trading and M&A activity

Aircraft production has more than doubled since 2003 with airlines taking on more capacity per operation

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588 1,429

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 200 400 600 800 1,000 1,200 1,400 1,600 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Average # of Aircraft Delivered per Airline # of Aircraft Delivered per Year

Historical OEM Delivery Schedule

Deliveries (left axis) Aircraft per Operator (right axis)

Source: Ascend, SKY Analysis

CONFIDENTIAL

Increased Lessor Participation

Lessor activity is most prevalent in aircraft between 8 and 18 years of age 18+ year old aircraft has the lowest lessor participation as aircraft are ultimately sold back to the airline

The role of leasing companies has nearly tripled since 1990 with 43% of the global fleet leased by airlines from lessors

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Source: ICF Analysis - July 2017

CONFIDENTIAL

Increased Institutional Investment

Long stable cash flows and dollar denominated assets have attracted large institutional investors from all the major regions around the world

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Aircraft investment has seen a broader participation over the last two decades from pension funds, private equity, financial institutions, insurance companies, and sovereign wealth funds

Early 2000’s Present

CONFIDENTIAL

Lessor Consolidation and Platform Requirement for New Entrants

Large lessors will continue to identify M&A and joint venture opportunities to increase growth and manage risk while new entrants will require experienced platforms to enter the industry

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Recent Large Lessor M&A & Joint Venture Activity Recent New Entrants Through Platform Acquisition

M&A Growth M&A Growth M&A Risk Management M&A Risk Management

CONFIDENTIAL

Conclusion

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Aircraft replacement cycle driving increase need for capital funding Increased capital requirements call for greater lessor participation Large lessors need to accelerate growth and manage risk through M&A and joint venture activity Increased demand for aircraft investment but barriers to entry require platform acquisition for new entrants