Investor and Analyst Day Presentation. April 5, 2011

Transcription

1 Investor and Analyst Day Presentation April 5, 2011

2 Forward Looking Statements / Property of Aircastle Certain items in this presentation and other information we provide from time to time, may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted Net Income and Adjusted Net Income plus Depreciation and Amortization and the global aviation industry and aircraft leasing sector. Words such as anticipates, expects, intends, plans, projects, believes, may, will, would, could, should, seeks, estimates and variations on these words and similar expressions are intended to identify such forward looking statements. These statements are based on management s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward looking statements; Aircastle Limited can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward looking statements contained in this presentation. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle Limited s expectations include, but are not limited to, significant capital markets disruption and volatility, which may adverselyaffect affect our continued ability to obtain additional capital to finance our working capital needs, volatility in the value of our aircraft or in appraisals thereof, which may, among other things, result in increased principal payments under our term financings and reduce our cash flow available for investment or dividends; general economic conditions and business conditions affecting demand for aircraft and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and/or reduced yields, operational disruptions or unavailability of capital caused by political unrest in North Africa, the Middle East or elsewhere, and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases; termination payments on our interest rate hedges; and other risks detailed from time to time in Aircastle Limited s filings with the SEC, including Risk Factors as previously disclosed in Aircastle s 2010 Annual Report on Form 10 K, and in our other filings with the SEC, press releases and other communications. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differfromfrom those contained in any forward looking statements. Such forward looking statements speak only as of the date of this presentation. Aircastle Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. The information contained herein is the property of Aircastle Limited and shall not be disclosed, copied, distributed or transmitted, or used for any purpose, without the express written consent of Aircastle Limited.

3 Agenda Ron Wi Wainshal hl Chief Executive Officer Intro Industry Overview Aircraft Leasing Primer AYR Profile & Servicing Capabilities Mike Inglese Portfolio Overview Chief Financial Officer Financial Performance Capital Structure Bob Peart Chief Investment Officer Investment Opportunities Ron Wainshal Concluding Remarks Chief Executive Officer 3

4 Aircastle Overview Aircastle (NYSE: AYR) is a leading commercial jet aircraft lessor with a global presence 136 aircraft with 64 lessees in 36 countries as of December 31, 2010 Top tier global leasing company pursuing differentiated growth strategy designed to generate superior risk adjusted returns Modern fleet financed with a conservative capital structure Well positioned to capitalize on the resumption of normal growth trends in both passenger and cargo markets DUBLIN, IRELAND STAMFORD, CT SINGAPORE Lessee Countries Aircastle Offices 4

5 Investment Highlights Positive Long Term Industry Fundamentals Long term growth market expanding at a multiple of global GDP Trend towards more leasing vs. owning by airlines Scarce supply is driving rentals higher Approximately $500 million of new investments completed in 2010 Strong Growth Prospects $700 million of built in growth from the A330 program Projected further investments in 2011: $500 million to $1 billion Modern Aircraft Portfolio & Diverse Customer Base 136 aircraft with 64 lessees in 36 countries 90% is latest generation technology Cargo aircraft expertise Stable Cash Flow & 2010 EBITDA of $491 million; $240 million of unrestricted cash Conservative Long term 61% net debt to net book value of assets Capital Structure Demonstrated capital markets access World Class Experienced management team drawn fromindustry leaders Management Team Global presence with in house expertise Strong Servicing & Completed more than 125 aircraft leases Origination Track Record Fleet acquired via 67 transactions with 54 counterparties 5

6 Consistently Strong Portfolio Performance Consistently delivered portfolio utilization of 98 99% and a rental yield of about 14% Expected Q1:11 utilization of at least 98% and rental yield of around 14% 100% 98% 96% 94% 92% 90% 88% 86% 84% 82% 80% Historical Revenue Utilization and Yield (1) Q1:07 Q2:07 Q3:07 Q4:07 Q1:08 Q2:08 Q3:08 Q4:08 Q1:09 Q2:09 Q3:09 Q4:09 Q1:10 Q2:10 Q3:10 Q4:10 Utilization Yield 16% 15% 14% 13% 12% 11% (1) Aircraft on lease days as a percent of total days in period weighted by net book, excludes aircraft in conversion. (2) Calculated as lease rental revenue / average NBV for the period (Rental revenue does not include maintenance revenue). 6

7 Current Business Priorities Opportunity Aircraft demand recovering and we believe that current technology aircraft values are in the early to middle stages of recovery Action Plan Pursue value add investments with a focus on achieving superior risk adjusted returns Invest $500 million to $1 billion in addition to recent investments and $700 million in builtin A330 program growth Bond market rally is continuing which, combined with low interest trates, provides attractive ti source of capital Maintain stable leverage at ~67% debt to total capital Funding for growth from a combination of cash on hand and bond market financing Capitalize on the cyclic market recovery through asset sales Capture value add premium through asset sales Initial emphasis on newer aircraft where buyer financing is more readily available Focus on driving improvements in financial performance metrics Increase ROE and EPS in 2011 via: Deploying cash in new investment opportunities Profitable asset sales Share repurchase 7

8 Industry Overview 8

9 Aviation Market: Key Trends The recovery in the air transport market is dii driving a strong resurgence in aircraft demandd Supply of modern aircraft is limited (particularly freighters) Strong demand growth coupled with tight supply has led to increasing rental levels Airlines have offset impact of increasing fuel prices thus far; long term outlook less certain Exogenous events: Japan/Middle East 9

10 Air Transport Traffic Rebounds Passenger and freight levels recovered sharply during passenger traffic grew 7.3% vs. 2009, freight traffic surged 18.3% 2009 was the worst year on record for the air transport business Both passenger and freighter levels are now above pre financing crisis levels Air traffic is anticipated to grow faster than GDP as the global economy recovers Historically, passenger and air freight traffic growth at a multiple of 1.5X to 2X GDP growth Air travel growth is being driven by economic growth in large emerging economies 20% Comparison of Airline Traffic to GDP 25% IATA Traffic Projections (Y/Y % Change) 15% 20% 18.3% 10% 15% 5% 0% 5% 10% 5% 0% 5% 7.4% 4.7% 13% 1.3% 1.3% 2.1% 7.3% 6.1% 5.6% 5.9% 6.1% 5.1% 5.1% 5.5% 4.6% 10% 15% F 10% 15% 9.8% E 2010F 2011F 2012F 2013F 2014F GDP RPKs FTKs Passenger Traffic (RPK) Cargo Traffic (FTK) Source: Airline Monitor, ICAO, IATA, IMF. Source: IATA March

11 Record Load Factors; Airlines Regain Profitability Load factors reached record levels in 2010 as demand dgrowth outpaced supply High load factors beginning to drive capacity increases Freight load factors have also witnessed a sharp recovery Given directional cargo flows, load factors above 50% are considered strong Recovery poised to continue and should drive strong profitability and higher h lease rates Passen nger LF (%) 80% 78% 76% 74% 72% 70% 68% 66% 64% Rolling Twelve Months Load Factors Dec 00 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Passenger Load Factor Freight Load Factor 60% 58% 56% 54% 52% 50% 48% 46% 44% reight LF (%) Fr Source: IATA was the most profitable year in history for the airline industry Meaningful regional variations; profitability was highest in Asia Pacific, whereas Europe was, and remains, weak 2011 traffic and profitability expected to remain strong, but growth to moderate Passenger and freight traffic growth return to historically normal levels $, Billions IATA Net Profit Projections $10 $8 $6 $4 $2 $0 $2 $4 $6 $2.7 $4.7 $3.2 $4.3 $2.7 $7.6 $3.7 $1.4 $1.1 $1.0 $0.5 $0.7 $0.5 $0.3 $0.6 $0.1 $0.1 $0.0 North America Europe Asia Pacific Middle East Latin America Africa F 2011F Source: IATA, March Note: IATA projections assume an average oil price of $96 per barrel of Brent crude for

12 Very Few Modern Aircraft Out of Service Very low levels of parked current technology aircraft, many of which are transitioning between operators Parked classics remain at very high levels (~16%), majority being retired instead of returned to service High load factors and limited parked aircraft should drive lease rate increases 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Percentage of Fleet Parked by Type March 2009 March 2010 March /800/ ER A / F/SF/BCF/ERF A319/320/321 (excl. classics) Source: Ascend. 12

13 Tight Supply of Wide Body Freighters Over 50% of s have left the market since 2008 without sufficient replacement capacity Incremental s returning to service barely replace retiring 747 Classics Unclear if 747 8s/777s on order are sufficient for expected growth Further conversions of s necessary to satisfy demand Currently Fs in service, 39 on order 12 in service Fs operated by FedEx, 13 orders by FedEx Several years before 747 8Fs deliver in any significant numbers Freighter Aircraft In Service Fleet On Order F BCF F / ERF SF LRF 747 8F Source: Ascend. 13

14 Strong Demand Expected to Absorb Production Increases Both Boeing and Airbus have announced plans for increased production levels The installed base has increased significantly over time, however, annual deliveries as a percent of the current fleet have stayed relatively constant Despite oscillations, average annual deliveries of ~6% of installed base in the seat market and ~5% in the seat market is observed This suggests that if the global fleet continues to grow at similar growth rates, the market should be able to absorb increased production rates Production increases could cause an initial oversupply situation However, balance should be restored over time, likely through retirement of older types Global Fleet and Annual Deliveries Seats Global Fleet and Annual Deliveries Seats 12, % 3, % 10,000 8, % 2,500 2, % 6, % 1, % 4,000 2, % 1, % 0 0.0% 0 0.0% Global Aircraft Operated Deliveries as a % of Current Fleet Global Aircraft Operated Deliveries as a % of Current Fleet Source: Ascend. Source: Ascend. 14

15 New Aircraft: Limited Impact on Supply Demand Balance New technology aircraft expected to have a limited impact in the near term Airbus has announced that it will introduce a re engined A320 neo aircraft beginning in ~2016 Boeing leaning strongly towards all new replacement for 737NGs towards the decade s end No significant Bombardier C Series sales yet Ongoing delays in new generation mid and wide body aircraft 787 entry into service (EIS) now expected later in 2011 but production ramp up expected to be slow A350XWB entry into service still officially targeted for 2013, but this could well slip Boeing 777 replacement now appears to be further off into the future The freighter (and pax) introduction also experiencing delays with EIS in second half 2011 Boeing stopped producing the freighter in 2008 and 777F production has been very limited 15

16 Recovery for New Gen Narrow Body Rentals, But Not Classics Rentals for current generation narrow body aircraft are recovering slowly but are still a long way from peak levels Boeing 737 NGs outperforming Airbus A320 family Smaller variants (e.g., A319 and ) are performing worse, however, due to stronger demand for larger capacity aircraft with similar per trip costs We believe this trend is unlikely to reverse Lease demand for older technology aircraft has remained weak and we don t anticipate it will recover much, if at all $400k Narrow bodies 5 Year Constant Age $400k Narrow bodies 15 Year Constant Age $350k $350k $300k $300k Mon nthly Rent $250k $200k thly Rent Mont $250k $200k $150k $150k $100k $100k $50k A A Source: Ascend. $50k A Source: Ascend. 16

17 Wide Body (Passenger & Freighter) Rentals Rising The rental recovery started later but has been more pronounced for wide bodies (Pax & Freighter) Driven by the rising levels of long haul premium traffic Ongoing 787 delays and virtually no 767 production strengthening the supply side ly Rent $950k $900k $850k $800k $750k $700k $650k $600k A330s, particularly newer, higher capability $550k models faring better than 767s $500k F market has improved significantly Month 2003 Source: Ascend. Wide bodies (Freighter) 10 Year Constant Age F (10 Year) 2011 $900k Wide bodies 5 Year Constant Age $900k Wide bodies 10 Year Constant Age $800k $800k $700k $700k Mon nthly Rent $600k $500k $400k $300k $200k Mon nthly Rent $600k $500k $400k $300k $200k A A ER A A ER ER Source: Ascend. Source: Ascend. 17

18 Higher Fuel Cost Driving Demand for Current Generation Technology Oil prices again rising, many forecasting sustained oil prices above $100/ barrel Rising crack spreads on jet fuel amplifying lf the effect So far airlines have offset the majority of fuel price increases Tight aircraft supply (coupled with greater demand inelasticity) has led to high load factors which has in turn provided greater pricing power to airlines Aircraft demand focused on more fuel efficient current generation technology and away from classics $180 Crude Oil & Jet Fuel Prices per Barrel $160 $140 $120 $100 $80 $60 $40 $20 $ Average Crude Oil Price Average Implied Jet Fuel per Barrel Source: Bloomberg. - Average crude price represents average of European Dated Brent, West Texas Intermediate Cushing, West Texas Intermediate Midland, and West Coast Alaskan North Slope. - Average jet fuel represents average of New York Harbor, Gulf Coast, Mid-Continental, and West Coast Kerosene. 18

19 Aircraft Leasing Primer Pi 19

20 Aircraft Leasing Primer Triple net leases; lessee is responsible for maintenance and insurance Lease terms of 3 to 12 years Rentals and aircraft prices are typically set in US Dollars Rentals are usually fixed, equal amounts paid monthly in advance Security deposits and maintenance payments collected Aircraft are portable assets with global customer base 20

21 Aircraft Leasing Economics Annual Rentals Over An Aircraft s Life Monthly Rental ls ($000s) $400 $300 $200 $100 $0 Mo. LRF: 0.80% Mo. LRF: 1.00% Mo. LRF: 1.10% Mo. LRF: 1.40% Aircraft Age Aircraft are long lived assets An aircraft s value can be expressed as the present value of a series of lease cash flows and a scrap residual Lease rentals typically decrease with each lease over time While the initial lease is important, approximately half of a new aircraft s value derives from subsequent cash flows Components of Aircraft Value After the First Lease Lease 2 26% Lease 3 13% Lease 4 6% Residual Value 4% Notes: Illustrative example of new delivery A320 with assumed purchase price of $41.5M. Aircraft value calculated as NPV of all lease rentals and residual value of $8M (comprised of expected part out value and maintenance compensation), discounted at 7%. Excludes any maintenance reserve, receipts and reimbursements. The numbers contained in the example above are for illustrative purposes only and these figures are based on a variety of assumptions and estimates which may turn out to be materially inaccurate. 21

22 AYR Profile & Servicing i Capabilities i 22

23 Strong Integrated Platform with Global Reach In house capabilities across all aircraft leasing functions Experienced management team drawn from leading industry players Global presence with offices in Stamford, Dublin and Singapore ORIGINATION & PLACEMENT 10 Professionals Significant platform scalability potential Expertise to originate custom tailored transactions Focus on value add transactions Rigorous portfolio management monitored from business, risk and technical viewpoints TECHNICAL & ENGINEERING 10 Professionals Strong freighter market in house skills to help optimize residual values Complete focus on our own portfolio World Class Servicing More than 125 aircraft placed on lease with over 50 customers since inception 2010 revenue utilization of 99% while annualized rental yield remained steady at ~14% Converted six aircraft to freighters LEGAL & CONTRACT MANAGEMENT 12 Professionals PRICING & RISK 5 Professionals 23

24 Solid Progress on Lease Placement Activities of 11 scheduled expirations placed / contracted for sale: 7 aircraft have executed or committed leases or lease renewals 2 aircraft subject to sales agreements Actively remarketing five aircraft early terminated in Q1:11 Represent ~2% of Q4:10 lease rental revenue 2012 Signed lease with Virgin Blue for one new A delivering in Spring aircraft representing 16% of NBV with scheduled lease expiries Making progress on 2012 lease roll off In active discussions relating to more than half of the aircraft with expiring leases 24

25 Middle East Exposure Management Remaining exposure consists of five aircraft (~6.5% of 2010 lease rental revenue for 2010) Emirates: Two ERF freighters (~5.3% of total AYR lease rental revenue for 2010) Tunisair: One Jordan Aviation: Two 737 Classics Early terminations in Q1:11 for five A320 family aircraft Lotus (Egypt): Four A320s Discussions started in late 2010 following intense competition from European and regional operators flooding the Egyptian market One A320 early terminated in early Q1:11 to reduce pressure; early termination payments and engine contribution collected Ceased operations in February after tour market collapse and leases terminated; remaining three A320s in Cairo in the care of our MRO while deregistration process is in work Royal Falcon (Jordan): One A319 One A319 early terminated in Q1:11 and redelivered on a cooperative basis 25

26 Impact of Japanese Earthquake and Tsunami Aircastle has no aircraft leased to Japanese airlines Very few operating lessors have Japanese airline exposure Passenger travel into/out of and within Japan likely to suffer significantly at least during the short term Japan Airlines and ANA most directly affected Most airports have re opened, but nuclear concerns and other issues curtailing demand Difficult to ascertain impact on aerospace manufacturing The most heavily industrialized areas less affected by the earthquake and tsunami Limited effects on broader financing market Too early to discern long term impact for the air cargo market Effect on Japanese supply chain remains key unknown, as numerous factories are currently closed As Japan rebuilds, and humanitarian relief efforts increase, air cargo carriers could benefit from an increase in activity 26

27 Significant Asset Sales Capabilities 21 aircraft sold 2005 through Q1:11 with sales proceeds > $400 million Cash on cash IRR ~15% unlevered 13 transactions with 12 counterparties Significant activity in out of production aircraft Includes one insurance recovery in late 2010 Sale of four SF freighters expected to result in pre tax income of $9.5 million in Q1:11 Sold after pax to freighter conversion and long term lease placement with arm of Chinese Post Office Two additional contracted sales in 2011 One in Q2:11 One in Q4:11 Anticipating enhanced sales activity during 2011 as pricing environment continues to improve Initial focus on assets where bank financing is more readily available 27

28 Mike Inglese Portfolio Overview 28

29 Modern Portfolio with Strong Revenue Stream Modern commercial jet portfolio Diversification Aircraft Type (1) 90% by net book value is latest generation of technology Investments oriented to early and middle part of an aircraft s f production Longer useful lives than last off the line units 737 NGs 18% Ftrs 26% 767s & 777s 8% Other 9% 737 & A320 Classics 3% 757s 3% 33% of our portfolio by net book value in cargo aircraft Diversification by end market A330s (2) 23% A320 Family 16% Other Freighters 3% Longer useful life Excellent lessee performance throughout downturn Long remaining i average lease term Provides strong cash flow performance Portfolio Statistics (1)(3) # Lessees / # Countries 64 / 36 Portfolio Remaining Lease Term 4.7 Freighter Remaining Lease Term 7.4 Weighted Average Age 11.0 (1) Percentage of NBV. Figures as of 12/31/10 (2) Includes two A Freighters (3) Years weighted by NBV 29

30 Geographically Diverse Portfolio Aircraft are portable assets with global customer base Portfolio spread regionally across 64 carriers throughout 36 countries Anticipate this portfolio mix will gradually shift away from Europe as the portfolio grows due to: More investment opportunities elsewhere Redeployment of aircraft as they roll off of current leases AYR Geographical Distribution Latin America 8% North America 10% Europe 46% Asia 26% Middle East & Africa 10% Emirates 7% AOG 2% Jordan and Tunisair 1% Note: AOG aircraft came off lease after 12/31/2010. Percentage of NBV. Figures as of 12/31/

31 Diversified Customer Base Largest customer exposure is less than 7% of net book value Combined, the top 10 customers represent 49% of net book value % of NVB Customer Country # Aircraft Greater than 6% per customer Emirates UAE 2 Martinair Netherlands 5 HNA Group (1) China 8 US Airways USA 8 SriLankan Airlines Sri Lanka 5 3% to 6% per customer Airbridge Cargo (2) Russia 2 Avianca Colombia 2 China Eastern Airlines China 8 Iberia Airlines Spain 6 GOL (3) Brazil 6 (*) Figures as of 12/31/2010. (1) Eight aircraft on lease to affiliates of the HNA Group, although the HNA Group does not guarantee the leases. (2) Guaranteed by Volga Dnepr. (3) GOL has guaranteed the obligations of an affiliate, VRG Linhas Aereas, and accordingly, the two are shown combined in the above table. 31

32 Financial i Performance and Capital lstructure 32

33 Strong Asset Returns Consistent lease rental revenue drives strong cash flow Year end 2010 lease rental exit run rate of $560 million annualized, including $93 million from unencumbered aircraft assets Estimated Q1:11 exit run rate is $570 million annualized reflecting acquisitions, disposals and aircraft off lease Average FlightEquip Held for Lease LeaseRental Revenue and EBITDA $mm, NBV $4,500 $4,000 $3,972 $3,806 $3,837 $mm $600 $500 $526 $542 $512 $531 $502 $491 $3,500 $3,000 $2,500 $2,000 $2,606 $400 $300 $200 $363 $334 $169 $149 $1,500 $100 $1,000 $ EBITDA Lease Rentals 33

34 Full Year 2010 Revenue Summary Lease rental revenue of $531.1 million was higher by $19.6 million versus 2009 due primarily to aircraft acquisitions net of dispositions of $22.5 million, partially offset by lower rentals from lease transitions, extensions and floating rate leases totaling $2.9 million Maintenance revenue in 2010 was down $43.0 million versus the prior year period due to fewer scheduled and unscheduled lease terminations Other revenue decreased $8.7 million due to the absence of lease termination payments in 2010 Amortization of net lease discounts and lease incentives increased $8.9 million Revenue Summary $ millions Lease Rental Revenue $511.5 $531.1 Maintenance Revenue Amortization of Net Lease Discounts and Lease Incentives (11.2) (20.1) Total Lease Rentals Interest Income and Other Revenue Total Revenues $570.6 $

35 Revenue Trends Lease rental revenue is a consistent performance driver of the operating and financial results Maintenance and other lease termination revenue in any reporting period is inherently volatile Dependent upon a number of factors: the timing of lease expiries, early terminations and maintenance events and the utilization of the aircraft ($ millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenues Lease rental revenue $ $ $ $ $ $ $ $ Amortization of net lease discounts & lease incentives (1.1) (2.8) (4.0) (3.3) (4.8) (4.9) (4.2) (6.1) Maintenance revenue Interest income Other revenue Total Revenues

36 Conservative Long Term Capital Structure Demonstrated capital markets access ABS debt, bank debt, ECA backed debt, unsecured bonds, as well as private and public equity markets Net debt to book equity 1.6 to 1 Paid dividends for 18 consecutive quarters ($335.8 million total since IPO) In 2010 paid $0.40 per share Authorized to repurchase up to $60 million of common shares Allows Aircastle to take advantage of attractive valuation $4.1 billion (1) 136 aircraft $2.5 billion Net Debt $1.5 billion Book Equity (2) As of 12/31/10. (1) Net Book Value of Flight Equipment. (2) Book Equity excludes mark to market of derivative liabilities of $180 million. 36

37 Solid Liquidity with Attractive Long Term Debt Ended 2010 with $240 million of unrestricted cash and $191 million of restricted cash $50 million undrawn revolving credit facility Aggregate non recourse term financings of approximately $2.1 billion at very attractive rates Earliest scheduled maturity 2015 Long Term Debt Summary as of December 31, 2010 $ millions, except # of aircraft Maturity # Aircraft Interest Rate (1) Outstanding Securitization No. 1 (2) Jun % $ 415 Securitization No. 2 (2) Jun % 998 Term Financing No. 1 (2) May % 643 ECA Supported Financings May 21 Aug % 4.48% 267 A330 PDP financing 2.76% Notes Aug % 296 Unencumbered Aircraft 18 Total 136 $ 2,708 (1) Reflects current swap rate or index + spread, for all financings except the ECA financings which are fixed rate debt (2) For Securitization No. 1 and No. 2 and Term Financing No. 1, all cash flows available after expenses and interest will be applied to debt amortization if the debt is not refinanced by June 2011, June 2012 and May 2013, respectively 37

38 Estimated Term Financing Debt Amortization Profile Amortization will accelerate on the fifth anniversary of each financing All excess cash flow available from rents, net maintenance funding and proceeds from asset dispositions after payments for expenses and interest payments will be applied to principal repayment Economic terms will drive refinancing decisions for these facilities Equity cash flow and servicing fees from our unsecured and secured assets together with our access to multiple capital sources are expected to be sufficient to significantly grow our portfolio and earnings over the next 3 years without refinancing these facilities Estimated Annual Debt Amortization (as of December 31, 2010) $400 $385 $367 $300 $200 $100 $45 $146 $142 $150 $99 $94 $91 $78 $63 $50 $62 $72 $62 $46 $104 $ Thereafter Securitization. No.1 Securitization No.2 Term Loan No.1 Source: Aircastle K (contractual obligations: pages of 10 K) 38

39 Debt Financing Alternatives for Aircraft Lessors Bank Debt Securitizations ECA-Backed Bond Market Structure Secured Often non-recourse Secured Often non-recourse Secured Recourse Secured and Unsecured Recourse Complexity Medium Asset-specific limitations High Long process Asset-specific limitations Medium Corporate covenants Low Corporate covenants Assets New to 5 Years Old New to 5 Years Old New Only Flexible Funding Asset by Asset or in Pools/Portfolios Pools/Portfolios Asset by Asset Asset by Asset or in Pools Access Broad-based Selective May need separate servicer Selective Limited to established, rated entities Outlook Centered on European banks Modest recovery Good market appetite Dependent on credit rating agencies More difficult to get Deep pool of capital Strong demand Bond market access provides AYR a competitive advantage in sourcing new investments, particularly mid aged aircraft 39

40 Bob bpeart Investment Opportunities i 40

41 Limited Competition For Mid Age Aircraft New Aircraft Mid Age Aircraft End of Life Aircraft Pricing close to pre Financial Crisis levels Return of traditional lessors Large role of ECAs in new deliveries Yields are still high though starting to narrow Very few traditional lessors playing in this space Yields are still high but more lessee/ asset risk Mostly smaller lessors Leverage is rare Significant activity by No ECA activity some PE funded d Significant activity by Newcos PE funded Newcos Small role by PE funded Many large new orders Newcos given scarce bank kdb debt Increasing interest from fixed income investors New investment capital clustered around either new aircraft or end of life plays 41

42 Risk Adjusted Returns Still Strong for Mid Age Aircraft Returns in the aircraft backed bond and new aircraft lease markets have narrowed significantly Attractive returns remain available for mid age, current technology aircraft While yields are starting to narrow, this recovery will take longer due to limited bank financing availability lbl Aircastle s deal sourcing and value add capability combined with capital markets access provides us with important competitive advantages Investment Mid-Age Aircraft Unlevered IRRs (1) 8-9% 15-16% 12-13% New Narrow-body Unlevered IRRs (1) 6-7% 11-12% 7-8% EETC Class A Yields (2) 6.4% 8.9% 5.5% EETC Class B Yields (2) 7.4% 13.5% 7.0% 5 Year Swap Rate (3) 4.2% 2.9% 2.4% (1) Source: Aircastle estimates. These estimates are based on a variety of assumptions which may turn out to be materially inaccurate. (2) Source: Citigroup EETC yields represent YTD average as of March 16, EETC yields for 2007 and 2009 represent full year averages. (3) Source: Bloomberg Year Swap Rate as of March 29,

43 New Technology and Aircraft Value A320s with NG Engines Years in Production Narrow body Aircraft 23 Yrs in Production Installed Intro of New Tech (1) 5, NGs (1) 5,200 A320 "Classics" 737 "Classics" ,800 Source: Ascend. (1) Estimated installed base of new generation narrowbodies in 2016 An aircraft s economic useful life depends on whenit is produced Aircraft produced in the early to middle part of the production life are likely to fly longer Last off the line aircraft typically don t last as long The production run for current generation narrow bodies is extremely long Very large installed base at the time a new technology aircraft is introduced ($ Millions) Illustrative A320 Valuation Comparison (2) New Model 1999 Model Price $41 $21 Value in 2017 $31 $14 Est. Residual Value (3) $8 $8 (2) The numbers contained in the example above are for illustrative purposes only and these figures are based on a variety of assumptions and estimates which may turn out to be materially inaccurate. (3) Residual value assumed end of the aircraft s life at year 25 (comprised of expected part out value and maintenance compensation). A higher percentage of a new A320 (with NG engines) value is at risk after the introduction of the A320 NEO than for an earlier model with same technology 43

44 $700 Million of Built in Growth From Remaining A330 Deliveries Eight aircraft delivering during 2011 and H Signed long term leases for all aircraft Six aircraft already acquired Two A s leased to Avianca in 2009 Two A freighters leased to Hong Kong Airlines in 2010 First two of six A aircraft delivered to South African Airways in Q Bank commitments in place to finance all 2011 deliveries based on ECA support Strong A330 demand due to recovery in long haul premium travel 787 delays also contributing 44

45 Illustrative Example Contribution of an A Contribution of an A delivery Purchase price ($ millions) $ 90.0 Assumed delivery price for A passenger aircraft Lease Rental Revenue % monthly lease rate factor (10.8% annualized) Depreciation year life with 15% residual value Year 1 Interest Expense 3.0 $75M loan at 4% fixed; 12 year mortgage style amortization Estimated amortization of deferred hedge loss 0.8 Average annual amortization over 5 year life of original hedge Estimated annual pretax income contribution $ 2.9 Estimated annual equity cash flow Lease rentals $ % monthly lease rate factor Debt Service (principal and interest) 7.9 $75M loan at 4%; 12 year full payout mortgage style amortization Annual equity cash flow $ 1.8 Notes Above illustration depicts full year estimated impact after acquiring one A aircraft, financed as described above; does not include maintenance reserve payments collected from lessees Annual interest expense will decline each year as loan amortizes The numbers contained in the example above are for illustrative purposes only and there figures are based on a variety of assumptions and estimates which may turn out to be materially inaccurate 45

46 New Investment Targets Targeting $500 million to $1 billion of additional investment during 2011 Focusing on investments that capitalize on our strengths Strong team with significant value add and deal sourcing capabilities Considerable freighter market knowledge and experience with conversion plays Capital markets access and reputation as a credible buyer New generation narrow body aircraft Focus on first half of production run Target niches include excess airline capacity/fleet replacement plays freight market plays Passenger to freighter conversion to supply new capacity High quality mid and wide body transactions Capitalize on new program delays Primarily orienting towards A330s and Boeing 777ERs 46

47 Illustrative Annual Contribution of Incremental Acquisitions Sources: ($ millions) Cash on hand / from operations $ Unsecured debt offering Total $ Contribution from new assets depends on timing of investments and financing Purchase price ($ millions) $ Assumed monthly lease rate factor 1.15% Annual Lease Rental Revenue $ % monthly lease rate factor (13.8% annual) Depreciation 32.5 Estimated at 5.0% of purchase price Interest Expense 30.8 Assumed 7.5% fixed cost of debt / deferred financing fees Pretax income contribution $ 26.5 Estimated equity cash flow Lease rentals $ % monthly lease rate factor (13.8% annual) Debt Service (interest) % fixed interest rate Annual equity cash flow $ 59.7 Notes Above illustration depicts full year estimated impact after investing $650M, financed as described above; does not include maintenance reserve payments collected from lessees The numbers contained in the example above are for illustrative purposes only and there figures are based on a variety of assumptions and estimates which may turn out to be materially inaccurate 47

48 Conclusion 48

49 Investment Highlights Positive Long Term Industry Fundamentals Strong Growth thprospects ModernAircraft Portfolio and Diverse Customer Base Stable Cash Flow & Conservative Long term Capital Structure World ClassManagement Team Strong Servicing & Origination Track Record 49

50 Appendix 50

51 Reconciliation of GAAP to Non GAAP Measures Year Ended December 31, (Dollars in thousands) Net income $51,206 $127,344 $115,291 $102,492 $65,816 Depreciation 53, , , , ,476 Amortization of net lease premiums (discounts) and lease incentives (4,406) (7,379) (1,815) 11,229 20,081 Interest, net 49,566 92, , , ,262 Income tax provision 4,845 7,658 7,541 8,660 6,596 (Earnings) loss from discontinued operations, net of income taxes (5,286) (12,941) EBITDA $149,349 $333,745 $526,305 $501,672 $491,231 We define EBITDA as income from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non GAAP measure is helpful in identifying trends in our performance. Using EBITDA assists us in comparing our operating performance on a consistent basis by removing the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. 51