Jetrader - January/February 2009 - 8

J: As president of transportation ﬁnance, which includes CIT Rail, what lessons have you learned from dealing with rail that could be applied on the aviation side? unit size over twin-aisle, so we will build our ﬂeet much like how we see the breakdown of the world ﬂeet in the future. JK: The rail business is a very interesting business. We’re arguably the second or third largest rail lessor in the United States, and defacto in the world. It is a different business just based on the number of assets involved. We have approximately 115,000 rail cars, plus more than 500 locomotives, and when you contrast that versus 300 airplanes, it’s very, very different. But, a central theme in all this has to do with the relationships you have with your clients and the understanding of the industry and the assets. I think that’s what we have in both businesses. We hire people who are rail professionals or aerospace professionals who have a passion for those industries. To me, one of the key success factors that I’ve found in both these businesses is the quality of the people and their passion for the respective businesses that they’re in. Obviously, a rail car is a lot less complex than an aircraft, and in a lot of ways I ﬁnd that refreshing, but the logistic complexities of moving a rail car across 2,000 miles efﬁciently and inexpensively is not an easy thing to do proportionate to their costs. It is a different business, but a lot of the core competencies are the same. J: Can you talk brieﬂy about CIT’s business aircraft group? JK: Sure, we see that as a logical ﬁt and extension of what we do today; we have been in that business for 10-plus years, and we think that the direction that business is going, speciﬁcally internationally, plays well into our competencies. With a ﬂeet on the commercial side that is 85-percent-plus international, we have the competencies to manage and build a business jet or corporate jet ﬂeet internationally. We also have a leading position ﬁnancing/leasing NetJet shares. J: To expand on that, how do you see the future for Boeing and Airbus business jet versions? JK: It’s certainly not a core of what we would build our business model around, but clearly there are both individuals and companies that ﬁnd the BBJ or the ACJ to be a strong business tool for them. It’s a very interesting airplane; if it meets your needs. It’s not something as a leasing and ﬁnance company that we can build our business around. That’s not to say that we can’t accommodate a customer, but it is not going to be the main focus. J: What is the planned makeup and size of your leasing ﬂeet between now and the next 1015 years? You’re very focused on narrow-body airplanes as your core, but do you see a shift because of what’s going on with the economy? J: How should the aircraft manufacturers react to the current crisis? Should they keep current aircraft production levels as is? JK: First of all, it was terriﬁc that the manufacturers decided not to go forward with the rate increases. They were attuned to the market and they made the right decisions. I think the next step in terms of rate is truly going to be a function of how the world economies react in the future and speciﬁcally how much liquidity is available to ﬁnance the aircraft that are being built. Liquidity continues to be a primary concern, and I know that both manufacturers are concerned with making sure that the customers that they have possess the capital necessary to be able to buy the aircraft. This is an evolving process. The manufacturers have taken some good initial steps, but it’s really going to be a function of how we see the world economy playing JK: The core of our ﬂeet will remain single-aisle airplanes, and we think that this is the core of the airline business going forward. That being said, currently, 20 to 25 percent of our ﬂeet today is twin aisles. Our goal is to serve the airline industry and to help provide them with a product that allows them to ﬁll seats efﬁciently. We want them to have the right aircraft when they need it. Sometimes they need twin-aisle, and sometimes they need single-aisle, but proportionally, worldwide, single-aisle will continue to dominate in Photo by: rogerbarker2/ﬂickr.com 8 The ofﬁcial publication of the International Society of Transport Aircraft Trading

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Jetrader - January/February 2009

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