Aircastle Limited (

AYR

)

Q4 2011 Earnings Call

February 29, 2012 10:00 a.m. ET

Executives

Frank Constantinople – SVP, IR

Michael Inglese – CFO

Ron Wainshal – CEO

Analysts

Gary Liebowitz – Wells Fargo Securities

Andrew Light – Citigroup

Isaac Husseini - Barclays Capital

Scott Valentin – FBR Capital

Jamie Baker - JPMorgan Chase & Co.

Gregory Lewis – Credit Suisse

Josh Pinkerton – Goldman Sachs

Bill Greene – Morgan Stanley

Glenn Engel – Bank of America

Presentation

Operator

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Good day everyone and welcome to the Q4 2011 Aircastle Limited earnings conference call. This call is being recorded. At this time, it is my pleasure to turn the call over to Mr. Frank Constantinople, senior vice president of investor relations. Please go ahead sir.

Frank Constantinople

Thank you, Carla. And good morning everyone and welcome to Aircastle Limited’s fourth quarter 2011 earnings call. With me are Ron Wainshal, Aircastle’s chief executive officer, and Mike Inglese, our CFO. We will begin the presentation shortly but I would like to mention that the call is being recorded and the replay number is 888-203-1112 from within the United States and Canada, and from outside of the U.S. and Canada the number is 719-457-0820. The replay passcode is 2558049. This call will also be available via webcast on our website at

www.aircastle.com

along with the earnings press release and our Powerpoint presentation.

I would like to point out that statements today, which are not historical facts, may be deemed forward-looking statements. Actual results may differ materially from the estimates or expectations expressed in those statements and certain factors that could cause actual results to differ materially from Aircastle Limited’s expectations are detailed in our SEC filings which can also be found on our website. I’ll direct you to Aircastle Limited’s earnings release for the full forward-looking statement legend.

And I’ll now turn the call over to Ron.

Ron Wainshal

Thanks Frank and thanks to all of you on the call for joining us today. I’d like to start by reviewing our accomplishments for the fourth quarter as well as the full year of 2011. I will then discuss the current market environment, including supply and demand factors for aircraft and their effect on our levels, capital market conditions and our competitive positioning. Finally, I will discuss our plan going forward before turning the call over to Mike for a review of our financials. After Mike’s remarks, we will open the call for questions.

2011 was a successful year for Aircastle capped off by a strong fourth quarter. Throughout the year our focus on disciplined accretive growth and effective portfolio management enabled us to drive our earnings higher. In addition, by selectively selling assets, repurchasing shares and executing on our Airbus new order program, we increased earnings per share and return on equity substantially.

As we begin 2012, Aircastle remains well positioned to take advantage of what we believe is an attractive investment environment for aircraft. We began the year with almost $296 million of unrestricted cash and have no other meaningful investment commitments following the completion of our Airbus program in April. We also continue to benefit from our ability to access the capital markets as we completed an unsecured bond issue at the end of last year.

Given the significant decline in bank financing capacity and the long term structural changes that are taking place in the banking sector, our ability to access the bond market provides us with an important strategic advantage over competitors. And it also represents an important differentiator with our customers. Looking ahead, we are quite optimistic for our prospects.

I’d now like to review some of our specific accomplishments for the fourth quarter and for the full year of 2011. For Q4, our net income was $35.6 million or $0.49 per diluted share. For the full year, Aircastle’s net income increased 89% to $124 million or $0.64 per diluted share.

Full year lease revenue was $580 million, rising 9% primarily due to new investments. In 2011, we invested about $1 billion in aircraft acquisitions, including new 330s from our Airbus program. Of this amount, approximately $400 million closed in the fourth quarter, including our first 777-300ER which is leased to Cathay Pacific.

We also acquired seven narrow-bodies and in December completed the purchase and leaseback of two MD-11 freighters with EVA Airways of Taiwan. We also took advantage of attractive asset prices and monetized some of our investments through opportunistic sales. We sold 13 aircraft for a total of $0.5 billion in 2011 generating $39 million of gains. Of these, five aircraft were sold in the fourth quarter for total gains of $10 million.

Our fourth quarter sales consisted of one new A330 leased to South African Airways as well as several middle-aged aircraft demonstrating that there is money to be made in both new and used aircraft. In fact, since our formation we’ve sold 30 aircraft generating gross proceeds of more than $800 million and an aggregate unlevered return in excess of 14%.

During the course of last year, we also broadened our funding base and enhanced our capital structure. We were able to source attractive secured bank financing for deals with high quality customers such Cathay and EVA. At year end, we also traded $150 million worth of secured debt which provides us with capital to pursue new acquisitions both credibly and confidently. This capital will help us continue building our unencumbered asset base which comprised 27 aircraft with a year-end book value of almost $700 million. Combining these aircraft with our unrestricted cash balance, we had nearly $1 billion in unencumbered assets on December 31.

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