Q4 2019 Earnings Call

Good day and welcome to the Aercaps fourth quarter and full year 2019 financial results call. Today's conference is being recorded on a transcript will be available following the call on the company's website.

At this time I would like to turn the conference over to Joe's Mcginley head of Investor Relations. Please go ahead Sir.

Thank you operator, Hello, everyone welcome to our full year 2019 conference call with me today is our Chief Executive Officer, Inglis, Kelly, Our Chief Financial Officer, Pete you heard us before we begin today's call I'd like to remind you that some statements made during this conference call what you're not historical facts, maybe forward looking statements.

Forward looking statements involve risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements are a couple undertakes no obligation or did not imposed for a lot to publicly update or revise any forward looking statements to reflect future events information or circumstances that are right. After this call further information.

Turning issues that could materially affect performance can be found in aircrafts earnings release dated February 13th Twentytwenty a copy of the earnings release on conference call presentation are available on our website at <unk> Dot com.

This call. This open to the public and is being webcast simultaneously in aircraft dot com and will be archived free but we will shortly went through earnings presentation I'm going to low time at the end security as a reminder, I would ask that I'm listening with themselves to one question. Some wonderful I will not to turn the call overarching just Kelly.

Thank you Joe.

Thank you for joining us for our fourth quarter 2019 earnings call.

Hi, I'm delighted to report record earnings per share of $8.43.

Fourth quarter Aircat generated $2.34 earnings per share a 44% increase over Q4 2018, continuing our long track record of consistent earnings growth.

During the year your cap team executed 353 aircraft transactions, which included 192 lease agreements 65 aircraft purchases and the sale of Nike six midlife an older aircraft.

Oh much scale of activity demonstrates the breadth and depth of aercaps relationships with airlines manufactures and investors around the world.

We enter Twentys Medina position of strength, we have $40 billion contracted future lease rents.

The next three years over 97% of our lease rents are already contracted.

Robert you. These does not expire until the third quarter 2027.

All of this gives us tremendous visibility into our future cash flows. Moreover, today, new technology aircraft to make up 58% for fees that is the highest percentage of new technology aircraft and any major last or in the world.

Eric happens taken delivery of more new technology aircraft than any other aircraft fast or or airline in the world. As a result air cap is helping customers meet their environmental and sustainability objectives.

Our new technology today is concentrated on the most in demand variance. The 80 21, Eattwenty Neil you hate to 21 meal. The Boeing 77 Dash nine and the Athree 5900, the average age of our new technology aircraft was approximately two years.

We know that these aircraft will form the core of the world's passenger fleet for decades to come.

Our current technology fleet is also concentrated on the most liquid aircraft types. The Boeing 737 N G.

Eight week 20, CEO and among the white bodies, the athree therapy and Triple seven.

Which remained a mainstay of global long haul routes, but very importantly, the average age of our current technology. Please is 11.3 years.

Our triple seventh fleet being over 13 years, you can see this in the slide deck.

We do not have young current technology aircraft, because we have focused all of our new orders for the last decade on new technology aircraft.

We know that over the next decade current technology aircraft will be in Vermont, but will gradually become less so as a proportion of new technology equipment gross.

Given the average age of our current technology aircraft air copies to best position to any major that's all for this trend and we've clearly de position in company for the last seven years with this in mind.

This is one of the key competitive advantages of our capabilities and scale Aercaps. These trends before anyone else and Crucially We act on these trends.

During 2019, we continue to actively manage our fleet by purchasing new technology aircraft and selling or mid life an older assets in the fourth quarter of 29 team. We took delivery of Fourteeneight Btwenty Neos to 77 Dash nines for Embraer E Twod and Threed 5900, we also sold 28 of our owned era.

Huh.

For the full year, we sold 88 owned aircraft.

I had an average age of 15 years.

We sold these aircraft for an average gain on sale of 10% over our carrying Bobby this represents a 35% premium to their book equity value.

These sales have resulted in a further reduction in the average age of our portfolio to 6.1 years and an increase in or average remaining lease term to 7.5 years, which is one of the longest in the industry.

Furthermore, these sales allow us to recycle capital into more accretion opportunities.

Turning to the Corona farms.

He is of course affecting our Chinese customers, there's stuff families on our own employees in China.

Thoughts are with those who are suffering from the impact of the Corona virus.

These airlines have been our partners for decades.

They will be our partners for decades to come.

We will help them, where because it's very challenging period.

In terms of air accounts exposure to Chinese customers approximately two thirds of our revenue comes from the big three state on carriers.

As with prior academics I was a prior epidemics and given the efforts of the Chinese days, we do expect the traffic will return to normal later in the year.

On the Max we did not take any deliveries in Q4, and we await further information from the essay and Boeing with regard to the safe we aren't she'll be aircraft in service bowling currently estimates that the Max or the turn to surface in mid 2020.

Undermined our utilization rate in the quarter was 99.8% as demand for aircraft remains high no doubt them actually the cone Corona virus will impact or PK growth in the short term, but we expect that overtime. These issues will be resolved.

Our capital markets day to day in November we mentioned that large sales of stock and stock options on air cap stock by two legacy shareholders AI Jie Han law like to elevated volatility in our share price over the past several years.

Second to be shareholders Waha capital completely exited its position in early December which removes an overhang on our stock going forward, we would hope to see a greater correlation between the consistent performance of our business and the market value of our company. We would of course continue to take advantage of that mismatch if it persists and we announced a further 200.

50 million share repurchase program today.

In summary, this was another strong quarter for Erica with Q4, 20, 919 bps up 44% over Q4 2018 are consistent growth in earnings. If there was one of our platform our processes and our relentless focus on execution. We will continue to manage this company to deliver long term value for our investors as we look to the deck.

It ahead with basket of handed over to piece for detailed review of our results.

Thanks, Scott good morning, everyone.

Got produced a very strong performance in the fourth quarter and a record performance for the full year as just mentioned in the fourth quarter, we generated earnings per share or $2.34, an increase of 44% over the fourth quarter 2018, our net income for the order was around $310 million, 33% increase over the fourth.

Quarter of 2018.

For the full year or net income was $1.146 billion increase a 13% over 2018, and our EPS was a record 843, an increase of 23% over the prior year.

Our utilization rate was very high 99.8% for the fourth quarter.

We were upgraded to triple B locked by S&P in October more on positive outlook for Moody's. So we continue to have an upward ratings trajectory.

Our credit metrics continued to improve and we ended the year with the debt to equity ratio of 2.6 to one we've also reduced or secured debt to total assets to around 22%, which is down from 25 person at the beginning of the year.

We expect to get down below 20% during the course of this year.

Our average these assets increased by $1.4 billion over the fourth quarter of 2018 as result of new deliveries.

Our book value per share continue to increase the strong double digit pace was up 15% over the past year to $72 need sounds as of December 30 Onest.

We've continued with our share repurchase program in the fourth quarter, we bought 3.4 million shares for just under $200 million for the full year 2019, we bought 12 million shares for a total of $607 million.

Hey, we also announced a new $250 million share repurchase program that will run through the end of June.

So altogether it was very strong quarter reflects our consistent operating performance the power of their kept platform and our disciplined approach to managing our assets and allocating our capital.

Turning to slide seven our total revenues for the fourth quarter, well $1.257 billion, an increase from 1 billion turned and $20 million last year.

This was primarily driven by higher maintenance revenues as result of higher end of lease compensation that we received during the fourth quarter, but.

But we also at higher lease runs at a higher gain on sale of assets in the fourth quarter than in the fourth quarter of 2018.

Or other income was higher than normal in the fourth quarter 2018, because of some inventory sales that we have that quarter.

Turning to slide eight for the fourth quarter, our net interest margin was $747 million, which was roughly flat year over year or average cost of debt for the fourth quarter was around 3.8% before debt issuance costs than fees and other impacts of around 40 basis points. When you include those constant fees was around 4.2.

Per cent for the fourth quarter, which is the same as the previous quarter. The slight increase from the fourth quarter 2018 was driven primarily by the roll off the serve all your debt related to purchase accounting going forward. We expect the average cost of debt to trend down somewhat as we continue to replace older more expensive debt with new data at a lower cost.

Our net spread was 7.9% for the fourth quarter and our net spread that's depreciation was 3.2% which is the same as in 2018.

The average age of our fleet continued to decrease during 2019 to 6.1 years by the end of the year. We achieved this through a combination of purchases of new technology aircraft and sales of older current Tech aircraft. The average age of our Newtek aircraft, which represent 58% of our fleet today is 2.3 years, while the average age of our current.

Check lead is 11.3 years.

Our average mean lease term has continued to increase in now seven than half years when it belongs to the industry.

Turning to slide nine our net gain on sales was around $49 million for the fourth quarter, an increase from the fourth quarter of 20 team.

During the quarter, we sold 28 of our owned aircraft, putting 17 narrow bodies in 11 wide bodies with an average age of 15 years for a total of $729 million or gain on sale margin was around 7% for the quarter.

For the full year, we sold 88 of our owned aircraft Guy with an average age of 15 years for a total of just over $2.1 billion, an average gain on sale at around 10%.

On the purchasing side in the fourth quarter, we purchased 21, new technology aircraft for total Capex of $1.3 billion and for the full year. We took delivery of 65 aircraft for total capex of around $4.6 billion.

Now turning to slide 10, I mentioned that during 2019, we sold our aircraft or an average can sell around 10% on an asset basis, which equates to around 35% premium to book equity.

On average the aircraft that we sold were 15 years old and these were aircraft that we wanted to exit for portfolio management reasons. The same time, we were able to buyback or own stock at an average discount to book value of 26% during the year. So we continue to take advantage of this valuation arbitrage to reinvest in our own portfolio of aircraft.

That was made better as a result of the sales and of course, that's had a positive impact on or if yes, and on our book value per share.

Turning to slide 11, Kristina expenses were on $71 million for the fourth quarter, which was about the same as in 2018.

For your 2019 or us Gina expenses were on $268 million, which is a 12% reduction from 2018. This includes all stock compensation expense and it's only 5.4% of our total revenues, which illustrates the efficiency of our platform.

Our maintenance rights expense was around $25 million for the quarter down from about 36 million. In 2018. This was primarily driven by the lower maintenance rights asset balance as that asset continues to roll off. It was also affected by the level of maintenance activity during the quarter.

Or other leasing expenses were about $62 million for the quarter, a decrease from $90 million in 2018, and this was due to lower expenses related to lease terminations compared to the prior year period.

The asset impairments the fourth quarter, although they have to lease terminations and aircraft sales a little more than offset by maintenance revenue recognized upon termination.

On slide 12, we continue to maintain a very strong liquidity position.

As of December 31st we had available liquidity of $8.2 billion, which includes our cash a revolvers or other undrawn facilities and our contracted sales in October we amended and extended or mean revolving credit facility. We kept the size of the facility at $4 billion, an extended the maturity until 2024.

With better pricing and improved commercial terms.

Our total cash sources of $11.3 billion, or one and a half times or cash needs over the next 12 months, which amounts to excess cash coverage of just under $4 billion.

Turning to the next slide.

Well, there's equity at the end of December was $9.315 billion and our book value per share was $72, an eight cents compared to 60 to 95 at the end of 20 team.

That's a 15% increase over the past year and over the past five years, we've grown our book value per share by an average at 14% of here through our operating performance and our capital allocation strategy. We can continue to generate strong growth in book value per share year after year.

So in summary, we had another very strong quarter and a record year in 2019 bps up 44% for the fourth quarter and 23% for the year or utilization rate was high or fleet continues to improve with the addition of Newtek aircraft were placed far out into the future and we continue to sell used aircraft at attractive prices if.

We look back to 2015 over the past four years, we've increased our EPS from $5.72 to $8.43, we reduced our leverage from 2.9 to one to 2.6 to one we've gone from non investment grade rating through investment grade, we reduced our average age from 7.7 years to 6.1 years.

And we've increased the newtek portion of our fleet from 12% in 2015% to 58% today.

Fundamentally what that means is that today, we have a much more profitable company with a much better credit profile.

We're entering 2020 in a position of strength with over $8 billion of liquidity and the most advanced fleet of new technology aircraft in the industry and we believe this positions us well for the year and for the new decades.

With that now we'll turn it over for Tonight.

Thank you.

If you would like to ask a question. Please take note by pressing star one on your telephone keypad.

If you are using a speakerphone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

These problems on the phone line indication when your line is open again style.

Asked the question we've talked for just a moment to allow everyone an opportunity to signal for questions.

We will now take our first question from Jamie Baker from JP Morgan. Please go ahead.

Good morning, and this is a build symbol on for Jimmy Baker.

Just a quick one for me can you comment on the level of support the Chinese government can provide for the airlines in the region and of the Airlines asks for rental me from this point.

Sure. The Chinese government said that they are [noise] waving toxins another judy's associated with that would fares that's public knowledge I'm sure like they've stated that they have encouraged the financial institutions to work with all Chinese companies in the economy to help them through this difficult period.

In terms of our own participation and das or customers, we've been they've been with us for them over 40 years some of them.

And of course, we're going to try and help them through this period.

They've been around for 40 years of every confidence it can be around for another 40 years.

<unk>.

Got it. Thank you spend a just a quick follow up.

So whatever Moody's and Fitch waiting for to upgrade you.

I haven't you already met their respective hurdles and if so is it just a matter of thought at this point.

Well look we are we have good dialogue with all the rating agencies, we speak to them all frequently so as you know on positive outlook for Moody's right. Now. So we're hopeful that we'll get an upgrade from them sometime soon with Fitch. We've also had good discussions and we believe that based on their mentor.

Works that we do deserve an upgrade today, we think we meet all of their metrics. So you'd really helped us them. What they are waiting for but you know from our perspective, we'll continue to we'll continue to push for an upgrade because we do think it's warranted.

Certainly if you look at how we manage the leverage up apologies over the course of 2019 and into the year end as well that discipline around that.

We firmly believe that we've met the metrics for Fitch.

Got it thank you very much.

[noise], we will now take our next question from Moshe Orenbuch from Credit Suisse. Please go ahead.

Great. Thanks, because as you think about the opportunity once Boeing does start delivering the banks is how do you think about what's best for you and your customers do you want to be at the front end of that can you get better economics by being more flexible <unk> can you talk a little bit about what your.

Thinking about in that respect.

Sure well there most of our I think we'd be at least over 50% of our.

Our order book already.

So most of our leases are contracted with customers that are going to deliver after the first couple of years. After the aircraft returns to service that's assuming that all the customers want the airplanes ice I imagine that that the majority of them. We'll continue to want the aircraft I believe that it will be a good airplanes. When it was returned to service.

And in terms of opportunity I, just don't see the situation where Boeing will have.

Manny Whitetail I mean, you only situation, but its whitetail sees it the less or not least an airplane.

I'm, it's being built and that's kind of their own fall really I'm not gonna have to placed out in a hurry.

But bowling won't top white tails to spare because they're so far behind.

Because of the production halt on the deliveries to customers who needed them to add to meet their growth targets, particularly if you're an all falling customer. If you had expected to receive 2030 40 of these airplanes and you only receive half that amount you know Boeing would have an obligation to you Ivan.

He used to try and give you any additional slots that became free so I don't envisage I'm, a huge amount of opportunity at the front end and once it comes into service or no.

Will there be opportunity further as perhaps there might be and of course, you know will always be talking with Boeing about opportunities like that.

Got it and.

Peter I guess since you know your lease rates are contracted and depreciation is pretty much set the fact that interest rates have been lower.

We should be a you talked about your spread being stable and you know some seven can you kind of frame out what that benefit could be in ER and the cost of funds over the course of 2020.

Yes.

I'm sure Moshe So look I I think that will continue to have an average interest rate for the year of around 4.2%, which is which is what I said at the capital markets day. So I think that's probably still our best estimate you know we have about 3 billion of funding.

To do this year.

And so that's going to be done a lower lower rates than that average Mount so it's kinda start bringing it down but we've got 29 billion of debt in total so it takes time for that to roll through but we should still see some steady decrease in that number over time, but just because you know the 3 billion as a small percentage of the overall 29.

And it takes time for that a three to really see much of an effect I think it's very important the motion when you look I've done that spread.

You have to factor and we could have held onto those aircraft that'd be sold or we could have taken the sales proceeds on Boston additional airplanes.

That may well have elevations in that spread in the near term.

They have been the wrong things to buying the long term.

So what we did instead of doing gosh, we bought our own stock and as Pete said, you've seen that our earnings per share from 2015, where the company has a much better portfolio with a fully integrated companies lower leverage higher credit ratings and the earnings are up from $5 in change to $8.43 at a much better.

Sure.

The company as it were so they are all part of how to think about.

The net spreads and also it's worth noting once again of course, there when we give you an interest number it includes all fees and costs associated with terminations I saw the kit the cash coupon is obviously less than that less than that.

Right. Thanks, Thanks, I certainly understand the impact on on the net spread of buybacks. Thanks.

We will now to our next question from Catherine O'brien from Goldman Sachs. Please go ahead.

Morning, Iran. Thanks for the time.

So some data we have 29 team looks like it actually had the highest number of aircraft coming back into the market from Maryland falsely scene, you know in quite some time, but we didn't see any impact on aircraft portfolio lease yield. So just to two questions on the first is that more a function of Airbus department to good job avoiding the majority situations.

Or is it really overall supply being tied to the Max grounding. Another OEM delays and then and then second question on this is all these planes already been absorbed probably by the market.

Well, there's still some aircraft out there that needs to be placed that could impact supply demand. This year. Thanks.

Well.

First of all I would say the capability of aircrafts platform is unrivaled and that's proven time and time again.

But what is also true.

Is that.

No doubt airline to false make headlines.

They don't necessarily make big Chargers on highly diversified extraordinarily capable aircraft leasing platform.

So if you go back over the last 15 years going through the worst downturn, we've seen ever in aviation following the financial crisis fuel being at $146 apparel, the eurozone crisis that list goes on.

Our credit costs have averaged just over 1% of lease revenue.

That hasn't historically being the primary driver of return and Aercaps business.

So I think it's very different you got to really separate.

Worlds, leading platform and air cap from anyone else. When you think about capabilities to deal with defaults and again in 2019 as you've seen in previous years.

We tend to outperform and issues like that.

Okay understood and then you know we've been talking about thinking about the competitive backdrop in pricing in the Sally stock market improving for last couple of quarters. Now can you give us any color and how far we are off the bottom in that market and if you're getting any closer to where cap would consider participating. Thanks.

You look out than we did not should become coast there and in January we did come close to a sale lease back on some athree hundred 59, hundreds we didn't quite get there and the end, but so there was certainly a much closer than we had been so that's a positive and we'll see how this.

Year unfolds, having said that of course, you know we had.

Pretty much everyone involved in the aircraft financing business that in Dublin. This but several thousand people here for the year Finance conference two weeks ago and there you can see that there was still of course extremely boynton stable demand.

For investments in aircraft.

Great. Thanks for the time.

We will now take our next question from Helane Becker from Cowen. Please go ahead.

Thanks, very much operator, hi, everybody and thank you very much for the time Sue too I think relatively easy questions. One is do you still I think at Investor Day, Pete you talked about a billion dollars and aircraft sales is that still your target.

Yeah, laying that's still our best guess for the year I mean, I would say if conditions continue you know, we as just mentioned or at the our finance conference a few weeks ago here or there was a huge interest continued to be a huge interest in use mid life a an old.

<unk> aircraft. So the demand continues to be there. The ABS market continues to be very strong so from a financing side buyers can get financing attractive financing for these portfolios.

So I think that you know if that continues throughout the year than couldn't be more than a billion. It could but at this point you know we're only in a in mid February So I would say billion dollars still probably our best guess for the year.

Okay and then my other question really has to do it the delays.

See you know you're more in Airbus then a Boeing.

Focused from although you know obviously you do have the Max on order and and the 77th and so on that.

You know two questions with regarding to that with all the delays from the Oems you know ours is a core EPS target that you talked about at Investor day still intact.

Okay and B you know the airlines give to go back to Boeing and ask for compensation do you guys get to do the same thing.

Well I take the first part of that just on the EPS target yeah. So our guidance is unchanged, we still think it'll be between.

$7 and 740 for the year, excluding any gain on sale.

So I mean of course.

Yeah, the shop, a split pretty much down and then we're actually 50% balling, if I just talk to that up there on the the appendix slides.

Of all our airplanes, but.

Of course, you can go back to Boeing and of course, we have losses associated from add the Max and we will ensure that the shareholders of air cap do not there those offices.

And.

That we will receive adequate compensation from Boeing in connection with those those costs that we are suffering.

And you know about format that takes I don't mind that currency. It is so long as I can catch that currency yet.

Right exactly that makes sense, okay, well, thanks, guys I appreciate the health.

Sure.

We will now take our next question from Ross Harvey from Davy. Please go ahead.

Good afternoon, guys M. Three questions for me please.

The first one is partly related to question earlier, but having sets a very strong based on the Korean cast from 29 team I'm, just wondering what specific factors and the cost lines.

We should expect to see moves such that you know the figure the figure would have been broadly flat year on year and 2020.

Secondly in relation to marketing, it's obviously, you've got 97% to lease rents through adds 2022 contractedness with the case at the CMT sort of implies you've got a conservative time rice not a lot of your forward placements care benefits for for for revenue visibility, but in light of the.

Recent OEM delays, which of your mind it to adjust that all in the future and finally on the exercising of theater Twentyneo family aircraft options can you shed any light and what protect our variance you are attracted to with enough I'm on the reasons behind us.

Sure vote Ross, let me take the first one so I mean, if you look at if you look at our 2019 performance excluding gains on sale. So if we take that out that's about you know about $7.20, a which puts us roughly in the range for Ah for 2020, a in the middle of that.

The good before seven to 740 odd and when we look at what's going to happen with the overall balance sheet. During the course of the or given these delays we expect will be roughly flat. So you know there aren't really any big movements on the cost side, you know SG Nay I think we talked about before but I think that will.

We continue to run it maybe $65 million to $70 million a quarter. The depreciation depletion depreciation rate that will be as I said that a couple of work at state. So its budget will be around 4.64, 0.7% or for the year and and average interest rate as I said before it's in May.

Moshe you know around 4.2%. So I don't think you're not going to see any major changes in any of those items. During the course of the or the big thing that can swing, obviously is leasing expenses and maintenance revenues right. Those are the two things that that can swing a lot and some of that as timing, but other parts. It's permanent benefits that you got.

So that's what I would say for the year.

And Ross on our leasing strategy are facing airframes far out that's a function of our capability.

As an aircraft mess or add to be able to do das and so we'll continue to do that took place at well into the future in terms of the option. It was focused on the Athree 20 321 bearing.

Okay, great. Thanks very much.

You're welcome so.

Well now take our next question from Michael Linenberg Deutsche Bank. Please go ahead.

Hey, guys. This is because patel.

Just a quick question here. So one of your largest competitor recently announced that they are committing 6 billion to proactively work with their customers as they deal with the current a virus.

Are you in a position where you may consider stepping up to do something similar or what are your thoughts on that.

I think at the moment our customers are are are suffering and their families are suffering and Dan you want to try and support them, but anyway, we can or whatever we can do to help them.

We will be able to do be carry 10 billion of liquidity on hand at any given time.

No one carries more liquidity in the world and Erica.

So I'm sure we can more than that much anyone but at this point in time a focus at the company is helping to partners that'd be lower for this company for 40 years.

Great and then just small here.

One of the modeling side as well.

On the seven to 740 core Gaby P.S. you guys talked about at the.

At the Investor day, what's driving the NIM contraction in lease yields in 2020 that you guys got as well.

Oh, well that trend that's been going on as you look out over the years I mean, it's really a function of some will continue dropped in the average age of the fleet. So it's going down you know the average age will go down to.

About six years by the end of 2020 or so that's the biggest contributor to that and I'm part of that is it's obviously the new deliveries that we're taking that when they come on right. There at a lower yield and I'd go that grows over time, but it's also due to the fact that as Chris mentioned before you know the aircraft that we sold it so we're selling.

Mid life, some higher yielding aircraft, but we're reinvesting those proceeds in in buying back or stock. So that's that's why you see that affected the at least that's been pretty important though what you're seeing is that we've been able to hold the yield last depreciation and interest constant.

While using the proceeds to significantly boost earnings per share by taking advantage of the arbitrage of selling our assets at 135% of book equity and buying back the same equity at 76%. So long as that arbitrage exists. It's something we're certainly going to continue to do.

And it's really the geography of the P. analogous be moves.

But underneath that really substantive point, that's not the quality of the company has improved and the earnings have improved also.

Got it thanks guys.

[music].

Sure.

[noise], we will now take our next question from Vincent Caintic from Stephens, Inc. Please go ahead.

Okay. Thanks, Thanks for taking my questions. So back on the the effects of the CRO the virus and just kind of going to be a.

Maybe a broader question, but I'm sort of I still expect us to be short term phenomenon, but.

What's sort of things I guess should we be paying attention to.

In terms of maybe risks and opportunities so to the extent of maybe it's just as others are there opportunities for you just stepping another financings and.

Yes.

Good and give us a history lesson in test epidemics, what has happened and have you.

You sort of whats the challenge has ever seen in sort of sniffing what opportunities are you seeing as other city liquidity providers, whether she says thanks.

Look I think thousands of people have died not sure I certainly want to talk about opportunities that arise from something like us.

Lot I can tell you is that in the past.

What we have done as we worked with our customers, we know that Chinese the future.

Goes customer that we have will be with us for a long long time to come.

They're going through an extraordinarily difficult time like now, but they'll come through us and and what I expect we'll see what we've seen in the past when our customers get into some difficulty is that we'll see we'll probably defer some rents given that there are no revenue line has obviously fallen significantly and you're probably defer events for a month or two to to help them out.

On a case by case basis.

But that will be the focus of our efforts is how can be a help our customers through this period rather than profit from us.

Okay understood. Thank you.

So.

With that and.

If you were undertaken says, yes, but hopefully short term phenomena the.

If you were just sort of rents does it actually show up on your.

We still do near term or do you continue to.

And then eventually claims on those fronts. Thank you.

Yeah, what you're normally do that if you do differ rents and not to be case by case basis I'm not to just be a receivable that.

We'll be repaid over time and that's typically that's only being the case I mean at them at the year end, our total receivables for the entire company was $47 million <unk> and that was for the entire business.

And in the past when that our partners have had issues for whatever reason, we have worked with them and I guess, we pay pretty promising.

Okay, great. Thanks much.

<unk>.

And just as a reminder, <unk> star one ask a question.

Take a follow up question from Catherine O'brien from Goldman Sachs. Please go ahead.

Thanks, a follow up just one quick modeling one so at the Investor Day, I think you guided to 4.2 billion an expected Capex. This year I was just wondering is is that number still intact and if so how much of that is driven by myself. Thank you.

Sure Catherine ER. So we if you look at the appendix slides, you'll see that we moved out our estimates of of Max deliveries for the year. So now we're only assuming four aircraft delivering and so that really takes our our capex for the year down to about 3.3 billion.

As our estimate for the year again look obviously, there's a lot of uncertainty around those nice deliveries are both this year next year. So we'll have to see how that plays out, but but that's our best guess at the moment.

Okay got it policies I haven't got hit that makes sense. Thank you.

Sure.

[noise] as there were no further questions I would now like to hand, the call back to where speakers for any additional or closing remarks.

Thank you very much all for joining us for the full year 20, not getting results.

<unk> with another strong quarter of earnings with S. up 44% and this has been achieved through the strong leasing capabilities air cap disciplined approach to portfolio management and proactive risk management with a fourth speaking to you all three months' time.

Bye.

Ladies and gentlemen, this concludes today's call. Thank you for your participation you may now disconnect.

[music].