Air Lease Corporation
Q3 2013 Earnings Call Transcript

Published: 8 Nov 2013

[Operator:]

Good day, ladies and gentlemen, and welcome to the Third Quarter 2013 Air Lease Corp. Earnings Conference Call. My name is Derrick, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Ryan McKenna, Head of Strategic Planning and Investor Relations. Please proceed.

[Ryan McKenna:]

Thank you very much. Good afternoon, everyone, and welcome to Air Lease Corporation's Third Quarter 2013 Earnings Call. This is Ryan McKenna, Assistant Vice President Strategic Planning and Investor Relations. I'm joined this afternoon by Steve Hazy, our Chairman and Chief Executive Officer; John Plueger, our President and Chief Operating Officer; and Greg Willis, our Senior Vice President and Chief Financial Officer. Earlier today, we published our third quarter results for fiscal year 2013. A copy of our earnings release is available on the Investor section of our website at www.airleasecorp.com. This conference call is being webcast and recorded today, Thursday, November 7, 2013, and the webcast will be available for replay on our website. [Operator Instructions] At the conclusion of today's conference call, instructions will be given for the question-and-answer session. Before we begin, please note that certain statements in this conference call, including certain answers to your questions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including, without limitation, statements regarding our future operations and performance, revenues, operating expenses, other income and expense, and stock-based compensation expense. These statements and any projections as to the company's future performance represent management's estimates of future results and speak only as of today, November 7, 2013. These estimates involve risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our filings with the Securities and Exchange Commission for a more detailed description of the risk factors that may affect our results. Air Lease Corporation assumes no obligation to update any forward-looking statements or information in light of new information or future events. In addition, certain financial measures we will use during this call, such as adjusted EBITDA and adjusted net income, are non-GAAP measures and have been adjusted to exclude charges relating to amortization of discounts and debt issuance costs and stock-based compensation expense, among other charges. A description of our reasons for utilizing these non-GAAP measures, as well as our definition of them and the reconciliation to corresponding GAAP measures, can be found in the earnings release we issued today. This release can be found in both the investors and the press section of our website at www.airleasecorp.com. Unauthorized recording of this conference call is not permitted. I would now like to turn the call over to our Chairman and Chief Executive Officer, Steve Hazy.

[Steven F. Udvar-Hazy:]

Thanks, Ryan. Good afternoon, and thank you for joining us today. I'm very pleased to report that Air Lease Corporation increased its diluted EPS to $0.46 per share in the third quarter of 2013, compared with $0.36 per share in the third quarter of 2012, representing an increase of 27.8%. For the first 9 months of 2013, ALC increased its diluted EPS to $1.25 from $0.90 in the first 9 months of 2012. This also represents a strong 38.9% increase. Similarly, our top line revenues for the third quarter of 2013 were $216 million versus $175 million in 2012, which is a 23.4% increase. For the first 9 months of 2013, ALC increased its revenues to $616 million from $466 million in 2012, representing a 32% increase. Our team has consistently focused on the cash generation of our business and cash from operating activities increased to $493 million for the first 9 months of the year, an increase of 32% over the same period in 2012. At the end of Q3, we have over $12.7 billion of contracted cash flows associated with our current fleet and future deliveries. ALC increased its pretax profit margin to an all-time high of 35%, and this was achieved through our core leasing operations and our focused efforts on reducing our cost of funds. We concluded Q3 with a highly attractive overall composite cost of funds of 3.46%, which is 28 basis points below at the end of Q2. With these strong results in mind, Air Lease's Board of Directors decided it was appropriate to increase our quarterly cash dividend to $0.03 per share, representing a 20% increase over the previous quarterly cash dividends. ALC is firing on all cylinders consistently, and I want to commend the excellent work of our entire team who have continued to execute our business plan and have delivered outstanding financial and operating results. Globally, passenger traffic continues to grow ahead of our expectations and we continue to see steady demand for aircraft. IATA, the International Air Transport Association, recently reported a passenger traffic for the first 9 months of 2013, increased 5% versus the same period in 2012, with passenger load factors increasing to a very strong 80.1%. The robust traffic growth is exceeding the growth rate in global GDP, and the substantial replacement cycle is further driving demand for new aircraft. We see an increase in product differentiation globally between legacy carriers who are focusing on premium traffic passengers for medium and long-haul international flying versus the low-fare low-cost carriers targeting price-driven and price-sensitive domestic and regional passenger traffic. ALC is well-positioned to serve both of these diverse airline customer basis in the marketplace. In late August, Air Lease received news from Standard & Poor's that our company have received an investment-grade corporate credit rating of BBB- with a stable outlook. This is our second investment-grade rating, which follows our A- rating from Kroll Bond rating agency earlier in the year. S&P recognized a variety of aspects of ALC's business and credit metrics that create our investment-grade profile and Greg Willis, our CFO, will talk more about this in his remarks. We are pleased with the outcome but we'll continue to strive for outstanding results that will warrant upgrades in the future. Now I would like to turn this over to John Plueger, our President and Chief Operating Officer, who will further discuss our performance and strategic positioning.

[John L. Plueger:]

Thanks, Steve. Our aircraft lease placements continue to track with no significant change in portfolio overall lease rate factor. During the third quarter, demand remains strong from Europe, the Middle East and parts of Asia. We successfully delivered 8 aircraft from our order book, increasing our fleet to 182 aircraft. The summer is typically our slowest quarter of deliveries during the year, and these specific deliveries were skewed towards the end of the quarter. I just want to remind you that the full impact of the lease rentals in any quarter will not be realized until the following quarter when we receive 3 full months of rent. Our average fleet age remained very low at 3.6 years, with a healthy average of 7 years remaining on our leases. After a great deal of work with The Boeing Company on the development and final product definition of the 787-10, we reached final launch customer contract terms for the purchase of 33 Dreamliners, consisting of 30, 787-10s and 3 additional 787-9s. And this was the order we originally announced at the Paris Airshow in July. We anticipate that this model will become one of the most efficient aircraft in the worldwide twin-aisle fleet. Our valuable order book will allow us to continue to increase our scale and global presence, while building the leading aircraft leading -- leasing franchise. We believe that our business model of ordering aircraft directly from manufacturers under the right price and terms result in leading profitability metrics. On an overall portfolio basis, our lessees continue to perform well. We have no leases expiring this year, and no more than 5% of the aircraft in our fleet are up for renewal in each year through 2017. As we look forward to our remaining deliveries for the year, we now have clarity that the fourth quarter will have 11 new aircraft delivering from our order book. The majority of these aircraft are expected to deliver in the second half of the quarter, and this timing does impact quarterly revenue. Our business leverage predicated a long-term aircraft leasing operations and the timing of deliveries within a quarter has no impact or bearing on our long-term strategy or profitability. One remarkable fact that I'd like to comment on is that while we increased our debt this quarter, as well as the book value of our assets, total interest expense actually declined from last quarter as an absolute number. We're really pleased with our financing progress that our team has achieved. And on that note, let me now turn this over to Greg Willis, who will walk you through our financial profile that we believe further differentiates ALC.

[Gregory B. Willis:]

Thanks, John. S&P recognized a variety of aspects of ALC's business that create our investment-grade profile. Starting with ALC's very low leverage and commitment to keep our debt-to-equity ratio below 2.5 to 1. We have a very young fleet with an average age of 3.6 years. These aircraft have long leases attached currently with an average of 7 years remaining across the fleet. The combination of young aircraft on long leases reduces residual value risks for the company. Further, we now have a widely diversified customer base of 79 airlines in 45 countries. And no single airline customer represents more than 10% of annual revenues. Our commitment to funding the company rather than individual aircraft assets further distinguishes our investment-grade profile. ALC's secured debt is only 18% of total assets, and therefore, we do not receive a down notching of our unsecured debt issuances. Further, we have constructed a conservative debt maturity ladder and have generated strong interest coverage ratios. Having achieved the investment-grade rating from S&P and Kroll, we believe that our access to capital will continue to broaden and one of the first signs of this came from the banking community. Having successfully expanded our unsecured revolving bank facility in May to $1.7 billion, we received inbound request during the fall from new banks wishing to enter the bank group and some existing lenders seeking to increase their commitments. Therefore, we decided to reopen the facility and have now successfully added $300 million in new capacity. Our unsecured corporate bank revolver is now $2 billion in size, with a margin of 125 basis points over LIBOR. The bank group now includes 43 institutions and we are very appreciative of the continued support from the banking community. Owing to the substantial liquidity achieved in the bank market during the past 6 months, we developed some -- we deployed some of this liquidity and we were never in a position needing to tap the public bond markets. We will continue to remain opportunistic as to when we issue paper. Another development resulting from the S&P rating is that our 3 public bonds are now included in the Barclays investment-grade index. This will help the liquidity and market appeal of our senior notes as we continue to build out a balance debt maturity ladder. We believe that the liquidity provided in the corporate bond market provides a more efficient financing strategy for our company than secured funding alternatives. This concludes my review of the financing activities of the company. And I will now turn it back to Ryan.

[Ryan McKenna:]

That concludes management's remarks. [Operator Instructions] I'd like to hand the call back to the operator. Operator?

[Operator:]

[Operator Instructions] Our first question will be from the line of John Godyn, Morgan Stanley.

[John D. Godyn:]

We've heard from some other lessors that have already reported somewhat of a surge of demand for certain narrowbody aircraft. 737-800s have been highlighted and definitely an uptick in A320 demand. I was hoping that the team could sort of speak to what they're seeing on these aircraft types?

[Steven F. Udvar-Hazy:]

Well, I just wanted to go on the record to say that a few weeks ago, we delivered our last A320 new ceo that we ordered back in 2010. These aircraft have all been placed on very profitable long-term 12-year leases. And so in terms of A320s, we're completely tapped out. All of our aircraft are flying. We have 100% utilization. We have no incremental A320s in the future that need to be placed. Our next A320 will be the neo, which begins in 2016. We still have a number of A321s for which we've seen significant demand. And all of our A321s, which we'll deliver in 2015 and next year, are placed, again, on long-term leases. We are seeing a significant increase in 737-800 activity. We're virtually leased out now through 2015. We have leased out a number of our 2016 positions. And we have a small number of early 2017 positions. And then again, we begin to receive the first MAX 737s, starting in January of 2018. So we have seen improvements in the lease rate profiles. But from our vantage point, we have leased out virtually all of our single-aisle capacity for the next 3 years.

[John D. Godyn:]

That's very helpful. And Steve, we've seen a lot of headlines lately about the 777X and Boeing continues to speak to formally launching the program this calendar year. I was hoping you could update us on your thoughts on the 777X just within the context of what might be an imminent launch.

[Steven F. Udvar-Hazy:]

Well, the only thing I can tell you is that Boeing has been working very hard and diligently with a handful of leading international airlines, some of which are located in the Middle East, to get this program going. Both Boeing and General Electric have worked very hard to sort of optimize the airplane. Based on customer feedback, we have been an active participant in this small customer focus group. And I think Boeing is working very hard to achieve a launch before the end of the year. And I think the Dubai Air Show will certainly be a turning point in that process.

[Operator:]

Your next question is from the line of Jamie Baker, JPMorgan.

[Jamie N. Baker:]

Steve, I'm wondering how comfortable you currently are with, I guess, I'll call it the risk adjusted yields today at the higher quality end of the aircraft spectrum that you obviously target? Or is there a scenario where the returns might start to be, I don't know, competed away enough that you would consider a move down market? Or let me ask it differently, is there even a breaking point where you might consider a shift in aircraft strategy? And if so, how close might we be to that point?

[Steven F. Udvar-Hazy:]

We have seen a growing gap in the lease economics of sale-leasebacks versus our strategy, which is placing our new aircraft with airlines that required lift. And we have not seen really a degradation of lease rates as a percentage of acquisition costs on our new airplanes, whether single-aisle or widebody. We have very little competition, particularly on the widebody side. However, we have seen the lease rate factors on sale-leasebacks become more and more competitive and less rewarding and we have totally stayed away from that segment of the market.

[Jamie N. Baker:]

All right, that's helpful. And a follow-up on your 777X comment from earlier. At least as the aircraft is currently envisioned, and I realized it's somewhat a sensitive topic, but does it put a stake in the heart of the 747-8 and/or the A380?

[Steven F. Udvar-Hazy:]

Well, the large version of the 777X, which is the 9X, is only a 7-foot stretch. So effectively to 2 rows increase. So if you have 2 rows and economy is 20 seats, it's 1 row of economy and 1 business class at 16 or 17 seats. And that's assuming a 10-abreast economy in the back, which most of the current 777 operators are going for the 10 abreast in the economy. So in terms of seating capacity, it's only about 5% larger than the 777-300ER. But because of the new lameter wing and the engine design, it hopes to achieve about a 10% to 12% improvement in operating cost. And it will eat into the A380 market, it will eat into the 747-8 market. I think what's more concerning to Boeing is that the cargo market has been soft and demand for new 747-8 Freighters is not as strong as they forecast. So it's yet to be seen whether the 747 will be sort of wound down at some stage later on in the decade. I think that's a decision Boeing has not made yet, but certainly for the 747. The airplane won't come out until 2020. So we're really looking at 7 years from now for the first delivery, if they maintained their current schedule.

[Operator:]

Your next question is from the line of Arren Cyganovich, Evercore.

[Arren Cyganovich:]

I know you've talked about the placements coming in roughly within your expectations of not having much change there. I'm wondering if you could talk about the NGs? And as you get further out into that book, if it's coming any more difficult to place them, as they start to bump up against when the neo will start hitting the market?

[John L. Plueger:]

Arren, it's John Plueger. Thanks. The answer is no, I mean, our NG placements are going well and as Steve indicated, we're placing a variety of aircraft now in '16 and beyond '17, I would say. I would -- actually, one of the questions I think, it was from John Godyn reporting other lessors strong demand on the NGs, we see that. So there's no indication of any that we can see, any kind of softening in the '16 or '17 time frame. And fairly quickly, we're probably going to have most of those positions leased out. So no evidence of softening in the lease rates at this point in time. Continued robust demand.

[Arren Cyganovich:]

Great. And then on the credit rating, I was wondering if maybe Greg could talk a little bit about if there's any conversation you'd had with the agency about whether what aspects you could do to help get upgrades or improve your credit rating in the future?

[Gregory B. Willis:]

I think a lot of it was continuing to book more and more quarters and gain more and more experience. But I think as we continue to focus on unsecured capital raises and driving our unsecured portion of our debt portfolio to 90%, I think that will help as well. But in all fairness, I think we're just going to continue to execute and we'll layer on, more and more ratings, as we continue to go along, but we're happy with our current ratings from Kroll and S&P.

[Operator:]

Your next question is from the line of Helane Becker, Cowen.

[Helane R. Becker:]

I just have a question on the stock-based compensation line. Kind of uncertain as to why it declined by 50%. I kind of thought the stock performed well in the quarter?

[John L. Plueger:]

Yes, I'll take that one, Helane. If you look back in the footnotes, we described the vesting of the options. And at the end of the June of 2010, we completed the vesting of the 2010 options that were granted.

[Steven F. Udvar-Hazy:]

June of 2013 [ph].

[John L. Plueger:]

Yes.

[Steven F. Udvar-Hazy:]

It's a 3-year cycle. These are options that were granted. We only granted really one set of options in 2010. And at the end of the second quarter, we're done with that. So now we have only RSUs and those are, obviously, less than the combined options in RSUs. So going forward, we'll see a lower amount for this expense category. We're not issuing anymore stock options at this time.

[Helane R. Becker:]

Perfect. Okay, good. And I guess that was really my only question. Other -- I actually do have a question on depreciation. Have you thought about the right length of time over which to depreciate the aircraft? I noticed the airlines in some cases have been bringing that number down a little bit and I was kind of wondering what you're thinking about that?

[Steven F. Udvar-Hazy:]

No, Helane, we're quite happy with our depreciable life of 25 years across all of our product line. We just don't see that any evidence that, that should be shortening either from aircraft maintenance structural point of view nor from the economic life point of view. And just a quick reminder, our business model is one that's also predicated on keeping our fleet young, not only by buying just new aircraft, but also by selling the aircraft when they are still fairly young, about 1/3 of their useful. So when an airplane gets to be around 7, 8, 9 years of age, we look to sell it. I think that's a young aircraft and it's one other way that we minimize any potential future residual value of risk. So the short answer is no. We are quite happy with where we're at.

[Operator:]

Your next question is from the line of Richa Talwar, Deutsche Bank.

[Richa Talwar:]

Okay, so my first question is on the demand environment geographically. I think John, you commented that you're seeing demand strong in parts of Asia. I was hoping you could elaborate on what parts of Asia you're particularly seeing strength in? And then hone in on China. There's been some news recently about, suggested that Chinese government is becoming more open to liberalizing the airline market, allowing some of these new entrant carriers to compete more aggressively with incumbents. Can you comment on that? I know you've created a strong footing with some of the large Chinese airlines, but if you're seeing any incremental opportunity from the smaller emerging airlines in the region?

[John L. Plueger:]

Yes, sure. Let me just -- in my specific remarks what I said was that our -- during the third quarter, our demand remains strong from Europe, the Middle East and parts of Asia. So pretty much across the globe. Specifically, though, with respect to China and Asia, we continue to see demand from Southeast Asia and through China. I will comment that earlier in the year, we were watching because we had the feeling that the demand from the big 3 Chinese airline groups, the Air China, China Southern and China Eastern groups, may have showed signs of abating somewhat but actually, that's not proven to be the case. We have in the last several months, we have several ongoing potential campaigns with the big 3 airlines in China. As far as a little bit more liberalization, a bit more opening up for operating leases in China, more product, we think that's great. We have built a business model that we think competes in any venue, in any geography and under any circumstance. We compete with our airplanes. We don't really compete with our balance sheet. We don't compete against deposit base funders. So the great delivery positions that we have, the continued demand that we see across China, not just in the big 3 groups but also on the secondary airlines, airlines such as Sichuan and a number of other carriers, some privately owned, some regional carriers, overall remains strong. And so our delivery positions that we have really give us a great position that new entrants don't have into that marketplace, whether they'd be Chinese-based or other new entrants globally.

[Richa Talwar:]

Okay, great. That's helpful color. And then secondly, I wanted to get more information on your decision to mainly maintain a pretty plain vanilla debt portfolio in a sense that I don't believe you have any derivatives or swaps. So can you speak to your strategy behind that? Why you don't incorporate interest rate hedges and what risk that might present? I know on the last call, you talked about the rate escalators you have that protect you on the top line. But if you see any risks from rising interest rates as it relates to your debt?

[Gregory B. Willis:]

Yes, this is Greg. I just want to point out that we target 70-30 on the debt fixed floating ratio. We feel that we're more effectively able to manage the interest rate risk we take in our portfolio by keeping the -- by targeting 70-30, and we do so by keeping the short end of the curve floating for the bank market through our unsecured revolver. And in going in the longer part of the curve, keeping that fixed to the bond market. So that's how we effectively manage that ratio. And I think it's been to be a very effective strategy over numerous years.

[Steven F. Udvar-Hazy:]

Yes, we just don't see anything on the horizon that indicates any radical changes in interest rates in the foreseeable future. We're very happy with our strategy. And I think we've been pretty open with all of our stakeholders that this is not a management team that believes in derivatives.

[Operator:]

Your next question is from the line of Scott Valentin, FBR Capital Markets.

[Scott Valentin:]

Just real quick on the dividend increase, I know you guys have said you're not going to become a dividend play in terms of high yield, but I was a little surprised in the magnitude of the increase. Can you maybe comment? And I assume there is no change in strategy there?

[Gregory B. Willis:]

Well, it's a modest increase. It's a 20% increase. We're going from $0.025 per share per quarter or $0.10 per year to $0.03 per quarter, $0.12 a year. The impact on the company, assuming about 100 million shares outstanding, is only $2 million. But we do want to demonstrate to our institutional holders, the retail market, and the broad spectrum of capital investors in our company that we're optimistic. We feel very strong about our ongoing performance, and also about our future performance. And the board felt, based on our inputs and those we received from some of our large shareholders, that this was a prudent step to take and it continues to demonstrate the company's consistent strong long-term performance.

[Steven F. Udvar-Hazy:]

Let me just add, Scott, that we believe in the mantra that we are a growth company. And, frankly, we believe that by a small dividend and it's still very, very small, we don't compromise that one bit. Instead, we have a future belief in the growth of our company and we are big believers in shareholder value and delivering that value. This is a small component of that. But in no way shape or form are we deviating away from being a growth company. That's what we are.

[Scott Valentin:]

Okay, fair enough. I appreciate that. And then just a follow-up maybe on depreciation question. I think in the past, you mentioned that in 2014 you might look to sell some aircraft. I'm just wondering if any of those conversations have started? Or are there aircraft that you plan to sell in '14 and maybe...

[John L. Plueger:]

Well, I think it's fair to say, Scott, that you can look to us for 2014 and beyond to start selling some aircraft. We have a business model. That business model specifically and clearly says that we only enjoy an aircraft through the first 1/3 of its life. We are now 3.5 years of age. We continue to grow but of most the first 2 years, obviously, have been focused strictly on growth. But yes, you can start to see, to expect from us some sales activity in '14 and '15 and beyond as a normal part of our business model.

[Steven F. Udvar-Hazy:]

I think our state of strategy, even if you go back to the IPO prospectus was that we would reach about 200 aircraft in size. We're really on the threshold of reaching that objective. And once we've gone past 200 aircraft in our portfolio, then we begin to dispose of some of our older aircraft on a profitable basis and reinvest that cash in the acquisition of new aircraft. So that point is now upon us, and as John indicated in 2014 and '15, you will see very specific and well-thought out used aircraft sales.

[Scott Valentin:]

Okay. And the key part, I think, what you said was profitable. So it sounds like you guys feel pretty comfortable about values going forward.

[Steven F. Udvar-Hazy:]

Yes, ALC is not a charitable organization. We're a profit-motivator organization.

[Operator:]

Your next question is from the line of Moshe Orenbuch, Crédit Suisse.

[Moshe Orenbuch:]

I guess, first question kind of following up on that last one. Given that you've kind of enhanced your funding base and have better liquidity during 2014 and '15, will have additional liquidity, I guess, from the sale of some aircraft, is that contemplated in the forward order book? Or are there opportunities to increase in some way and kind of put that to work incrementally?

[Steven F. Udvar-Hazy:]

We have, in fact, accelerated from delivery positions and we continuously update our backlog. We certainly under ordered aircraft in 2010, '11 and '12 and we're continuously sort of modifying our backlog, pushing deliveries forward to accommodate the requirements from our customers. So to the extent that our used aircraft sales are more vigorous and successful than we anticipate, we will look at opportunities on either accelerating new aircraft or situations where we can acquire new aircraft and deploy it profitably on a long-term lease. But we're also very conscious of our debt-to-equity ratio and even with a more robust growth plan ahead, we want to be very disciplined and maintain a debt-to-equity ratio that's below 2.5 to 1.

[Moshe Orenbuch:]

Got it. On a slightly different topic, you had mentioned that you aren't going to be doing additional stock options. Is there going to be more SG&A in terms of cash compensation? Or is that just was sort of onetime and the level of cash compensation is going to be stable?

[Gregory B. Willis:]

Well, because of the accounting rules and the expensing of options, we felt that it was a nonoptimal way of compensation. And I think our board comp committee and based on more recent trends in the public sector restricted stock units seemed to be a more effective way of dealing with this issue. And we have an ongoing program that you can read about in our proxy statement. And we're just continuing that program. I don't anticipate any large increases in equity-based compensation. They'll be measured, and the board will deal with that issue at our next meeting in February.

[Operator:]

Your next question will come from the line of Jason Arnold, RBC Capital Markets.

[Jason Arnold:]

Just a question, I guess, on the debt side. The spreads on your debt have come in nicely following the additional rating. Any additional thoughts on funding mix, extending term or anything like that in terms of new issuances here for going forward or any thoughts around that?

[Gregory B. Willis:]

Jason, it's Greg. I'd like to remind you that we have $1.5 billion of liquidity, and we use that to make sure that we're never forced to go to market. Our spreads have come in significantly but we think that there's still a lot of room to go, if you look at the credit metrics. The way we manage our fixed loading portfolio is -- fixed loading mix, excuse me, is by keeping the bank market floating and the bond markets fixed over the long-term. So I think that if you have anything else, I'm happy to go into more details.

[Jason Arnold:]

Sure. Yes, I was just curious if the spread coming in is giving you any thoughts as to extending terms slightly if opportunities arise or you just take advantage of...

[Gregory B. Willis:]

We have a lot of runway on our maturity profile. We have no sizable maturities until 2017. If we do more capital markets issuances, there'll probably be on 2017.

[John L. Plueger:]

Yes, Jason, I would just comment. This is John. I would just add that we've actually kind of -- what you're specifically asking about, we've actually kind of continuously done that since the early years of the company. As we add banking strength and as we add capital market strength, we have moved out maturities on our original Crédit Suisse warehouse facility, on our current bank unsecured facility, which has now been upsized twice this year, the second time being after our investment-grade rating. So it's just a very normal natural process for us as part of our total capital strategy.

[Steven F. Udvar-Hazy:]

I do want to -- just to remind everyone on the call that the last public bond that we did back in February was a 7-year maturity with 2020 is when we will pay it back. We've done a private placement in the last 60 days. A significant part of that will mature in 2019. We extended our $2 billion revolver that Greg described from a 3-year facility to a 4-year facility. And, at the same time, reduced the margin on that. So we're consciously moving debt maturities out and doing it in a sort of a well-planned intelligent fashion rather than in one giant step. So you'll see a progressive set of measures that management is taking to better match the debt maturities to our lease cash flow maturities.

[John L. Plueger:]

Yes, just reminder, Jason, I know you know this but others might not, the overall goal for the company is to, on an overall portfolio basis, have the average tenure of our debt match about the average tenure of our lease maturities, which is about 7 years.

[Operator:]

At this time, I'm showing no further questions in queue. I would like to turn the call back over to Mr. Ryan McKenna for any closing remarks.

[Ryan McKenna:]

That concludes management's remarks for today's call. Thank you very much for your participation, and we will speak to you next quarter.

[Operator:]

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.