I think I see our next speaker in the back row. I've been having a good time watching his facial expressions as others present, along with my Airbus and Boeing friends. I'd like to now ask two people to join the stage, Mr. Steven Udvar-Házy, as well as my equity research colleague, Hillary. I'm very pleased that Steve can join us here today again at our event. Everyone knows who he is on the leasing side. Started the industry, built it up, very much an industry figure of renown. I also like to say, and this is perhaps my little kids speaking when they were little, thank you for your extraordinary generosity for creating the Steven Udvar-Házy Center outside of Washington, D.C. If you haven't been there, one of the most magnificent aviation museums in the world, and it is in large part, a gift to the nation and our visitors from the gentleman sitting next to me. With that introduction and thank you, Mr. Steven Udvar-Házy. Thank you, Doug. It's a pleasure to be here. It's the middle of the afternoon. If anybody falls asleep, I'll call you out. It's a pleasure to be here with investors and colleagues in the industry, airlines, lessors, banks. It's also nice to be together again in person. I think we're all tired of Zooming and Teaming and not knowing where our employees are when they're supposed to be working. It's nice to be back to some level of normality. Look, I think you all know Air Lease. We started the company in 2010 after I had about a two-hour retirement from ILFC. We've grown from dreams and aspirations to becoming a $55 billion aircraft leasing platform. As of June 30, we have about $28 billion of aircraft assets, almost 500 aircraft that we own or manage. We have the largest order book of any lessor for Boeing and Airbus aircraft, 430 planes. We're gonna be taking anywhere from 90-100 airplanes a year. That's pretty much what we did at ILFC in the 1990s. We're used to handling that volume of business. We have over $31 billion of lease rentals that are already committed. We keep extending leases. We keep taking new airplanes. We have the largest unsecured bank revolving facility in the industry, $7.1 billion revolver, unsecured. 99% of our assets are unencumbered, which 10 years ago would have been highly unexpected and unbelievable for an aircraft lessor to have essentially all of its assets free and clear of any permanent financing. We've achieved an adjusted pre-tax ROE of about 12% in spite of the worst airline turbulence, storm, whatever you wanna call it, that we've experienced in the last two years. That's something none of us can plan for, regardless of our lengthy experience in the industry. Where are we in the market? Well, our revenues are up. Our order book placements vis-a-vis where we were two years ago are up. We've got, right now, about 60% of our order book is already placed, and we're announcing more and more transactions literally every week. The order book size, as I said, is pretty large. It's almost $28 billion. It is coming down at the rate of about, you know, $1 billion-$1.5 billion every quarter. Our cash flow, year to date was about $1.5 billion liquidity, getting close to $8 billion. We're doing that in spite of global RPK still being about 29% below where we were in 2019, and especially international RPKs, with Asia to Europe, Asia to North America, Asia to Australia being down 35%. There's still a long ways to go on intercontinental long-haul traffic. Global load factors are 82%. I talked to a lot of airline CEOs that tell me they're running north of 90% load factors, which historically are about the highest they've ever been. The global fleet that's back in service is now over 80%, trending upwards. That's a good sign. What are the basic ingredients of what's going on and what's on the horizon? Well, traffic recovery continues to strengthen. I think my other colleagues, including Gus Kelly, have emphasized that traffic is recovering. It's now getting to the point where in a lot of markets, the traffic levels are actually higher than they were in the same month in 2019. Let's hope that trend continues and that governments recover their sanity and allow air travel to go unrestricted. We're still seeing a lot of conservatism, particularly in Asia and China, aligning things back to normalcy, but we have seen what happens when they do in Europe and North America. Look how quickly traffic has rebounded. There's also a consumer pent-up demand. There's a greater emphasis on experiences rather than goods, and people are spending more money on travel, and maybe buying fewer refrigerators. There are operational constraints. We lost a lot of labor and knowledgeable professionals who were sort of phased out of the industry during COVID as airlines and airports and air traffic control authorities all retrenched. A lot of brain power was lost, and replacing that is not something that you can do overnight. We also have issues at airports and security systems and ATC across the board. Maintenance infrastructure is a big problem because the fleet of the airlines overall has grown, but maintenance facilities have not kept up with that. Especially with the new technology aircraft engines, they require more frequent shop visits and service upgrades. This has affected operational integrity of the airlines. As you all know, you see more delays, more cancellations, flight crews running out of time. Flights are canceled. Flights are consolidated. It's not exactly a happy experience for the average traveler. The other issue that I think has been touched on a lot today is the overambitious production rate projections that Airbus and Boeing have made in the last couple of years on production rates, particularly on single-aisle aircraft. What we're seeing today, it's virtually impossible for them to get anywhere close to what they projected, say, 12 months ago. There's just a lot of missing elements to be able to achieve those production rates, particularly in power plants, avionics, forgings, titanium. I mean, I can give you a list of 30 different things that have impeded the ability of the primary OEMs to achieve their targets. We're seeing a situation where supply and demand are not in equilibrium. I think for the next three or four years, the demand for young technology aircraft is gonna be greater than the ability of Boeing and Airbus to produce those aircraft on time. Therefore, this will help the recovery of both the airlines and the lessors. Getting to 100 airplanes a month in the single aisle, excluding Embraer, from that number is gonna be very ambitious. New technologies will emerge, but we think that their application on large aircraft over 50 seats is still problematic, and we just have to see how that evolves. The recovery of global air traffic continues, and this has also been useful and helpful to the international markets in the widebody space. We've seen recent announcements by Lufthansa. They picked up 787 widebodies that were intended for Hainan Airlines. They've upped their A350 orders. They reinstated their 777X orders. We see airlines like Air New Zealand that put our 777-300ERs in the desert in Victorville, and now they've reactivated those aircraft. We see airlines like Ethiopian Airlines upgauging their order from A350-900s to A350-1000s. We've seen a deal between us and Virgin Atlantic, where we had a certain number of A330-900s, and we've cut back a couple of A330-900s from their lease order book and gave them an additional 2 A350-1000s to operate primarily from London to New York, London to Florida, London to LAX, where a 320-seat aircraft is too small. They need something that's in the 350+ range. Passenger traffic has proven to be highly resilient. What this chart shows is we've gone back to the Vietnam War in the late 1960s. We looked at the first oil crisis in 1973. We looked at the second oil crisis. We looked at Gulf War, Asia crisis, 9/11, so forth. What we did is we analyzed the GDP growth during those periods. There was only one negative growth in GDP, and that was this last pandemic. Then we looked at airline traffic growth. Historically, on a very kind of rule of thumb basis, we always said if GDP grows, say, 2% a year, globally, air traffic is gonna grow 4% within a band of reasonable magnitude. What you see here is that the traffic growth has outpaced GDP growth. If you look at particularly the normalized periods, which were longer than the distressed periods, that's a realistic assumption going forward. Even if we use 1.5 times GDP growth, we're projecting that air traffic growth can easily grow on a long-term sustained basis at, say, 4%-5% a year. That's pretty good. I mean, 3.9% increase is about 150 million more passengers a year. That's like, you know, three or four big airlines put together. There are secular tailwinds. The middle class is growing. Even if we go into a somewhat mild recession in the Americas and Asia and Europe, middle classes are growing, people are more educated, people are more mobile. That represents the initial penetration of the market for the ULCCs. Once people start traveling by air, it becomes almost like a part of their lifestyle. It becomes something that's normal rather than unusual. That's where I mentioned earlier that experiences and goods are now competing with each other for consumer dollars. Today, as we sit here, experiences seem to be winning out. The pandemic also showed us that if you take away the restrictions on travel, air travel demand is extremely positive and robust, and it's become a form of mass transportation. Had we not had this pandemic, in 2022, we would've had about 4.9 billion one-way passengers. I mean, that's unbelievable if you go back 20 years. We've seen a gravitation toward leasing, and there's many reasons for that. Number one, most leasing companies that are investment-grade rated have lower cost of financing than an airline can get. Number two, airline balance sheets have been pretty well damaged during the pandemic. They've gotta pay back government loans, government bailouts, expensive short-term financings. Airlines need to kinda repair their balance sheets, and that's gonna be a multiyear process. During that period, they're gonna look to lessors to provide the capital for new aircraft. The other issue is there's more and more pressure on the airline industry to modernize their fleets at a faster clip because of this environmental momentum that emanated from Western Europe and is now becoming much more global. Airlines that plan to modernize their fleets at a certain pace now have to accelerate that, and we're seeing more and more of that trend today. Airlines are forced to go to the lessor community to achieve those objectives. Our business is mainly focused on replacing aircraft that are reaching anywhere from 15-25 years of age. That's 90% of our business. As you can see here, the number of aircraft that will become of age, where they need to be replaced is gonna be growing significantly over the next couple of decades. I think the outlook is strong because even with a low single-digit percentage of air traffic growth, the replacement cycle plus that additional growth will create a very healthy environment for aircraft demand. Just as an overview of our backlog, for those of you that are not closely following us on a quarterly basis, we just took delivery of our first A220 last week for ITA in Italy. We have 75 A220s on order. We have 183 A320, A321 LRs and XLRs, all NEOs on order. Most of those 183, I think more than 170 are A321neos, which is the largest order of A321neos by any lessor by far. We're also the largest lessor of the 737-8 and -9, with 109 aircraft in the backlog. 14 more A330neos, 22 more 787-9s and -10s, seven yet to deliver A350s, and seven A350 freighters. That's the 418 airplanes end June thirtieth. By the end of the year, that's probably gonna be down to around 390 aircraft in our backlog. Our role is to be a fleet solution provider. I mean, the DNA of Air Lease really began as a fleet planner, as an airline strategic partner. We're less financially oriented than we are airline-oriented. When we conduct our business and our campaigns, we're always trying to put on the hat of the airline. What would we do if we were running that airline? These are just some placements that we've announced in the last few months. Condor to replace their 757 and aging A320 CEO fleet with 19 new Airbuses, of which 17 are A321neos and only two A320s. Aeroméxico nine 737 MAX-9s. We did the first deal with Air Canada for 15 A321XLRs, which will all be dedicated to transatlantic operations. They also placed an order with Airbus and a small lease deal with AerCap. Malaysia Airlines 25 737-8 MAXs to replace their 737-800 fleet. ITA 31 aircraft, including A220s, A320neos, A321neos and A330-900neos. We did a deal with Spirit for 15 Airbus aircraft, five A320neos on a sale leaseback that we put into one of our managed vehicles and 10 A321neos directly from our order book. That just gives you kind of a breadth of some of our recent lease placements. There's about six or seven unannounced transactions that will be coming out in the next few weeks. That kind of covers the situation with Air Lease. What are the key factors for success? I think it's the management team's experience. It's unequaled in the industry scale. As I mentioned, we're $55 billion dollar platform. I think our asset strategy has proven to be good. We've never had a write down or a accounting reduction of valuations. This is scrutinized by KPMG every quarter. We have a clean, simple capital structure with a strong equity base and unsecured debt and a very strong group of banks. I think we have 55 banks, including Deutsche Bank in our $7 billion unsecured revolving facility. We have steady and predictable investment-grade ratings. We have good diversification. We have about 120 airline customers in 62 countries, a strong customer base that's loyal, and we do a lot of repeat business. Hopefully in the coming years, we'll be coming back here every year and demonstrating to the investment community that this is a solid, long-term, profitable, high ROE business. Any questions? Questions from the audience? How about questions from Doug? How about- Those are the best. I have a micro question, but I'll take the bait. I was gonna ask about the 2,300 HGW range extension on a 787-10, but let's have some real fun. I thought you were gonna ask me about the A220-500. I was going to ask you about that too, but we'll get even bigger. Yeah. An all-powerful being has made you CEO, sole board member and sole proprietor of Airbus. In a parallel universe, an identical Steven Udvar-Házy is the same thing at Boeing. What do these two Steven Udvar-Házys do, since you've spoken about the challenges that the manufacturers, CEO, sole proprietor, sole board member of each company? Their main contribution to the global economy would be to make psychiatrists rich. I'm not sure I'd want to be in any one of those positions. It's a lot easier for me to criticize them as a customer than be in their shoes. Look, those are very complex businesses, because projecting what the airline transportation industry will need for the next three or four decades is not easy. That crystal ball is a very difficult one. You could see the mistakes in retrospect, but you can't see prospectively. The A380 is probably a good example of that. The other factor is that both of those companies have a very high proportion of defense business, and that involves new technologies, pushing the technological envelope. It depends on geopolitical situations throughout the world that dictate how anxious governments are to spend money on defense. I think the evolution of the industry toward this duopoly, if you go back to like the late 1960s, Douglas Aircraft Company was building more jets than anybody else. They were building DC-9s, and DC-10s and started to build MD-80s. They were ahead of Boeing. They were ahead of Airbus. We had Lockheed Aircraft that was still building the Lockheed TriStar in the 1970s, competing with the DC-10. We had Fokker Aircraft in Amsterdam building F-28s and F100s. And at that time, Airbus, you know, in the early 1970s, Airbus was just basically a startup. We didn't buy our first Airbus till 1989. We didn't buy our first A320. It was 1991. 31 years ago, we bought our first A320, and people thought we were crazy. We leased it to a French airline called Air Inter, which doesn't even exist anymore. It was taken over by Air France. To answer your question, what I would do is probably simplify the model makeup and rather than look at an evolutionary line, come up with a whole new group of airplanes that can serve the industry for the next 30 or 40 years. To match that up with the proper power plants is almost an impossible task because we don't know where the regulatory environment is gonna be, what energy requirements are gonna be. The technology and the challenges that are faced by Boeing and Airbus trying to make the right calls is probably the most difficult that I've ever seen in my career. Because if you go back to the de Havilland Comet and the 707 and the DC-8 and the first DC-9 and the first Caravelle, everything since then has been sort of evolution and improvements, and you get another 10% here, you get another 12% there, you get another 6% here. Now we're looking at step changes that are really radical. Applying those step changes to large aircraft that can carry 300 or 400 people, safely and economically is very difficult to forecast. The other issue is that we have technologies to make major forward changes in the airplanes we have today. There is the potential to design new things that are unbelievably better than what we have today, but they would be so expensive that no manufacturer would have the financial resources to build those. I'm not sure passengers will pay a huge premium to fly on a new technology for that sake. I wouldn't wanna be the president of Boeing or Airbus. It's better to be a customer. Thank you for that fulsome answer. That was great. I'll turn it over to Hillary for a couple of equity side questions. Sure. Yeah. We're undervalued. I agree. That's the answer to your question. Your spreads are too wide. Okay. Got that out of the way. You know, it sounds like on the supply side, you know, we'll remain supply constrained next year. On the demand side, you know, what happens if Europe goes into recession, U.S. or other parts of the world goes into recession? You know, obviously, I know that there is pent-up demand, but, you know, in a slowing economy, maybe the passenger would say, "Well, you know, I made a couple of trips last year. I don't need to go another, you know, take another five trips. I take two trips instead of three trips. Yeah. In that sense, what happens to the demand side of the equation? Obviously, the demand for aircraft is dependent on, you know, demand for air travel. You know, looking out forward to next year, supply is constrained. Let's say, you know, in a slowing economy, do you still think that air travel will be strong, or do you think that that'll be impacting the demand for aircraft as well? Yeah. It's kinda hard to project 2023 because how much of it is just the return to normalization? Then had we been normal in 2022, how much would traffic grow in 2023? Even if it's a very small single-digit number, and you look at all the retirements of aircraft that airlines have put off, I still think it's a healthy environment for new aircraft coming in. I think it's the airline margins that might be squeezed because of higher oil prices, higher interest rates, higher costs at airports. Labor is a big problem right now. I mean, pilots throughout the world are basically demanding and blackmailing airlines out of probably the biggest raises that I've ever seen. Even to hire an initial first officer, you know, they're offering huge bonuses to anyone that has got 1,500 hours and an ATP license. This is a worldwide phenomenon. I think the cost pressures are great, and I think airline margins are gonna be under some stress. They are increasing their fares as much as they can, but I think there's a point where elasticity starts entering the picture. I think 2023, I'm cautiously optimistic that the normalization will neutralize some of the softness in the global economy. I have to ask the question that you touched upon, and I'll ask it maybe too directly. Does your order? Well, you talked about the A220 for many years, even back when it was a CSeries. I guess you said it was a great airplane from the wrong manufacturer. That's now changed. You have an order for 68 A220-300s. Do you have conversion rights to an A220-500, and when is it coming? I think here's the answer. If Airbus decides to launch that aircraft, which is not imminent, I think they would want us to be a customer for the A220-500. There's two real areas that one has to think about on the 500. One is, does the production system in Mirabel, Montreal, and in Mobile, can they handle a significant increase in production rates of the A220? And today, the answer is no. Secondly, there's a huge overlap. If you do two circles on the A320neo and the A220-500, they almost cover the same territory. Why do you wanna destroy a really good program that's a fundamental foundation for Airbus's success, the A320neo? Why would you wanna cannibalize that with a A220-500, which could cost more to make today if they had to do it than to make an A320neo? I guess the answer might be because a large airline in Western Europe seems to want an A220-500. Yeah, we know who that is. Yeah. I think we do. A similar aircraft geeky question on the 787-10. Actually, no, we're gonna go back to the A220- The problem is not the A220-500 itself. It's not the design or the potential of the airplane. It's can it be built economically in large quantities? What's the impact to the A320 family? I guess there was a famous conversation with another luminary, Juan Trippe of Pan Am, who said, "If you build it, I will buy it." Someone else said, "If you buy it, I'll build it. Yes. Juan Trippe, what's your answer? Well, first there has to be demand. Okay. Pratt & Whitney's gotta make some improvements to the engine 'cause we're talking about a higher thrust engine. Can we use the same fan diameter as we have on the A220-300? Will we have to have a slightly modified engine just like between the A350-900 and 1000. There's some Issues. small differences between the two Trents. We'll see? We'll see. Stay tuned. Yeah. I don't think it's the number one priority of Airbus right now. I think the supply chain is a bigger issue, and getting airplanes out and reducing the number of man-hours to make airplanes, reducing the number of errors in manufacturing and stabilizing and also getting the widebody part of their business up and running at a level that makes sense. Great. I think you touched on that before, the two-a-month scenario on the 330. Yeah. It's up 50%, actually, Paul said, to three- a- month. Yeah. It's getting there. It's a big improvement. It's a long way from 10 that they used to make. I think Hillary and I both have many more questions, but we still have a robust schedule ahead of us, and I do wanna remain on time. Steve, thank you to you and also for the members of your team that I see here, for joining us at our conference today and, look forward to seeing you. We'll see you tonight. Thank you. Thank you very much. Thank you so much, Steve.