Q3 2019 Earnings Call
Hi, just fine.
Let's turn to listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if and when should require assistance. During the conference. Please press star zero on your Touchtone telephone.
No likes to have the conference over to speaker today Mr., Matt Dallas, you may begin Sir.
Thank you and good morning, I'm, Matt Dallas, the Investor Relations manager fly leasing and I'd like to welcome everyone to our third quarter 2019 earnings Conference call.
Fly leasing issued its third quarter earnings results press release earlier today, which is posted on the company's website.
By leasing Dot com.
We have a slide presentation that accompanies todays call, which is available to participants on the webcast. If you are not accessing the webcast you can find a copy of today's presentation in the Investor Relations section of our website on the events and presentations page.
Representing the company today on this call will be column Barrington, Our Chief Executive Officer, Julie rule, our Chief Financial Officer, and Steve's eases, the president and CEO will be back the company that manages and services Flys fleet.
This conference call contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
For the public statements include but are not limited to statements regarding the outlook for the company's future business and financial performance.
Looking statements are based on current expectations and assumptions flights 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 FCC.
Please refer to these sources for additional information.
An archived webcast of this call will be available for one year on the company's website.
And with that I would now like to hand, the call over to column Barrington, The CEO fly leasing coal.
Thank you bass and welcome everyone.
I'm happy to say that flies again reported excellent goes out to the third consecutive quarters. This year.
Because described the success to the development strategy that we put in place over the last few years, which has been excused X, but to me by be that.
Im supported by continuing strong industry conditions.
The fundamentals of our industry remain constant.
Born primarily by continuing strong growth global air passenger traffic.
Internationally of Comfort Association continues to report cost of gross numbers each month.
Including 3.8% growth in September .
That's predicting air traffic growth, 5% fall 2019.
Meanwhile, Thompson node actor Tonight, I'll add ons, it's a very important metric for the aircraft leasing industry has chosen supply and demand relationship for aircraft.
The news at record highs.
Good hitting an all time high at 8.5, 0.7% in August .
I haven't continues to protect worldwide airline profits in 28 billion for 2019, despite some pressure on yields about the profitability in some carriers.
Bored you have traffic and prosperous airlines support a strong aircraft leasing industry.
Okay.
The recent bankruptcy the Thomas Cook group proceeds great deal immediate publicity due mainly to the number of Holidaymakers has had to be we've got treated.
However, tones cooks to minus and the reason Tonight. Some other very binary airlines kinda varied has had very little impact on the aircraft leasing sector.
Number of aircraft involved is negligible in relation to the token leased portfolio.
Strong demand for aircraft, that's ensuring that the aircraft pre teens Thomas Cook, having picked up rapidly.
Telescopes demise is primarily due to structural changes in the European travel industry that are seeing more and more passengers moving away from traditional tour operations towards expanding low fare airlines, such as easy guess Ryanair and wins.
It's interesting that it was right now that was reported to be actively pursuing the aircraft can turn from Thomas Cook, So that right now could use them and it's now to subsidiary.
I fly how to think of aircraft piece, the Thomas Cook group.
Their crop is still at least with German Airlines subsidiary the group continued to offerings.
Which is being supported by large working capital known in the German government agencies.
Slide old Threed, all three aircraft for turned following jet Airways bankruptcy area. This year.
Overall them for the reasons just stated we continued to see strong demand leased aircraft prevailed on most of the world's regions.
We're also seeing continued strong demand for sales of aircraft from our fleet.
Pliocene unveiling of these strong market conditions.
Nine months to September 13 flight told a token ptwenty five aircraft, that's not good 13% to premium draft book value.
In addition, fly had 16 more aircraft contract sales.
Which nine are expected to tell it's important for the remaining seven are expected to close the first quarter.
No 20.
These continuing sales, which now token bought 100 aircraft for the last four years.
All that being a significant premium to book value.
Sure that flies ability to trade aircraft a significant gains continues.
It is not limited to any one time period.
It also demonstrates because one there's value in size allergies.
The feedback manager continues to add significant value to fly.
It's getting an experienced some context that amount it could be down provides a major assets to the company.
To be bountiful platform provides life than distinct scale advantage and dying leasing them selling aircraft.
This is particularly evident last year would be bottoms relationships allowed us to talk and it was all to be done times competing our large portfolio acquisition.
An acquisition, which was probably be too big for any of our single competitor.
And continues today is the talking about the PBM kinds acquiring aircraft and selling them into ABS transactions.
BBAMS Global network of long term relationships with airlines, that's because London's a significant assets to assist fly leasing acquiring and financing of fleet.
And beat them development of the Horizon ABS structures now totaling three this provides another avenue the sale of flies aircraft.
On slide be that continue to have a strong alignment of interest due to the more than 17% ownership applies to talk by BBAMS shareholders.
Before moving on to slide third quarter results I'd like to comment on two situations regarding Boeing 707 models.
Regarding the 737, Max the steel uncertainty about a two certification.
You'll note several airlines have announced they are not in the next back into their shadows until the first quarter of 2020.
We haven't this uncertainty about little impact on fly.
We have only to Max aircraft in our fleet, both of which were card purchase of leaseback transactions and both of which are long term leases.
Main current.
We do not have any max's on order.
Meanwhile, insects regarding the mix continues to get support demand and lease rates for other Boeing 737, Muslims I'd hate to 20 found the aircraft, which comprise a core a majority of Flys fleet.
There are multiple initiatives are fourth regarding cracks in the structures to find the wings. The fuselage use lodge of older 737 next generation aircraft.
These issues have required immediate inspection of aircraft that are being filmed makes it Turkey, how does the whole flight cycles.
The section within the talent lifecycle for aircraft, the accumulated 22600 or more cycles.
Oh, the Turkey nine Boyd 77 next generation aircraft inside speed.
42 aircraft to the combination of attached housing cycle.
Brian This immediate inspection.
Both aircraft have been inspected and neither have any signs of cracks.
Other aircraft in our portfolio of inspected as they approach the mandate lifecycle level.
Lines continue to maintain a consistent strategy. These four main principles disciplined aircraft acquisitions conservative financing active fleet management.
So with an emphasis on consistently enhancing shareholder value.
We are a rigorous some pricing refusing to pull the pay for aircraft.
Refusing to accept them profitably sentence or two outlets poker Muslims merely to build actually sides.
Experience tells us a pocket around crop, which is patches to the right price we provide concentra turned in virtually all market conditions.
Aircraft that up cartons and competitive prices both for the Jews games and their settled down to third parties.
Life sales aircraft consensual games quarter after quarter end year. After year showed the validity of this strategy and the fact that we've been executing is that consistent disciplined way.
Like financings Ulta conception based principally on long dated amortizing unsecured debt.
We've also demonstrated that we can reduce leverage in that acceleration manner.
Do you think is from four times equity agenda, we wanted to see a following completion of a large portfolio transaction.
2.6 times equity at September Tuck in nine months later.
We expect to from its more production and leveraged by year end.
A positive financial outlook has recently been recognized by one notch upgrades in our corporate rating from standard and Poor's.
On an upgrade creditwatch positive for Moody's.
These factors along with a stronger earnings and balance sheets are expected to have a pubs and impact on flight flies funding costs going forward.
As mentioned data are active fleet management allowed to consistently said aircraft to gains book value.
To generate some to purchase new aircraft entertaining young fleet.
Our active sales programs achieved these objectives anomalies slide and strong financial position.
Industry, low leverage and abundant capacity to some significant pipeline of Eighttwenty Neal family aircraft that will be acquiring over the coming from two years.
Our rigor in pricing on pricing is actively manage them to core aspects of our business.
They also demonstrate slides continued emphasis on enhancing shareholder value to producing double digit, Florida, we definitely growing book value per share actively purchasing shares when they can do so a significant discounts to book value.
We expect to continue to execute on these four pillars of our strategy.
[noise] fly continues to deliver excellent results.
The third quarter fly produced adjusted net income of $59.8 million equivalent to $1.93 cents per share.
Generated an adjusted return on equity 31%.
These aesynt or at least figures, which are also affected there you know.
GAAP results.
The best quarterly results delivered by fly.
We also increased to book values and $25.90 per share at quarter end, 20% increase since the start up here.
$3.85 premium to the in yesterday's closing share price.
Despite significant increases like share price continues to trade at 65% at 85% about book value.
Book value. This is consistently exceeded when these aircraft.
Our sell these results reflect the significant development supply of last three years selling older less conforming aircraft optimizing our capital structure and most importantly, upgrading I'm pleased with newer and more profitable aircraft.
Tend to continue these activities.
Our Q3 financial results a significantly ahead of the same quarter year ago, with 162% increase and adjusted net income to $59.8 million.
$1.18 cents increase adjusted earnings per share to $1.93 cents more than two and half times last year's Q3 was helped.
These improved to sell to paid some substantial 33% increase in total revenues.
Along with a 7.1% increase in net net spread.
Which was 7.5% in the quarter.
As previously mentioned up book value per share is also drove a significant increase.
25080 cents Tc five cents per share is 24% ahead, where it was a year ago.
This increase can be ascribed to side, how converting some of the problems along with our share repurchases.
Since the beginning of year, we've repurchased 2 million shares as an average price of $60.29 per share.
Representing over 6% flies outstanding shares in January 1st.
These reductions of repurchases have had a further hubs impact on the enhancement of shareholder value I referred to earlier.
Well I continue to acquire aircraft, having purchased two more Boeing 77 next generation aircraft in Q3, that's bringing our acquisitions year to date with totaling four aircraft put investment to over $100 million.
We've committed to purchase nine more aircraft comprising an eight one athree 20, 877 dash eight hundreds.
We expect six of these aircraft will be delivered to fly in quarter four.
The remaining three will be delivered the first half of 2020.
These non aircraft we represents investment.
Approximately $250 million.
You are particularly excited about our 20 watts committed Airbus Athree 20, Neal family purchase leaseback aircraft.
First of which is scheduled to deliver December .
Back to benefactor meeting its delivery schedule.
We have seven more.
Athree 20 near family aircraft, a mixture of Athree 20, Nielsen data, we 21 deals.
Hi, good for delivery in 2020.
The 11 more in 2020 2021.
But the last two aircraft in this program expected 2022.
To fly now with a 1.3 billion dollar pipeline committed aircraft deliveries all of which are either on lease how committed to lessees.
But also focus some additional acquisitions would buy more aircraft if they meet reach its investment criteria I referred to we have you guys.
We've also continued to pursue adapted aircraft trading program.
Eight aircraft to pull the three brigade, nearly 13 mine $9 million.
Which is a 17% treatment 12 book value.
Looking ahead, we 16 Balkan factor the aircraft sales.
Expect nine of these contracted sales declined this quarter for 2019.
Remaining seven to close important one 2020.
These 16 contracted sales lift for the pubs impacts on size earnings booked value leverage and fees age.
This is the six straight quarters, which flies produced double digit return of equity.
So the momentum as we reported in previous quarters continues.
But you did for the year to date, that's produced adjusted net income of $168.9 billion.
Which is 5028 cents per share.
As Julie ruler portion few moments that very public start to go for the fourth quarter.
For the years I hope.
This pumped about token based in a moment portfolio are justified growth a contracted sales.
Actual capacity.
There was a defensiveness.
And with that I'll hand, you over to our CFO duly route to take you through financial overview.
Thank you column.
Slides reporting net income of 51.7 million for the third quarter 2019, a 31 million increase from Q3 Q3 2018.
Hi achieved our we have 26.6% the sixth consecutive quarter of double digit orally and more than 100% increase from a year ago corridor.
Earnings per share increased nearly 150% from 68 cents a year ago to $1.67 in the current corridor.
The strong financial results were fueled by significant gains from aircraft sales as we continue to take advantage of a lively secondary market to self select aircraft.
In Q3 fly completed excel eight aircraft, including seven aircraft in the 12 aircraft portfolio sale announced in early July .
As a result to fly to her financial results over the past several quarters and the rapid deleveraging enabled by selling aircraft at significant gains to book value. Our net debt to equity ratio has declined from four times at the beginning of the year to 2.6 times at September Thirtyth as Carl mentioned.
Five operating lease rental revenue in Q3, 2019 decreased 2.8% to 96.1 million driven by the aircraft sales we have discussed on the call.
Although operating lease rental revenue declined we believe that our aircraft sales strategy has improved the quality of earnings as demonstrated by five increased net spread.
Total revenue increased 33% 239 million in Q3 2019 for 104.6 million in Q3 2018.
In Q3, 2019 fly recognize no end of lease income as compared to 3.1 million in the prior year period.
So I recognized 38.9 million of gains on sale of aircraft in Q3 19 from the sale of eight aircraft, which represents a 17% premium to net book value as Colin mentioned.
Turning to expenses depreciation and interest expense are down as compared to the prior year quarter due to aircraft sales, although on a combined basis. These expenses declined by 8.9% a larger decline the operating lease rental revenue at less than 3%.
As she makes sense is up slightly in Q3 as compared to a year ago, primarily due to lease related costs, a portion of which had previously been deferred and amortized and are now extends under the new lease accounting standard.
Loss on derivatives, and Q3 2019 relates primarily to interest rate swaps and then Walker qualify for hedge accounting due to debt prepayments associated with aircraft sales.
Also in Q3, 2019 fly incurred a 1.6 million loss on debt extinguishment, consisting almost entirely of noncash write off of that cost.
The debt extinguishment cost incurred also related to debt repayments due to aircraft cells.
Overall total expenses as a percentage of total revenues declined 25% year over year from 77% to 58%.
Now I'd like to cover our guidance for Q4 2019.
Our gain on sale of aircraft guidance assumes that nine aircraft sales will close in Q4 as Colin mentioned.
Several of these sales are expected to be part out, including or 80 to 82, Athree hundred Fortys, which we expect to be disposed of at an economic gain.
As calm also noted seven additional contractor aircraft sales are expected to close in Q1 2020.
For the fourth quarter of 2019, we're expecting operating lease rental revenue, but 88 to 90 million.
We expect amortization of lease incentives of one to 2 million.
[noise] gain on sale of aircraft is expected to be 14 to 15 million.
We expect end of like eat end of lease income of more than 30 million.
Depreciation expense will be approximately 32 to 33 million.
We expect interest expense of 30 to 31 million.
Debt extinguishment costs are expected to be approximately 2 million.
Maintenance and other costs are expected to be one to 2 million.
We expect actually expense of approximately 9 million without consideration of any foreign exchange gains or losses that may occur.
Overall Q4 pre tax income as expected to be more than 60 million.
Further leverage reduction if expected by the end up here at which time, they're expecting net debt to equity of approximately 2.5 times and in our near term outlook, because I expect net debt to equity to remain below three times.
Our improved leverage profile, coupled with a recent credit rating upgrade hasn't just been fly well as we think about refinancing opportunities for our long dated debt facilities as well as financing of acquisition.
I'll turn it back to call now for closing remarks.
Thank you Julie Okay, well, then let's recap of the highlights of quarter three 2019.
We achieved at 33% growth in Tokyo revenue 200 $939 million.
We sold each aircraft per gain of $38.9 billion, 17% to talk about book value.
We produced $59.8 million adjusted net income.
$1.93 cents adjusted earnings per share.
31% adjusted orderly.
We continued our track record of growing book value.
Which was $25 at 85 cents per share at quarter end.
That is 24% higher than a year ago.
And looking ahead.
We have a contract pipeline that aircraft that is $1.3 billion, including 21 of the lakes is generation Apis Neo aircraft.
We expect to add to this pipe pipeline to Fourq further acquisitions.
And finally, we've given pre tax income guidance of over $60 million for the December quarter.
These outcomes are all highly pumps to demonstrate that fly continues to represent a real value proposition.
At the Das we're now ready to take your questions.
Ladies and gentlemen, if he has a question that this time. Please press. The star then the number 100 touched on telephony.
Your question, that's been answered or do you wish to remove yourself from the Q. Please press the pound Keith.
Your first question comes on the line of Helane Becker from Cowen Your.
Your line is open.
Thanks, very much operator, hi, everybody. Thanks for your time.
So cool I have two questions one.
Question is with respect to the.
The aircraft. The two Athree 40 is that your your part I guess, you're you're what parting out or are you going to to sell the aircraft to a part out group or you're going to.
Pardon parted out and then sell the port yourself.
We have we are selling them to a third party Alain and its them they I'm not actually quite sure what theyre doing but the aircraft I understand that part in much.
Okay and then the other question I'll toss out express ourselves.
Right Gotcha, Okay that totally makes sense and then the other question I have is artisan Hong Kong earlier. This week, the one of the conferences and in one of the things that.
People talked about including myself was the whole idea.
Yes, she and how.
You know, they're switching and.
Then governments gone involved yesterday and I feel like if there is no if if if the industry doesn't take this on obviously the government's you're gonna do it for us than we probably won't like it.
Which is my opinion, but my question.
Sorry is you as you think about your fleet and the sale lease backs that you do and the way you're growing in or is it a focus on just new technology, you know who will you just try to sell all the old technology aircraft.
How are you thinking about that and one and two are your customers also coming to read the idea that you know they've got a.
Bruce up their fleet and get out of the old technology aircraft on it you know more timely basis.
So sorry for that.
It's obviously, a big issue and it certainly affecting airlines and people are concerned about higher taxes on fuel et cetera et cetera. So airlines are very focused on us and if their focus then and we need to be focused also on we are but as you can see we are.
Moving on a lot about mid life to older aircraft and you mentioned the Athree for hits in particular, those two aircraft our gas Guzzlers and that's why they have the they are being retired generally around the world. So we are moving with airlines from older technology to newer technology aircraft and we will continue to.
To that.
Because that's where the world is going.
Right Gotcha, Okay, well, thanks very much true.
Thanks, Helane you're of course.
Your next question comes from the line of Pestering O'brien from Goldman Sachs. Your line is open.
Everyone. Thanks, so much for the time.
So you don't need you'll be acquiring six aircraft from the fourth quarter can you tell us where you're sourcing those from and then any updates on where you're finding the most attractive acquisition opportunities for incremental aircraft on top of there the areas you want thanks.
Will.
[noise] copper and Steve or what we can't tell you exactly where we're sourcing them from a but generally it's in the general marketplace.
Oh it is.
Harder and harder to find deals.
So.
We pretty much have to run wouldn't call the seems to the market to find deals at work for us.
We have originated a few deals with startup airlines in Asia.
Which we thought were attractive deals.
So.
In general.
Things are not as easy as we were expecting it but we're still able to originate stuff as we go long.
That's great and I didn't mean like by name just you know maybe sally's back from other less or as you know just like what general General pool is yielding about feels right now yeah. It's a combination of both sale leasebacks and purchasing.
What we'd call a secondary aircraft from passive less source.
Okay understood and then and then just maybe I think I think in the guidance you had been expecting about 50 million plus and gains on sales in the quarter and ended up coming a little bit shy of that is that just a matter of timing of transaction closes or did you know some of those gildan about materializing any help there be great. Thank you.
Hi, This is Julie on and it is solely due to timing we had expected a few more sales to close in the quarter and does couple that didn't close in the quarter as since close in October so it's strictly timing.
Great. Thanks, so much real time.
Thanks Catherine.
Your next question comes from the line of cost Valentino from Compass point. Your line is open.
Thanks for taking my question just with regard to leverage I mean, it's down to 2.6 now I guess you guys point to 2.5 leverage ratio by yearend.
Is that a function of just.
Steve you mentioned opportunities are challenging out there was that a function of just the lack of opportunities or is that related to you got to S&P upgrade.
Looking for additional upgrades and that's what's kind of living to leverage.
Well, Scott, we've been running the business rather than.
Focusing on getting upgrades, specifically, but hopefully we've been running the distance away. This it's also implied to upgrade basically we as you know when we acquired the big portfolio DRA transaction, we said at the time, if we needed to de leverage from the four times as we were asked as big an easier.
I mean, we're going to do that to various ways, but including selling and some aircraft. During the course this year.
So nothing ptwenty five aircraft into cost of the year to date.
This is obviously contributed significantly to it or equity as you've seen a our equity has gone up very significantly the up by 24%.
So it's obviously, we pay downs dash as part of those transactions as well so a combination paying down debt increasing equity and we're now going into a very low levered situation. So we feel pretty comfortable salary out today.
[laughter] agreed I'm just wondering terms like we think about return equity going forward one of the cut offs for investment grade I think is two and half times leverage the rest of it would be secured secured versus unsecured debt and then on the pass you guys have run with more secured debt with a phone I guess that it was too expensive to get to that investment grade rating.
Is that still the case are you guys have you changed your thoughts there maybe have I misinterpreted, but are you looking for investment grade rating at some point or is it still going to be mostly asset based borrowings we not pick off I think we will.
Likely to continue primarily with secured financing for the time being we're not big enough yet to get investment grade and therefore, there's no point and trying to do all the things to get investment rate. If you don't going to get there. So until we can go the portfolio.
Of course and significantly above its present level I'm not going to do that stupid. They were going to do it Oh, sorry conservatively. So until we can do that.
We won't be pursuing an investment grade per se.
Okay, and then just on the end of lease income spikes to 30 million on the guidance in the fourth quarter, what's what's driving that increases lease terminations.
Yes, well, it's not actually it's mainly that eight 340 transaction to truly mentioned has had a bit has very significant entities income. So we will make any significant gain on the sale of the aircraft, but because of the crude maintenance crews. We have very significant end of lease income out of those two aircraft in this quarter okay.
So the gain on sale then for the fourth quarter against a margin should be lower than it was.
Yeah, It was easy or the guidance that it's relatively low considering the number of aircraft.
Selling and slower than it has been but that's making becomes a between 14, Scott that's offset by the economic gain from the a into leasing comes we'd have in the quarter.
Okay. Thanks, and then just one final question I'll get back into queue.
Steve You mentioned, the I guess, it's challenging to find opportunities that meet the return thresholds that that you did you guys that are required other others have said that that maybe getting a little less competitive I'm seeing some the Chinese lessors pull back a little bit maybe some shrinking or selling I'm. Just wondering if you're seeing that and then secondarily would be you asked a max.
Was back in the service you expect a glut of aircraft maybe by the second half of the year supply narrow bodies picks up.
To the first part of your question definitely the Chinese have pulled back from the marketplace.
And.
That's been positive for some of the returns that you see on what was called the tier one type of deals.
But keep in mind, Scott that really for fly we don't compete in that segment of the market right. That's still a to kind of a return for us.
Yes, we have to go down downmarket slightly older or more typical credits, where the Chinese really don't compete.
To meet our returns.
Our internal you know well targets are in the mid teens.
And so that's the type of deals that were looking for.
As respect with the Max and wasn't as would be a flooded deals.
Well, it's a good question a lot of the capital has no migrated over to the deal.
And so it's pushed kind of values on neos and prices higher because obviously they can't can't do Max is that at this point, but at the Max has come back and we expect that to balance out a bit.
There might be a few opportunities for flight.
And that segment of the market, but we're really have to wait and see.
Okay. Thanks very much.
[noise].
Your next question comes on the line of Jamie Baker from JP Morgan Your line is open.
Hi, This is a dual timetable on behalf of Jamie Baker. Thanks for taking my question.
Most of my questions have been answered, but just to clarify from the last answer that you. Just gave so have you already started seeing.
General.
You know generally impacts on lease rates in the marketplace. So far because of the Max grounding and do you expect that to kind of change again once a superior returns back to service in a source kind of delivered again.
Yeah, sorry, I said again, well what was your question.
So just to clarify some last question you know when looking at the Max you already mentioned that has limited fly has limited exposure to the Max but can you just briefly talk about you know how it impacted gentle lease rates in the marketplace. So far and how you expect that to change when delivery start again.
Sure. So it's had a direct impact obviously on the Angies, we've seen a pickup and lease rate and demand for the entries as.
Airlines are finding themselves short of lift I'm. So that's been positive for flight.
I think the question for all of US is how long that will last.
Obviously, the Max isn't going to be resolved overnight, even if they get it recertify, though in the fourth quarter or first quarter next year, we expect this too.
Play out over the next two years.
So it's not going to be immediate kind of flip back right. So there'll be opportunities I think for the next couple of years in the energy side and and then on the Max situation. You know it just depends were lease rates and volumes go and how fast that aircraft gets picked up.
General marketplace.
Thank you.
[laughter].
Your next question comes from the line of Coos lapel from Bebe Your line is open.
Hey, Good morning, guys. Just two questions here one are you seeing any delays from Airbus on the 320 Neos that you guys expect them to be delivered in the next.
Six to 12 months and then second given that it looks like it's going to take a little bit time to re absorb all of them access that are grounded back into the global fleets. His that created any incremental opportunities for you with respect to some of the options you have on some of the three twentyneos looking out into the future years.
Yeah, So oh look in general we're seeing some delays on the neo deliveries.
But the schedule that column laid out.
In this presentation, where we're taking one.
In the fourth quarter of 2019, and then 720 20 in a love it and 21 is the rescheduled delivery.
Proposal, that's been revised by Airasia, So we're pretty comfortable with other it may slide by a couple of months each of those deliveries, but right now we're pretty comfortable that the those will deliver in a in those quarters.
And what was the second question was certainly bottlenecks.
I think groups that uncertainty about the Max.
Timing and you know.
I was going to be picked up by airlines.
Has certainly helped the Athree 20 Neal family aircraft.
He made us more enthusiastic about our options to those aircraft as you know weve exercising the options.
Looking at home and see more but we don't we don't have to exercise the balance of those options for quite a wide yet so there's no point and jumping in until we need to.
We're really increase we've come through would be eight options that we have exercised.
Okay, great. Thanks, a lot guys.
Thanks Bruce.
Ladies and gentlemen at this time, if you'd have a question. Please press Star then number one on your telephone keypad.
Your next question comes the line of Bill last tourists from Baird. Your line is open.
Thank you very much I'd like to begin with you know the de leveraging question, which was actually touched on a little bit earlier.
Several times throughout the course the presentation you talked about how much you've de Levered and you even referenced the fact that you expect to be below three times on a net debt basis.
Is this a reset of the former target leverage ratio of three and a half to four times a week can we expect to see you now roughly right around three times going forward is that the new target leverage ratio. That's my first question.
I don't think we change our target Bill and I think we emphasize the fact that we've got a 2.6 from before in nine months, which was.
After that we told them off because we were going to do so we're pretty comfortable with what we've done very happy with it. So I think would just be put some emphasis on bathrooms, we will actually be increasing decreasing the leverage slightly and.
By the end of year, but we're not board not any new targets for future leverage. So you know we've got to be.
On around that 3% three times I'm going forward, we reckon.
Okay, and you know what that new target leverage and obviously the upgrades by S&P and the positive outlook by by Moodys, you know that kind of begs. The question of you do have a six in three eighths out there, which is currently callable and you can refinance that at considerably lower rates do you have any updated play.
And for that right now is that going to be replaced by secured.
Financing or was it will this be a refinancing.
Obviously, we are you know we've just finished the quarter. We've just got the upgrade leaves the scoped and positive outlook.
Looking at all up announcing a facilities right now.
As you say that the coal has gone away. So that long term unsecured test is one of the targets there were certainly looking us.
Okay. My final question is with the strong secondary market right now that you have for for leasing I'm I'm, just kind of wondering what what lease claim its lease placements do you have remaining for 2019 and how many do you have for 2020 at this point.
And how many of those have been placed.
So for 2009, Tim we we have zero remaining aircraft a everything's been placed at least.
And for 2020, we have five remaining aircraft.
True when I first quarter and three in the last quarter of the year.
But for the most part those look like all of them will be placed shortly.
Okay, and sorry, if I could slip in one more your level of unencumbered aircraft at the end of the quarter what was that amount.
Julie.
320 million.
Okay. Thank you very much.
Thanks Bill.
I'm showing no further questions at this time I would now like to turn the conference back to Mr., Matt Dallas.
We'd like to thank everyone for joining us for our third quarter earnings Conference call.
Worked updating you again next quarter you may now disconnect.
Ladies and gentlemen, this concludes todays conference call. Thank you for participating in the have a wonderful day you may all disconnect.