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There’s things to buy, but we have defined that capital and we want to make sure we’re doing the best with it. So what are we buying and where do we see value, particularly in our own context? We like wide bodies, we actually think that they have a good value. There isn’t the supply side pressure in our view versus the narrow bodies. I’m really worried about that, and we also think that there is residual value pressure down the road from the new technology. Better credits, less competition, relatively speaking, and a better ability to finance. We’re looking at targeting ROEs that are basically in the mid-teens or more, as much as possible, within reason, and we do risk adjust.Middle-aged aircraft. There’s always been a new car, showroom effect in terms of value, but more so now than ever, and there are very few people playing in this space, particularly as the bank market contracts. I’ll make a few comments about that later. Less competition, good airplanes, good demand, but we’re finding very little competition there. There we’re probably looking at financing aircraft with unencumbered bonds, unsecured bonds, so there’s nobody telling us, I don’t like this airplane or this maintenance is third rate, or [inaudible]. It’s our cash, and when we come into a situation where we’re cash buyers, it’s pretty powerful. We haven’t seen Mike competing with us in most of his deals. We like the freight market. We’re a leader in this niche. The freight market’s under pressure today, so from a new business perspective, it’s not a situation where I’d take placement risk. In fact, I wouldn’t take placement risk on anything right now, new or used, big or small, passenger or freight. But there are better credits there, and there are good sale lease-back opportunities. Freight market I think will come back, it’s just a matter of time. It’s a little bit more volatile sector, but it’s more cyclically sensitive, but a lot less event risk sensitive, so if there’s, God forbid, a 9/11 or a flu pandemic, the boxes don’t get scared of getting on an airplane like passengers do. So we do think it’s an important part of what we do, and it’s something that sets us apart.
Now what are we doing in terms of acquisitions in this position specifically? So far this year, we’ve continued to focus on where we think we have an edge and where we have a different viewpoint, and in general looking at ROEs that are, as I said before, in the mid-teens or higher. As of June 30, we invested $0.5 billion and we had commitments to invest 200 million more. That was our target at the beginning of the year, so we matched that. We continue to see opportunities, but I think it’s going to be one of those markets where the opportunities will kind of ebb and flow, and we’re patient.We have no new order stream aircraft left. So everything we’re going to do here is voluntary and only if we really get convinced about it. At the moment, I don’t think it’s a good time to buy new aircraft on spec, for two reasons. Placing the aircraft is more difficult, and rentals are lower, and I think the financing risk has never been higher. And I don’t think there’s any impetus for the manufacturers to give anybody a good deal right now. In terms of what we bought, it’s been basically about half new and half mid-aged or older, and we continue to see kind of that kind of mix in terms of our investment flow. In terms of dispositions, for the same reason, I think it’s a good time to buy, it’s a bad time to sell, particularly if you don’t have new narrow bodies, which we don’t. What we’ve been focusing on this year in terms of our sales efforts has been in exiting classic generation aircraft, because I think they’re basically on the way out, and that’s what we’ve done. Read the rest of this transcript for free on seekingalpha.com