Q4 2020 FLY Leasing Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the fly leasing fourth quarter 'twenty 'twenty earnings call. At this time all participants are in a listen only mail day. After the speaker's presentation. There will be a question and answer session to ask the question. During the session you will need to press star one.
Can you tell the salad if you require any further assistance please press star zero.
Thank you I would now like to hand, the call over to your speaker today, Mr. Matt Dallas, Sir. Please go ahead.
Thank you and good afternoon, I'm, Matt Dallas, the Investor Relations manager of fly leasing and I'd like to welcome everyone to our fourth quarter and full year 2020 earnings conference call.
Fly leasing, which we will refer to as fly or the company issued its fourth quarter and full year earnings results press release, which is posted on the company's website at fly leasing dotcom.
We will have a slide presentation that accompanies today's 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, and Julie rule, our Chief Financial Officer.
This conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 forward. Looking statements include but are not limited to statements regarding the outlook for the company's future business and financial performance.
Forward looking statements are based on current expectations and assumptions of fly Ash management, which are subject.
The two 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 companys filings with the SEC.
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'd now like to hand, the call over to Colin Barrington, the CEO of fly leasing column.
Thank you Matt.
Hi, good evening, everyone and thank you for joining us on our call.
Well 2020 was certainly a challenging year for the globally global aviation industry.
And the from any other industrial sectors, particularly the travel.
And for millions of individuals to succumb to the Covid virus and for the families and friends.
What is happening with them.
Airlines aircraft lessors of manufacturers of all gone through a torrid time with airlines worldwide, where our customers see in the frontline and suffering most businesses declined.
Well the first quarter 2020 was largely unaffected by Covid in the last three quarters. Many airlines all of the passenger traffic growth.
In some cases by more than 90% of compared to 2019.
For 2020 of the homes global Air traffic it was down by nearly 70% as compared to the prior year.
During this time the aircraft leasing sector shown its resilience in June of Tennessee.
Strong amount of.
The financial management, among the lessors of light too conservative and well capitalized balance sheet.
Allowed us to manage through this crisis.
We did indeed during the global financial crisis 12 years ago.
That's a relatively small lessor fly has been fortunate of had the support of the large and experienced B then the teams to bring us through this difficult period.
And to avail of the limited opportunity set of road.
The medium term outlook is certainly improving the vaccines of rone does and the numbers of Covid cases of Covid related deaths.
<unk> significantly.
As more and more people are vaccinated.
With many countries aiming to have most of the population stun vaccination effect by mid summer.
Back to see of relaxation and government restrictions on travel.
This should lead to a return of consumers who appear to have the continuing strong desire to get up and go.
I also I also also reports of particularly in areas such as Latin America increased board of testing is already boosting travel in that region.
<unk> the need for travelers to quarantine on arrival.
There's still a little way to go there of 70 green shoots of merging.
As regard to aircraft types.
Already seeing improvements in the utilization of that and values of narrow bodies with true.
The fact, the domestic and regional travel is rebounding more rapidly than long haul and international travel.
This trend is likely to continue through the end of the year.
Reflecting the resilience of the aircraft leasing sector capital markets have remained open for aviation products.
And there's been no shortage of liquidity in our industry.
Fly of dollar aircraft lessor was from the Vale of the these markets to bolster liquidity to sales of the aircraft and through entering into new debt facilities.
We've also benefited from historically low interest rates.
A light too generous pandemic related government supports in many jurisdictions and support from the aircraft lessor was the.
The capital markets of also provided the most major airlines with sufficient liquidity to compensation part, but the revenue losses of the past year.
And to survive to the loss of difficult months.
As always we can be then of being responsive to our airline customers need.
And I've worked with them to help ensure the surviving through these unprecedented times.
I'll also focusing of course on our own.
The cash needs.
2020, but certainly among the most difficult years in fly 13 year history the.
The financial results of effect this chunk of net loss of $67 million on total revenues of $334 million for the year.
This loss was mainly as a result of a 115 millions of dollar noncash impairment charge that we took in respect of nine aircraft.
Of which $106 million relates to two seven year old Airbus a 333 hundreds.
Expected to be returned early by the lessee.
Julie will explain this impairment in more detail junior of part of the presentation.
By the way these are the only eight 330 300 and our fleece.
If it were not for this impairment slides 2020 pretax income would have been positive at more than $40 million.
The net loss represented $2 from 'twenty, one cents per share.
As of year end of book value of $25 88 per share a very healthy premium to our share price.
Reflecting the resilience of the sector and the fly.
During 2020, we focus mainly on liquidity enhancements.
The fourth quarter, we closed the new $180 million five year term loan.
In that quarter, we also repaid our 325 million dollar 2021 notes, which were due in October this year.
As a result with no significant debt repayments scheduled until 2023.
The extended our overall debt maturity the charities.
We also continued to sell assets at a reasonable pace selling eight aircraft and three engines.
So I'll explain in a few minutes the sales continued to be at the significant premium to the book value of the asset suite.
During the year deliveries of the new purchase and leaseback, 828th 20, new aircraft to which we had commitment with the third.
And so we have no capital commitments during 2021.
We believe that this is a positive development as it provides breathing space until airlines airline traffic returns on the supply and demand situation for aircraft settled.
As.
The year progressed, we also saw of future rental cash flow is improving.
We signed nine lease extensions and five new leases to India.
We also collected most of the rent deferrals June quota for until the pace of rent deferrals decreasing the.
Only $4 million of rent deferrals granted in the fourth quarter.
Okay.
At year end 2020 fly was in a strong financial position the.
Addition to our $132 million of Bom restricted cash we had several unencumbered aircraft, which along with the cash totaled 320 thought 312 million of Europe.
We also reduced our leverage to of historically low level with the net debt to equity ratio ratio of two three times at year end the <unk>.
The year ago, and the significant reduction of the figure of at the end of 2018.
The resulting from positive conditions of the financial markets of the repayment of of 2021 notes.
We also reduced our average debt cost by nearly 50 basis points of the year and by 60 basis points since the end of 2018.
Coming to aircraft sales.
During 2020 fly sold eight aircraft from three engines from our portfolio.
The total gain of $36 million.
This was the 19% premium to the book value of the asset.
All of the sales two aircrafts in the one engine was sold in the fourth quarter produced a gain of $4 million of 17% premium to book value.
Despite the industry difficulties because of continuing capital market interest in the aircraft asset.
Fly was able to continue its strong record of profitable aircraft sales and once again demonstrated that there was value in our balance sheet.
In 2021, we expect to implement further aircraft sales with the objective of generating net income enhancing liquidity and managing credit exposures.
To this end, we have already signed letters of intent relating to the sale of several aircraft.
We are certainly encouraged by the amount of capital that isn't the.
Interested in aircraft assets, that's the strong long term investment and we'd sort.
Already the resulting in an increase in aircraft values, particularly for narrow body aircraft, which comprised the majority of our fleet.
Fly is prudent business model of an experienced management team of being the foundations that have allowed us to weather the last unprecedented year.
Our fleet is composed of the most popular narrow body aircraft type.
But 70% by value being these most popular narrow bodies.
These aircraft types of maintain the value of its definitely the most wide bodies, we expect them to the increased demand from the airlines of domestic and regional travel accelerates more quickly the long haul international travel.
We are of a diversified customer base with more than 50% of our lessees the comprised of flag carriers of the U S majors.
To date, we have experienced limited number of bankruptcies of among lessees.
We will continue to work with five of airlines to help them survive these difficult current market conditions.
Our balance sheet adults of durable with low leverage of long dated financing the protects us from debt repayment crunches and gives us the opportunity to pursue pursue our opportunistic acquisition strategy.
The team that has demonstrated its nearest to this period of <unk>.
Very low demand from airlines for new aircraft acquisitions.
Fly has certainly benefited from being managed by the experienced <unk> team during these challenging times.
The broadly based full service and experience the done team with more than 30 years' experience in our industry has vanished aircrafts in the financial assets through several industry cycles.
The bond, whose shareholders own more than 20% of fly will continue to provide these skills and personnel to maximize value for fly shareholders.
And with that of I'll hand, you over to Julie who will take you through the financials for the quarter and for the year.
Thank you Corey.
Thank you your column.
For Q4 fly is reporting a net loss of $107 million driven by an impairment charge of 115 million relating primarily to wide body aircraft expected to be returned early.
The net loss of equates to $3 51 per share as compared to earnings per share of $2 43 in Q4 2019.
The impact of the Covid pandemic on the airline industry is directly correlated to the impairment charge and the ongoing challenges being experienced by airlines continuing to affect the <unk> top line, although to a lesser extent than in Q3 due to the non recognition of revenue for certain lessees.
End of lease income and gains on aircraft sales were also both down dramatically versus Q4 of 2019.
Fly has net spread came in at 5% for the quarter.
Fly is year to date net loss of $67 4 million or $2 21 per share as compared to net income of $225 9 million or <unk> 12 per share in 2019.
The impairment charge I mentioned, a moment ago. It was the most significant driver of the year over year changes.
End of lease income and gains on sales of aircraft were down significantly as well.
Net spread for the year decreased five 9% on the revenue decline.
Price operating lease rental revenue in Q4, 2020 decreased to $64 3 million driven by the non recognition of revenue for certain lessees and fly smaller fleet.
Operating lease rental revenue declined as compared to the prior year quarter. The $64 3 million recognized in Q4 represents a sequential increase of nearly 20% over Q3.
Total revenues for Q4 were $72 8 million, which includes $5 2 million of end of lease income related to the early return of an aircraft and $4 3 million gain on sales of aircraft were 17% premium to net book value.
Year to date operating lease rental revenue declined to $283 9 million and total revenues were $333 4 million.
Can you provide a bit more detail on the decrease in operating lease rental revenue. This chart bridges from Q4 2019 revenue to Q4 2020 revenue.
Non accrual of lessees accounted for an $11 2 million of drop in revenue in Q4, 2020 as compared to Q4 2019.
Non recognition of revenue, which was much less significant in Q4 as compared to Q3 and nearly half of this amount is attributable to lessees were placed on non accrual prior to Q4.
Sold aircraft were the next largest driver of the revenue decline of $10 million, followed by lease extensions restructuring and the marketing, which contributed $4 3 million decrease.
The last category driving the decline is the decrease in LIBOR, which is offset by lower interest expense and other items with the aggregate decrease being partially offset by a $3 3 million increase due to revenue recognized from aircraft purchased in the last year.
This chart shows the full year operating lease rental revenue bridge from 2019 to 2020.
By far the largest driver of the revenue decline of aircraft sales as the result of 43 aircraft being sold in 2019 and 2020.
Non accrual of lessees accounted for $35 6 million drop in revenue representing less than 10% of 2019 operating lease rental revenue.
Lease extensions restructuring some of the marketing accounted for $9 $7 million of the decrease while lower LIBOR and other items cost of $5 2 million revenue decline.
These decreases were partially offset by a $22 8 million increase due to revenue recognized from aircraft acquired.
Fly has placed some airlines on non accrual status as the collect the collectability of revenue from these airline customers is not considered probable.
In Q4, we placed three additional airlines on non accrual status, representing only 3% of contracted rental revenue.
In total of 11 airline customers leasing 19 aircraft are currently on non accrual status.
For non accrual lessees fly only record revenue to the extent of cash receipts inclusive of cash security deposits.
We have seen an improvement in cash collections with $14 3 million of rent collected in Q4, and an additional $6 4 million collected thus far in Q1.
We expect to continue to collect cash from non accrual of lessees throughout 2021 and are optimistic of the cash collections will accelerate in the second half of the year with the anticipated uptick in air travel.
More information regarding non accrual accounting is contained in the appendices of the presentation.
On the expense side Q4 expenses included a 115 million of impairment charge, which I will talk about in more detail in a moment.
Depreciation was up slightly while interest expense decreased as compared to the prior year quarter due to the repayment of debt and a lower weighted average cost of debt.
SG&A expense decreased $6 million in Q4, 2020 as compared to Q4 Q4 2019 due to the smaller fleet, partially offset by realized and unrealized foreign currency losses, as well as higher general corporate cost.
In the current quarter, we recorded an additional allowance for uncollectible operating lease receivables of $1 million, bringing the total allowance of $4 million at yearend.
Maintenance cost increased in the quarter, primarily due to cost of prepare two aircraft for lease as well as costs related to offerings of aircraft.
For the full year depreciation interest expense and SG&A were all down due to aircraft sales.
In 2020 fly recognized an unrealized loss of 13 million to write down of marketable securities to estimated fair value.
As it relates to fly the investment in the equity tranche of aviation ABS vehicles, commonly referred to as E notes at December 31 of the remaining book value of fly of investment in E notes of $3 million.
To provide some color regarding the Q4 impairment charge you can see on the slide with the vast majority of the charge of 106 million relates to Q seven year old <unk> hundred 30 wide body aircraft that are expected to be returned early by the lessee.
As a result, our estimate of future on discounted cash flow decreased to below net book value.
As a reminder, under U S GAAP and asset is not impaired at the expected on discounted future cash flow of exceed the net book value.
Once it is determined that expected on discounted cash flow is do not cover book value. The actual impairment charge is calculated by comparing the net book value the cash flows discounted at an appropriate discount rate.
Analysis of flat to 106 million of impairment charge for the two wide body aircraft.
So it has no other <unk> hundred 33, hundreds in its fleet and only one other <unk> hundred 30 and older <unk> hundred 3200, with the minimal net book value.
$4 million of the impairment charge is attributable to 215 year old <unk> hundred 22 hundreds.
Fly is due to collect significant end of lease compensation for these aircrafts in 2021 unexpected to part out the aircraft.
Lastly, 5 million of the impairment charge was driven by five 819 aircraft with the weighted average age of over 18 years fly.
So I expect this all of these aircraft in 2021, which caused the relatively minor impairment charges.
[laughter] fly evaluated its entire fleet on an aircraft by aircraft basis and no. Other impairment was identified as of year end.
I'll now provide an update regarding fly as rent deferrals.
Q4 fly collected 47% of pre deferral of contracted rent.
For 2020 fly had approximately $54 million of rent deferrals of which about 47 million is included net receivables at December 31.
Deferrals for 2021 are currently expected to be approximately $10 million or less than 4% of 2020 operating lease rental revenue.
A table on slide 19 provides the details of rent deferrals and scheduled repayments by period based on expected deferral agreements.
Please note the fly continues to work with lessees regarding muscle of payments and as a result, these amounts may shift over time, including in some cases provisions to previous deferral arrangements or at lease restructurings that may be granted.
Based on contracted deferrals to date the payment of rent deferrals are scheduled to increase substantially in 2021 with about half of deferrals due to be repaid by the end of 2021.
Turn it back to call them now for his closing remarks.
Thank you Julie.
So fly has come through a very difficult year in good shape, primarily because of our.
Prudent business model, one of our experienced management team.
Our attractive fleet of mainly narrow body aircraft maintained its value will join.
During the year, we sold eight aircraft, representing nearly 10 percentage of our portfolio by number.
The 19% premium to book value.
Demonstrations of the market for aircraft sales recognized the value and it was prepared to pay for it.
Importantly, we have maintained the book value per share of nearly $26, which is more than twice our current share price.
For the future we have no near term capex commitments of low leverage and no near term debt maturities.
<unk>, we have financial flexibility the free to pursue our opportunistic acquisition strategy when market conditions support us.
But that we will take your questions.
As a reminder, ladies and gentleman that asked the question you will need to press star one on your telephone and to withdraw your question press the pound or hash key please standby will be compile the Q&A roster.
Your first question in queue comes from the line of the Catherine O'brien from Goldman Sachs. Catherine. Please ask your question. Your line is now open.
Hi, everyone. Thanks from the time.
Like maybe a couple of them either call maybe a couple of them the impairment charges at the start.
You know I know that impairments are tied to the decision to sell but the perhaps that decision triggered some of these impairment charges and I know on the <unk> hundred 30 that was it seemed more tied to the fact that that those aircraft are coming back early on lease.
But.
And in the same quarter you also the old several aircrafts out of gain.
So I'm just trying to I'm, just trying to like soft out of the puts and takes on those <unk> hundred 30 is.
Of course, the backdrop is continuing to change, but I think last quarter. You noted you were comfortable with the book value of your fleet, though they're really just trying to understand better you know.
What's triggering the AC 30 impairment I don't know if it's just you know you're marking to market for where rentals are on that the play back what would just love some additional color. Thanks.
Julie do you want to take this I mean, I think you sort of explain the GAAP.
GAAP measures, we have to take so would you want to maybe just summarize that again, perhaps.
Sure on the <unk> hundred 30, specifically.
During the quarter during Q4.
It it became highly likely that those aircraft will be returned early.
And that's sort of what what changed and triggered it in Q4 in the prior to that.
It didn't appear to be highly likely they would be returned early.
And.
And the kind of current environment theres the possibility they could remain off lease for a period of time.
And the and the rates rental rates on those aircrafts are depressed.
So that's what really drove us to to record the impairment in the quarter is the strong strong likelihood those will be returned early in 2021.
And I think the the other factor is that you have to discount the cash flow the projected cash flows in those circumstances, whereas until the while they were still on the east.
Actually.
Indeed with on discounted cash flows.
Got it yeah I mean the.
Sorry go ahead Catherine.
So do you have to like when you when you take once you move to the undisputed cash flow measure do you have to mark to market for prevailing rates. There are you able to forecast out some type of recovery or is this really just you know your remarketing it and those of the types of rates Youre seeing and you have to bake that in going forward.
Yeah.
And now we can take a long term view and we don't have to assume that the rates. There you know available today will will stay in place for the rest of the life of the asset so we use them.
The third parties that predict out future lease rates.
We will use that within our cash flow of protections.
Okay, and one more apologies for the harping on this but if you know I understand that you guys did a pretty comprehensive fleet review, but is are there any of their aircraft where.
Thinking through prevailing rates today.
Where if they were returned early.
You could see another impairment charge like this.
Or are you just because you know narrow bodies I know you were mentioning throughout the call that those values of recovering so maybe not but just would love to hear your thoughts.
Yeah, So I'm, obviously of meat and we can't predict the future, but in general we are comfortable with the quality and marketability of the fleet.
Which is predominantly the most.
Popular aircraft types of <unk> hundred Twenty's, and Boeing 737 N g's.
But you did touch on what I think what could be a driver of future impairments, which would be an early termination of of leases.
Yeah.
I mean.
And I doubt that it would be the significant out of the charge, we're seeing this quarter, but again, it's it's difficult to predict what might change in the future, but but overall we.
We are pretty comfortable with our fleet.
In particular I think that's from the.
If you had a net.
Narrow body returned prematurely, but let's see you would not expect to you would expect to re lease it more rapidly than you would with a wide body of the present time.
Understood. Thanks, all of that color I'll hop back in the queue. Thanks.
Okay.
Your next question in queue comes from the line of Jamie Baker from Jpmorgan, Jamie Your line is now open.
Hey, Thanks, good afternoon, everybody, so mark and I are still trying to.
<unk> of our heads around you know of $53 million of impairment per <unk> hundred 30, and how that's even possible could could you give us.
Perhaps the age of the aircraft and very importantly, what percentage of the book. The write down represents also are there any LTV tests in the secured facilities that might be impacted by the impairment.
Julie do you want from a yes, yes of course, hi, Jami. Thanks for the question you bet. So on the H age of the aircraft or just over seven years old each.
We don't typically comment on specific values of of individual aircraft, but you.
As you can imagine it's it is significant to the.
Of the pre impairment the value of these.
Hum of these aircraft and I'm sorry, what was the third part of your question.
Any LTV tests in your secured facilities that there could be of knock on effect.
Given the impairment.
Yeah, Steve there are LTV test, but we don't anticipate any any knock on effect that.
Those are theyre based on appraised values and in the case of these particular aircraft. They are in a facility that looks at base values.
And we just haven't really seen them appraised values come down.
Certainly base values and even a current market value. So we wouldn't wouldn't expect an impact from LTV tests from from the impairments that you know of correlated to the impairment charge.
Okay, that's helpful and calm.
Somewhat of a repeat of what I asked last quarter, but you know.
[laughter] of hectic time in the business.
Any new thoughts on how you're thinking about an outright sale versus the go private type transaction.
Versus the status quo, I mean, obviously trading at less than 50% of book.
The public market just increasingly doesn't seem like it's the right place to be.
Yeah, well you know as I said I think we've said before we look at.
Options, all the time, but we're not going to comment on any sort of a.
Measures like this at this point of time, Jamie So I'd, rather not go any farther than that.
There are some rumors of the newspapers of media and the we don't comment on rumors.
Well, let me squeeze in a quick one then just kind of fine tuning the slowing pace of deferrals granted in the fourth quarter was an encouraging data point.
Do we assume that that reflects fewer deferral sort of.
Or should we interpret it as of U S fly simply turning down taking a harder line for example.
Too much fewer asks by the airlines, but I think it's a fair distinction to ask about.
Yes, Judy correct me, if I'm wrong, but my understanding it's Stuart you're asked at this point in time.
Yes, that's right, but the pace of of request has slowed down okay. Perfect. Thank you very much.
Thanks, Jamie.
Yes.
Your next.
And can you come from the line of Helen Becker from Cowen.
Please go ahead and ask your question. Your line is now open.
Thanks, very much hi, how are you.
So.
Right.
I'm, assuming from your comments and the slides you're not doing any deferrals past this year and you're expecting repayments next year of Butner deferrals. The past this year is that correct.
Hi, Helane, it's Julie yes that is correct we haven't.
We have not granted any deferrals past 2021.
Thank you and then the other question I had was.
We had two other questions if I could squeeze them in one is on the five impaired <unk> hundred 19.
So you said youre kind of sell them.
But.
There's no D associated with the sort of second half transaction.
And then the part outs on the 800 twenty's or the second half too.
Yes.
Julie we have we normally don't comment on the sales until we.
Of firm contracts in the case of these seven aircraft of the $5 three nine teams in the 2000 Twenty's, we do have lessons of intent.
Which we hope will mean, the sales will be generated.
In the next in the coming months, but as I say, we don't have firm contracts that you have to the week, we haven't commented on them.
Okay and then my other question Colm is the freighter market is really hot right now and you know you have no order book would you consider sale leaseback transactions on.
The freighter aircraft or.
Or would you consider getting into that space.
Well, we have we have of currently in our portfolio we've got to.
Large crashes.
Yeah.
All of which we did on the sale and leaseback transaction, we would certainly look at Fraser of aircraft.
On the long if we got the the long term leases with good credits.
Thank you know the freighter market is hot because there are very few or less passenger aircraft flying around with the belly capacity.
When the market returns.
We hope it will true in the course of this year.
Possibly the frame the market won't be questions Haas as it is today.
But the but look if we can get a good freighter aircraft.
On the good lease and finance as well and we will look at the Suez in the future as we've done in the past.
Okay. That's fair. Thank you very much thanks.
Thanks Helane.
Of course.
Your next question comes from Couche Patel from Deutsche Bank Couche. Your line is now open hey.
Good afternoon, guys I wanted to take a minute to talk about how you guys think about risk management has risks and a function of fly which has traditionally been viewed as something thats reactive in response to specific stress points in the market or.
Has the process evolved since the onset of Covid or I guess.
Maybe to put it differently what proactive measures are you taking to support the potential for further future impairments. If the current situation fails to improve like we all are expecting to in the next.
Several months here.
Wow.
Judy due to come out of this or.
Sure.
Sure first I guess I'd say.
We're in a in a very strong position going into Covid, having completed the four.
The 40 to 43 aircraft sales and in.
In 2019 of 2020 at 35 of that was in 2019. So we try to be in a position, where we don't have to be reactive and be prepared for.
The eventual down cycles.
In terms of proactive measures or just you know actively engaging with our lessees all the time and.
And you know uncertainty and you're trying to work with them to make sure of that.
If we can help them with the long term survival, if they're going to survive. We think they're kind of survive long term, we're going to work with them.
But if we need to move to protect our assets and we think we can deploy them elsewhere.
We will we will work to do that.
Yeah, and I think that it will move.
For all Couche of greatest.
The risk management is that we you know 72% of our fleet by value is comprised of very popular narrow body aircraft, which are the can move from one airline to another of which are still remaining quite popular.
So.
I think of having the majority of the very large majority of at least in the.
Particular category of aircraft is perhaps our greatest risk protection.
Yeah.
And then I guess, just thinking along the lines of portfolio of strategy do wide bodies have a place in the fly portfolio over the longer term as we look beyond COVID-19 because it would seem that they carry a significantly greater degree of risk when you compare to the narrow bodies in your portfolio.
Yeah, I mean, we've always said the fly is likely to remain a predominantly narrow body.
Lessor and that's what we've done.
Think we've said before that we will only acquire wide bodies. If they are long leases to reasonably good credits and we can finance them inexpensively.
We.
We met that criteria with the two of three therapies. Unfortunately, the airline looks as it gets kind of lessons from them.
And that's why we've had to take this impairment.
Okay.
Well, thanks, a lot guys I appreciate it.
Nice goose.
Your last question on key of comes from the line of Catherine O'brien from Goldman Sachs. Go ahead, Catherine Your line is now open.
Hi, again, thanks for the extra time, one of you could just like the forward looking growth oriented question you know any thoughts on the <unk> hundred 20 Neo options you have the the don't need to go to areas of you know is it still too early to discern the theres demand for those.
When do you need to make the decision by on those or is it just seems like maybe there's more of an appetite brookdale lease back financing versus additional lift but would just love to hear your thoughts on maybe growth ultimately going forward. Thank you for the time.
The eight three of 21 news that we'd agreed to do sale and leaseback with Airasia and those deliveries have been pushed out beyond this year as have the option of aircraft. So we don't have to make any decisions on those deliveries right now.
We're working with air Asia on what might be the of the new.
New delivery program for those.
We'll have updates on that how's the year progresses.
Okay got it thank you very much.
There are no further questions in queue presenters. Please continue.
We'd like to thank everyone for joining us for our fourth quarter and full year earnings results Conference call and we look forward to updating you again next quarter.
May now disconnect.
Yeah.
Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you for participating stay safe everyone. You may now disconnect.
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