ISTAT Jetrader - Winter 2022 - 11

women at the executive leadership level, senior management level and across
the entire company.
Our multi-location model works really well for us, and the pandemic
has only strengthened it. We are super happy today with where we are and,
more importantly, we have an excellent execution roadmap for our next
transformative transaction.
Jetrader: You have a keen sense for value and an appetite for growth, so what
is the road forward to secure or boost DAE's strong industry position?
FT: We look at both assets on the balance sheet and assets we manage on behalf
of our investors. The managed assets sit on investors' balance sheets. On a
combined basis, we have seen a very nice growth in our franchise, along with a
significant strengthening of our balance sheet quality. Since the merger, we have
acquired approximately 200 aircraft valued at approximately US$8 billion and
divested approximately 135 aircraft valued at approximately US$4 billion. Today,
our franchise comprises of approximately 450 assets valued at approximately
US$15 billion. We have a robust appetite for growth, but our adherence to financial
discipline is even more robust. We have always maintained an active presence in all
origination channels, and we will rely on our 35+ years of operating history to find
the right growth opportunities.
Jetrader: Does DAE have any targets for balance sheet size, average age of
your aircraft portfolio and the split or investments in narrowbody, widebody
and turboprop aircraft?
FT: Today, we own, manage and are mandated to manage approximately 450
aircraft assets. We can easily see ourselves growing that number to 800. While we
do not have a target for the average age of the owned fleet, the sweet spot for us is
at the six-year mark. In our opinion, this optimizes return and residual value risk.
Jetrader: In 2017, you correctly
anticipated that some industry
shocks might force then new
investors to reconsider positions.
What is your view on the outlook
for commercial aircraft operating
leasing over the next five years?
FT: Investing in this sector requires
investors to have a long-term, throughthe-cycle
investment outlook and an
appetite for lumpy annual returns
on the way to consistent, abovebenchmark
performance. Some of the
capital that entered our industry in the early 2010s perhaps did not anticipate the
lumpy nature of returns. The capital that has come into the sector post-pandemic
is what I would describe as " eyes wide open " capital and is likely to benefit nicely
from attractive investment opportunities we see currently.
The outlook today for investing in commercial aircraft leasing is bright because
Jetrader: Have the last few years
changed your views on the optimal
size of a commercial aircraft
operating leasing platform? What
might that range be to achieve a
reasonable return on equity?
FT: We believe the optimum portfolio
size is somewhere in the 400800
aircraft range. A much larger
scale, we'd argue, is likely to create
diseconomies of scale resulting from
a) potential suboptimal deployment
of massive aircraft purchase
commitments stretching five-plus
years, and b) not being able to get out
of the way when trouble hits - and,
in this industry, it inevitably does. As
stewards of capital entrusted to us by
our shareholders and our investors,
we always ask ourselves this question:
If super-sized scale does not come
with super-sized returns, why should
that be an objective? We've always
prioritized optimal deployment of
capital over excessive scale - until
we have empirical evidence that
the definition of scale has shifted,
for us, the cutoff point is at around
800 assets.
The capital that has come into the sector postpandemic
is what I would describe as " eyes wide open "
capital and is likely to benefit nicely from attractive
investment opportunities we see currently.
of where we are in the replacement cycle of the fleet today. Our advice to current
and potential investors is: Pick a partner with a long-term record of consistent
success like DAE, plan to invest continuously through the cycle and let us guide you
through the cycles to produce consistent returns.
Jetrader: DAE has ordered relatively
small numbers of new aircraft over
the last few years but, perhaps
in hindsight, fortunately avoided
excessive capital commitments. Any
thoughts on organically growing
DAE's portfolio through large-scale
direct orders? Where do you see
value in various parts of the market?
* WIN TER 2022 * 11
ISTAT Jetrader - Winter 2022

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