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Q3 2008 AIRCASTLE LTD Earnings Conference Call - Final.

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OPERATOR: Good afternoon. My name is Ashley and I will be your conference operator today. At this time I would like to welcome everyone to the Aircastle third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there is will be a question-and-answer session. (OPERATOR INSTRUCTIONS) Thank you.

Ms. Hallisey, you may begin your conference.

JULIA HALLISEY, IR, AIRCASTLE LIMITED: Thank you, Ashley. And good afternoon, everyone. I'd like to welcome all I don't have you to the third quarter 2008 earnings call for Aircastle Limited. Joining us today are Ron Wainshal, our Chief Executive Officer, and Mike Inglese, our Chief Financial Officer. Before I turn the call over to Ron I would like to mention that this call is being recorded and the replay number is 800-642-1687 from within the US, or 706-645-9291 from outside of the US, with the replay pass code of 68123844. This call be also be available via webcast on our website, www.aircastle.com.

I would also like to point out that statements today which are not historical fact may be deemed forward-looking statements. Actual results may differ materially from the estimates or expectations expressed in those statements and certain factors that can cause actual results to differ materially from Aircastle Limited's expectations are detailed in our SEC reports. I direct you to Aircastle Limited's earnings release for the full forward-looking statements legend. Now I'd like to turn the call over to Ron.

RON WAINSHAL, CEO, AIRCASTLE LIMITED: Thank, Julia. Good morning. Before I start with my remarks for the quarter, I wanted to comment briefly on the 8K we filed this morning. In connection with the regular SEC review process related to our 2007 10K, we determined that our previously filed consolidated statements of cash flow should be restated to eliminate certain noncash activities and to preclassify maintenance payments and security deposits from operating activities to financing activities. Let me underscore none of this will change our previously reported consolidated balance sheets or consolidated statements of income including net income earnings per share, shareholders equity for all periods. This will not change our cash balances. Mike will elaborate on this later on the call when he covers our financial results.

Turning to the market, it is clear that the current market conditions are having a negative effect on share prices. In my view the current trading levels of our shares reflect a steep discount by almost any metric that does not come close to it reflecting our consistently strong financial and operating performance, the value of our assets and our platform and the prospects for business. For example during the third quarter our adjusted net income plus depreciation was $87 million. This measure of cash flow works out to be $4.48 per share on an annualized basis, relative to yesterday's closing stock price, returning in the multiple of only 1.26 times. Both management and our board are focused on continuing to execute operationally, and on finding ways to deliver value to shareholders over time. As we built this company from the ground up during the past four years we have always been mindful that our industry is cyclical, conditions periodically get difficult and then they get eventually better again. However we prepare for the tough times. Our portfolio of 133 aircraft is modern and well diversified, with 58 lessees in 33 countries. Our business generates strong cash flows from leases that have an average remaining term of 5.4 years and our portfolio utilization is 99% during the last quarter. Our fleet is term financed to at least 2013 and financings that are not recourse Aircastle, and they employee a conservative 60% to 65% loan to value leverage and put another way debt to equity structure of roughly two to one. And finally we've built an in-house team consisting of experienced top notch professionals. I'd like to now discuss the highlights from the third quarter.

Adjusted net income of $35 million and as I mentioned adjusted net income plus depreciation was $87 million. Both metrics are on par with last quarter's strong results. Our leasing performance was very good. We had already secured commitments for our scheduled 2008 lease explorations and all but four of our 2009 placement requirements. The placements were complete on attractive terms, more specifically same-store rents for 2008 placements were up 12% and for 2009 they're up between 5% and 10%, and the new lease terms average more than six years. To put in perspective these placements cover 29 aircraft or about 1/5 of our fleet and they also represent about 16% of our revenues. On the lease restructuring we place the three aircraft return last quarter, those were two 737-300s and one 757, and they were back in service in September.

Additionally, Futura a Spanish charter...

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