Fly Leasing Limited (FLY)

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FLY Leasing Limited (FLY)

Q1 2013 Results Earnings Call

May 2, 2013 9:00 AM ET


Matt Dallas - Investor Relations Manager

Colm Barrington - Chief Executive Officer

Gary Dales - Chief Financial Officer

Steve Zissis - President and CEO, BBAM


Helane Becker - Cowen Securities

Gary Liebowitz - Wells Fargo Securities

Richa Talwar - Deutsche Bank

John Godyn - Morgan Stanley

Glenn Engel - Bank of America Merrill Lynch



Good morning. And welcome to the FLY Leasing Limited First Quarter Earnings Conference Call. My name is Christie and I will be facilitating the audio portion of today’s interactive broadcast. All lines have been placed on mute to prevent any background noise. This event also features streaming audio, which allows you to listen to this show through your PCs speakers. For those of you on the stream, please take note of the options available in your event console. (Operator Instructions)

At this time, I would like to turn the show over to Matt Dallas. Sir, please go ahead.

Matt Dallas

Thank you, and good afternoon and good morning to everyone on the East Coast. This is Matt Dallas, the Investor Relations Manager at FLY Leasing. And I’d like to welcome you to our first quarter 2013 earnings conference call.

FLY Leasing, which we will refer to as FLY or the company throughout this call, issued its first quarter earnings results press release earlier today, which is posted on the company’s website at

Representing the company on this call today will be Colm Barrington, our Chief Executive Officer; Gary Dales, our Chief Financial Officer; and Steve Zissis, the President and CEO of BBAM, the company that manages and services FLY’s fleet.

I’d like to begin the call by reading the following Safe Harbor statement. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements include, but are not limited to, statements regarding the outlook for the company’s future business and financial performance. Forward-looking statements are based on current expectations and assumptions of FLY’s management, which are subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual outcomes and results may differ materially due to factors that are summarized in the earnings press release and are described more fully in the company’s filings with the SEC. Please refer to these sources for additional information.

FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise.

This call is the property of FLY and cannot be distributed or broadcast in any form without the express written consent of the company. A replay of this conference call is available for one week from today. An archived webcast of the call will be available for 90 days on the company’s website.

I’d now like to hand the call over to Steve Zissis. Steve?

Steve Zissis

Thanks, Matt, and good morning, everyone. In my prepared remarks on our last earnings call, just eight weeks ago, I’d touch on a few key themes for our business and the overall marketplace. I can confirm that generally speaking these themes persist today and I’ll briefly recap them for you on today’s call.

First, demand from our airline clients for aircraft and operating leases continues to show underlying strength that surprises to the upside. In just a first months of the year, we have signed up new leases or executed letters of intent on six aircraft, five new remarketings and one out right sale.

Lease rates continued to improve especially for used 800s, as demand exceed supply during the high season, our Airbus narrow-body continued to strength albeit from a very low level.

Many financial institutions including healthy mix of banks, insurance companies, sovereign wealth funds, pension funds and other financial investors are recognizing that aircraft leasing business offers a steady and predictable return opportunity with relatively low volatility in periods of financial distress.

This has resulted in a significant flow of new capital in the sector, which has resulted in an increasing asset values. As we have stated on other calls with our shareholders, we are targeting three to $300 million to $500 million of new aircraft acquisitions in 2013, and we think we can exceed this target while still making prudent investments and making attractive returns for our shareholders.

We expect the growth to come from a mix of new or nearly-new aircraft and selected acquisitions of mid-life in-production aircraft. The new or nearly-new equipment represents in our view, relatively safe corner of the market to deploy capital for predictable returns.

Investments in mid-age equipment represent strong prospects for attractive returns with reasonable downside protection from current pricing levels. As always, we seek our relative value and remain committed to be nimble and agile in what is a dynamic sector.

As of today, we closed on one aircraft and committed to five additional aircraft, together these six aircraft are expected to add approximately $215 million of acquisitions to our portfolio in aggregate. This puts us on track to meet or exceed our growth targets for 2013.

The combination of steadily improving lease rates, increasing liquidity in our portfolio and the attractive growth opportunities we see for FLY will drive revenue growth over the coming quarters.

As we think about profitability of our business, one must consider the strength of the financing markets, because interest rates is one of the key economic determines of financial success in aircraft leasing business. In short, fixed income capital markets conditions continued to be very strong.

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