Premium long-haul traffic remains robust and customers filling these seats drive profitability for legacy and flight carriers around the world. But with that said, the short-haul, charter and low cost carriers are clearly feeling the pinch of the slowing global market environment.

And this may impact demand for leased aircraft in the foreseeable future. While it is true that a handful of European and US carriers are shrinking their capacity, most networks are on hold or growing service leads. We have been predicting for several years that the fleeting requirements of the US legacy carriers would push demand for aircraft to higher levels. And this dynamic is clearly taking hold in the industry.

Several new orders have recently been announced by these airlines and we expect this free fleeting trend to continue. The supply of aircraft continues to notch up as Boeing and Airbus increased production across the board.

The Boeing narrow body equipment continues to outperform the comparable Airbus products in terms of demand and lease rates. I had expressed a view on a prior call that the demand for Airbus equipment had increased and that we were optimistic about the earnings potential of these aircrafts in the future.

But increasing supply has softened our view on the speed and strength of this recovery over the near term. I would now like to make comments briefly on the state of the financing markets for aircrafts leasing. There are three main pillars for debt financing in the aircraft leasing business today. They are one ECA and EXIM financing, two capital markets financing and three bank loan financing.

It will be no surprise to anyone on this call that capital market conditions continue to be highly volatile, making it difficult for less source to rely on these markets or perhaps more troubling for us and the reason is recent pullback in bank loan financing activity for US dollar loans. This is particularly true for the French banks, who have been significant lenders in the aviation industry, even through the credit crisis that began in 2007 and 2008.

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