GECAS Farnborough Air Show Norman C.T. Liu GECAS Overview A leading aircraft lessor & financier 40 years experience 1,200+ owned, 300+ managed aircraft 210 customers in 60+ countries 230 staff in 14 global locations Recently transferred GE s Rail, Marine, Airport financing portfolios 2 GECAS Presentation
Active Asset Manager Organizational Strengths Deep experience & domain knowledge Global distribution & longstanding customer relationships Hardware knowledge & technical expertise Structured finance & capital markets skills Pricing discipline & proactive risk/portfolio focus Deal Strengths Can do large, value-added deals & take advantage of downturn Broad array of products a lessor and financier 3 GECAS Presentation Air Finance Overview Air Transportation Collateral Credits Macro Factors Secular Trends - Critical sector, fundamental growth - Portable/long-lived assets, few manufacturers - Many sizes/shapes, varying results - Economic cycle, 9/11, Iraq, SARS, fuel - Low fare/internet, network carrier transformation, growth in emerging markets/world trade/tourism Up Cycle Down Cycle Sell more Place forward more Buy/finance more Manage fleet 4 GECAS Presentation
Ongoing Profits Despite Tough Cycle 2001 2002 2003 2004E Volume ($B) 9.4 8.8 5.4 7.0 Portfolio Costs ($MM) 45 210 270 225 Net Income ($MM) 470 454 506 ~525 Pre 9/11 GECAS: new product platforms, organic growth Post 9/11 GECAS: more opportunistic investing, while managing fleet 5 GECAS Presentation Growth Strategy Fleet Solutions Financing Solutions Narrowbodies Structured Finance Widebodies Secured Debt Engine Leasing Regional Jets Cargo New Product Platforms Organic Growth More customers Larger, value-added deals Large fleet rollovers Large aircraft placements with low-cost carriers Faster deal processing Post-9/11 Financing Higher returns, lower pricing/advances ~ 65% New Products 6 GECAS Presentation
5 Key Growth Areas 1. Secured Debt PK AirFinance, leading debt provider, purchased from Credit Lyonnais in 99 Growth via GECAS network & balance sheet 99-04E growth: $0.4B to 5.0B 2. Engine Leasing Started with GE rental business in 99 Growth via GECAS network & multiple products 99-04E growth: $0.1B to 2.0B 7 GECAS Presentation 5 Key Growth Areas 3. Regional Jets First US financings in 98, now expanding globally 4. Cargo Growth via global trade & 727/DC8 replacements 737/767F: 11 customers contracted 5. Low Cost Carriers Key customers: EasyJet, Jet Blue, AirTran, WestJet, Frontier, GOL, Air Asia 8 GECAS Presentation
Improved Portfolio Diversity 1999 2003 In-production aircraft/737 classics 67% 52% Secured Debt 5 20 Engine Leasing/RJ s/cargo/lcc s 11 25 Sub Total 83% 97% Out of production aircraft 17 3 Total 100% 100% 9 GECAS Presentation Attractive Portfolio Mix More Narrowbodies GECAS World V Narrowbody 70% 54% +16% Widebody 30% 46% -16% Younger Aircraft/Collateral GECAS World V 1 5 Years 74% 53% +21% 6 + Years 26% 47% -21% 10 GECAS Presentation SOURCE: GECAS & Airclaims data
Strong Fleet Management Since 9/11 Aircraft Placements 302 New aircraft delivered/placed 311 Scheduled/unscheduled rolloff placed 613 Aircraft placed globally (~70% with non-us clients) 2003 2004 2005 New Orders 49 106 60 Unplaced 0 0 3 % Placed 100% 100% 95% Rolloff 184 79 71 Unplaced 0 2 43 % Placed 100% 98% 60% 11 GECAS Presentation Strong Conditions for Placing Aircraft Globally Demand for aircraft up driven by traffic rebound > N. America/W. Europe (1x GDP) Low Cost Carrier/RJ growth, network carriers extending leases & share oriented > Emerging Regions (2-3x GDP) outsourcing, high resource prices/tourism, 50% 15+ years old in many areas Global trade growth driving demand for widebody freighters (747Fs) & 737F/757F/767F/A300F needed for 727/DC8 replacement (~1000 units) Robust Demand 12 GECAS Presentation
5 Key Initiatives 1. Continue to provide network survivors with refis/fleet simplification/core aircraft & pursue LCC s & RJ s globally 2. Expand in emerging regions (China, Russia, India, E. Europe, SE Asia, select Mid East/Africa/L. America) 13 GECAS Presentation 5 Key Initiatives 3. Focus on fleet rollover plays e.g. A320/737NG to replace 737 Classics 777X/7E7/A330 to replace 747/767/A300 pax & then convert to cargo 4. Cross-sell debt/engine leasing more 5. Grow new transportation segments Airports - privatizations, cargo facilities, equipment financings Rail/Marine secured asset based financings 14 GECAS Presentation
GECAS Summary Well-established global player Strong distribution, hardware, structured finance skills combined with pricing/risk discipline Profits sustained despite toughest cycle ever Built key growth platforms & ramped up opportunistic investments during downturn, while managing fleet Leasing conditions much improved with strong growth overseas Driving organic growth: network survivors, LCC s, RJ s, emerging regions, fleet rollovers/cargo, cross-selling, transportation segments 15 GECAS Presentation