Fly Leasing Limited (FLY)

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Call Start: 9:00

Call End: 9:34

FLY Leasing Limited (FLY)

Q4 2010 Earnings Conference Call

March 2, 2011 9:00 a.m. ET

Executives

Matt Dallas – Investor Relations

Steve Zissis – President and CEO, BBAM

Colm Barrington – Chief Executive Officer

Gary Dales – Chief Financial Officer

Analysts

Gary Liebowitz – Wells Fargo Securities

Helane Becker – Dahlman & Rose

Joe Gill – Blackstone

Presentation

Operator

Good morning. My name is Leticia, and I will be your conference operator today. At this time, I would like to welcome everyone to the FLY Leasing Limited Fourth Quarter 2010 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Dallas, you may begin your conference.

Matt Dallas

Thank you and good morning, everyone. I am Matt Dallas, the Investor Relations Manager of FLY Leasing and I'd like to welcome everyone to our fourth quarter and full year earnings conference call. FLY Leasing, which we will refer to as FLY or the company throughout this call, issued its fourth quarter and full year earnings results press release earlier today, which is posted on the company's Web site at www.flyleasing.com.

Representing the company today on this call 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 the 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 expressed written consent of the company. A replay of this call is available for two weeks from today. An archived webcast of the call will be available for one year on the company's Web site.

I will now hand the call over to Steve Zissis, the President and CEO of BBAM to give you his view on industry conditions.

Steve Zissis

Thanks, Matt and thanks everybody for joining us today. Demand for leased aircraft from airlines continues to improve month to month with continued strong demand from India, South East Asia and Latin America, and to a lesser extent, North America, China, Russia and Europe.

Lease rates for a newer 737-800's are approaching pre-crisis levels while Airbus narrow bodies, let lag during the early part of 2010 are now showing signs of good demand with [indiscernible] increases and lease rates.

Although we remain confident, we are in the early stages of a cyclical recovery that could typically last three to four years. We are concerned about the sudden increases in oil prices that will certainly dampen demand and perhaps cause a slow down in the market.

As we have indicated in several previous calls, capital continues to flow into the market-seeking sell leased backup opportunities and aircraft subject to leases. Although this new capital is making it more challenging for FLY [indiscernible] attractive deals, it is adding liquidity to our existing portfolio. This was evidenced by several aircraft we sold in 2010, above our book values.

Doing some recent sell lease back campaigns, we noticed pricing being done at levels approaching pre-crisis levels for new, narrow body aircraft types, before adjusting for the current interest rate environment.

Although it's difficult to predict how long these conditions will last, we do expect things to calm down as capital sources exhaust their budgets and airlines increasingly look to the lessor market to finance the heavy schedule of new deliveries in 2011.

Supply may be further compounded by airlines seeking leasebacks on older aircraft in order to safeguard their balance sheet from any temporary liquidity issues caused by the sudden increase in fuel prices. Obviously, this is a moving target and one we continue to monitor on a daily basis.

The [indiscernible] continues to be more attractive in aircraft leasing business. Not only bank that more readily available today than it was same time last year but credit marketers are decreasing and terms are improving across the board for borrowers. Capital market conditions are also improving steadily.

I'll conclude my comments with a quick few words about BBAM's operations and platform. In addition to servicing FLY's 60 aircraft portfolio, at the world’s third largest aircraft leasing and management company, BBAM also services an additional 340 aircraft for other third parties.

The size and scale of BBAM platform gives FLY access to market information and trading opportunities that would not otherwise be available to a company of this size. We plan to employ BBAM's significant resources to grow FLY prudently over the coming months.

Read the rest of this transcript for free on seekingalpha.com