Operator: Good day, and welcome to the Aircastle Limited Q2 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Frank Constantinople, Senior Vice President, Investor Relations. Please go ahead, sir.

Frank Constantinople: Thank you, John. Good morning, everyone, and welcome to Aircastle Limited second quarter 2016 earnings call. With me today are Ron Wainshal, Aircastle's Chief Executive Officer; and Mike Inglese, our CFO. We will begin the presentation shortly, but I'd like to remind everyone that this call is being recorded and a replay will be available for our website at www.Aircastle.com, along with the earnings press release and our PowerPoint presentation. I'd like to point out that statements today which are not historical facts may be deemed forward-looking statements. Actual results may differ materially from the estimates or expectations expressed in those statements, and certain facts that could cause actual results to differ materially from Aircastle Limited's expectations are detailed in our SEC filings, which can also be found on our website. I'll direct you to Aircastle Limited's earnings release for the full forward-looking statement legend, and will now turn the call over to Ron.

Ron Wainshal: Thanks, Frank, and welcome to our second quarter 2016 call. During the call, I'm going to discuss Aircastle's second quarter results, our view of business conditions, and where we're heading from here. I'll then turn it over to Mike Inglese to cover our financial results, and then we'll address your questions. To begin with, I like to note that this coming Sunday marks the 10-year anniversary of our IPO on the New York Stock Exchange. We are the first of the current generation of aircraft leasing companies to go public. In many ways, the world in which we live in is a very different place today. At the same time, many similar themes abound. The air travel market has grown significantly since 2006, with global traffic increasing by more than 60%, while aircraft leasing companies now own around 40% of the world's fleet versus 25% a decade ago. The aircraft -- the airline industry's center of gravity has shifted eastward from North America and Western Europe towards Asia, as air travel facilitated the growth and emergence of many economies. Aircastle has changed too. Over this past decade, we have acquired more than $10 billion in aircraft and sold another $3 billion. In fact, the value of our fleet is 4.5 half times bigger now than at the time of our IPO, and the vast majority of the aircraft net fleet has since been sold. Our ownership base has also changed, and we're proud to have as our largest shareholders, two large, globally active, long-term minded companies in Marubeni Corporation of Japan and Ontario Teachers' Pension Plan. We have grown to be the world's largest aircraft value investor. What hasn't changed is that the world is constantly evolving, sometimes in tumultuous ways. Likewise, the same holds true for the financial markets. The notion that investment opportunities vary with time and are often most attractive during times of uncertainty and volatility is central to Aircastle's investment approach. We've always been growing in an accretive and contrarian way, rather than tying up our capital long-term. We also believe in sharing our successes with shareholders, and are pleased to announce our 41st consecutive dividend. As we look out at the world today, we are struck by the rapid pace of change and the sense that macro volatility is increasing. Over the past several months, we've experienced a number of mini tremors, such as Brexit, political unrest in Turkey, and a surge in terror attacks. Some of these look to be short-lived issues, while others may entail effects that linger for some time. Apart from geopolitics, we appear to be going through a cycle of slowing economic growth worldwide, central bank stimulus packages, and lower interest rates. Investors seem uncertain, and we're seeing rapid switches between risk-on and risk-off attitudes. All that being said, for us, volatility represents opportunity. Our approach is to remain flexible and adapt fluidly to evolving challenges and opportunities in the market. We've put the Company in an excellent position to prosper, by keeping our capital free and flexible, while simultaneously working to augment; continuing to proactively derisk our business for the long haul; seizing on buying opportunities, both for aircraft and our own securities; as well as maximizing selling opportunities; and, of course, delivering consistently strong operating results. During the first half of 2016, we purchased $660 million in aircraft. If we add in deals we've been awarded to those we've closed or have committed, the total for the year so far grows to $1.3 billion. This is a strong showing considering its early August and that our full-year investment level for 2015 was $1.4 billion. Our ability to source investments with strong yields and excellent risk-adjusted profiles in an ultra-competitive low interest-rate market is truly noteworthy. We recognize many of the changes in the macro environment for some time, and we've acted to de-risk our business considerably over the past several quarters. We are doing so with the view toward long term, even at the expense of short-term revenues. These steps include improving the quality of our fleet by selling many less productive aircraft and paring the number of freighters; by proactively addressing our lease expirations; and in cases where we felt supply/demand dynamics have changed, we faced up to it and reduced the carrying value of the aircraft affected. The financial markets have also been changing quickly and we've been acting on these shifts. We took advantage of more favorable debt market conditions by completing our first secured bank financing in some time. We also repaid the remainder of our last securitization and freed up $0.5 billion in collateral. Investor demand for aircraft has improved once again, and we're acting on that by ramping up our sales efforts, picking up where we left off in Q1. As we did during the first quarter and many times before that, during the short-lived drop in stock market prices in late June and early July, we bought back shares, not a lot but enough to demonstrate our vigilance and initiatives. All of the above reaffirms what Aircastle has done consistently during the past 10 years. We have maintained a disciplined approach to capital allocation with a view towards growing our dividend as our sustainable earnings base expands; we have consistently delivered strong portfolio performance, guided by a sober and seasoned evaluation of risk, along with a proactive and skilled approach to asset management; and we've seized on the growth potential available in the unique and essential world we've crafted in an industry category that grows at nearly twice the rate of global GDP. Turning to our financial results, Aircastle had a productive second quarter, as we planted the seeds for strong future performance. We continue to earn good returns on our capital, with our cash ROE coming in at 14%, despite lower lease and maintenance revenue and lower gains from asset sales during the quarter. These results reflect excellent operating statistics, including 99% utilization during the quarter. Our portfolio is performing well with minimum overdue receivables. During the quarter, we purchased 19 aircraft for $560 million, and we continued building a healthy pipeline of new business. So far this year, we have a line of sight to buying more than 40 aircraft in 2016. All but three of these aircraft are current generation narrow bodies; the other three are wide bodies underwritten to extract value at lease end to minimize the residual exposure. The financial impact at this healthy level of new investments will become evident in Q3 and beyond. We're finding very good success in buying 5-year to 10-year-old current generation A320s and 737 aircraft from other leasing companies, where our reliability as a trading partner was a key differentiator. We're the only major capitalized lender [ph] in the space, and our access to unsecured financing and our team strength provide us with meaningful competitive advantages. We've also captured several attractive special situation deals from the narrow bodies. More specifically, we're acquiring eight such aircraft, more than $300 million this year so far. For example, we recently agreed to acquire and lease back two new A321s with an Asian airline, which had originally intended to finance them with export credit agency debt. The shutdown of ECA availability presented an opportunity and we seized on it. We consummated this deal in three weeks, once again, demonstrating our Company's agility and decisiveness. The first aircraft closed in early July. We continued our work in upgrading our portfolio by agreeing to sell two old 747 freighters back to our lease customer and eliminated considerable delivery residual risk. These aircraft have been parked for quite some time and selling them allowed both our customer and us to move on. During the second quarter, we also make good progress with our we completed our first lease placements. We completed our first Embraer E2 placement from our order stream, signing up Azul Airlines in Brazil for three E195s. This deal is consistent with the economics anticipated when we made the order with Embraer. As Azul is the major current-generation E-jet operator, this deal confirms our underwriting thesis that the new technology E2 aircraft will benefit from and tap into the large installed base of E1 customers. We also signed leases with two customers in China for three new Boeing 737-800s that we bought on spec from a South American carrier that found access to their needs. We've already purchased two of the aircraft from Boeing with a third coming off the line shortly. We've delivered one of these aircraft to the lessee and are in the process of preparing and reconfiguring the other two aircraft. We expect to deliver both of these two aircraft before the end of Q3. This deal is yet another example of our team's speed, global reach, and technical proficiency. We're making progress with other aircraft placement for leases coming due over the next year-and-a-half. We have handshake deals, wherein we've agreed economic terms for extensions to the 777-300 ER, an older A330-200, and two mid-age 737-800s. We're also pursuing several opportunities for other wide-body lease placements. Despite the fact that airlines are more reluctant to make wide-body commitments given the current market turbulence, we expect to make more progress shortly. We moved our annual fleet review for wide-body and freighter aircraft forward into the second quarter, in view of the current market conditions for these aircraft. Following a detailed review of each of the aircraft, we decided to write down the value of one of our three oldest wide bodies, an A330-200 coming off lease in the next few weeks. We are negotiating a lease placement with two customers for this aircraft, but determined that it's prudent to reduce its carrying value to bring it in line with current market economics. We believe the carrying values for our freighter, other freighter and wide-body aircraft are appropriate. Turning to our business environment, this morning, IATA released its passenger statistics for the first half of 2016. Air traffic continues to be robust, increasing by 6% during this period of the year, and while growth has been slowing over the past few months, it's still at very solid levels, and the year-to-date numbers remain above the long-term industry growth trend of 5% per year. However, capacity increases are catching up to demand growth. Supplies, measured by available seat kilometers, increased 6.2%; that's a little higher than the gross rate for demand. However, at more than 79%, load factors are very high. We'll be keeping a close watch on this. Airline market conditions vary significantly by geography. North America continues to be the best-performing region in the world. The US is a mature market with lower growth, but more balanced supply/demand dynamics, and it accounts for more than half of the world airline industry's projected profits. Mexico is performing very well and is one of the industry's bright spots, so we increased our business there recently. The South American market, while still struggling, is showing some positive signs. In Brazil, the appreciation of the real against the US dollar is a big help for airlines. On the other hand, economic growth in Europe is slowing again, and the airlines there are issuing first-half trading statements or indicating concerns about the rest of the year following some of the macro events I mentioned earlier. In general, the tone of the Asia-Pacific market is positive, with India being the bright spot and China maintaining strong air-traffic growth, even as its economic growth rate slows a little bit. We are doing more business in both China and India, but remain cautious about counterparty risk. We don't see much change in rental rates since our last discussion in the spring. Rentals for current-generation narrow bodies remain steady, supported by low fuel prices. At the same time, cheap jet fuel continues to put downward pressure on lease terms for new technology aircraft, whether they are single or twin aisle aircraft. Rentals for A330s and 777-300 ERs remain week. We don't believe they'd dropped further, notwithstanding the hesitancy by airlines in certain parts of the world to add such capacity. The OEM's are beginning, finally, to acknowledge there's an issue here, and we hope that they do indeed act to match new supply to demand and drop production. Interest rates are at strikingly the low levels. Of the $37 trillion of developed market sovereign bonds outstanding, 15 trillion have negative yields. Current five-year swap rates are nearly 1%, not far from the historic lows during 2012. Of course, this low-rate environment provides attractive financing opportunities. It also makes dividend-paying companies, such as Aircastle, more attractive to investors seeking yield. There is indeed a big chase for yield from investors, pushing aircraft prices up. While this is not an entirely new phenomenon, there seems to be more of a risk-on attitude present. We see a great appetite for US dollar assets from investors in Asia, as well as other parts of the world, driving pricing in our space. The price pressure is highest for new aircraft sale lease-backs, where we see returns at or close to all-time lows. As we look ahead, current market conditions demonstrate the merits of Aircastle's investment strategy and the power of our value-add capabilities. We continue to focus on achieving 15% economic ROEs on new investments, while building a good new investment pipeline. We've been achieving this by shifting our acquisition efforts to focus on used current-generation narrow bodies that provide attractive risk-return profiles, even in today's market. Based on our new deal pipeline, I see our demand growing to a total of nearly 200 aircraft by the end of the year and believe we're well-positioned to exceed last year's level of new investments. The key though is remaining disciplined. We're more optimistic about asset sales today than several months ago, and we intend to pursue such transactions both opportunistically and as a means to continue improving our portfolio. As we consider the many changes going on in the world, it's worth revisiting three basic investment principles underpinning our strategy. Number one, air travel will continue to grow; number two, demand for aircraft leasing will increase along with air travel growth; and three, economic conditions vary over time and prime investment opportunities tend to arise during times of doubt or volatility. This third point is where our approach stands out from those of our competitors and why we believe we're on a strong, long-term trajectory, even if it doesn't follow a straight line. So as we assess the current situation, we're working through another peak in volatility, one which, considering our business model, presents as many opportunities as concerns, and we remain bullish about growth. This remains a time for taking prudent actions to best position Aircastle for long-term success, and despite recent volatility and retail pressures, we believe the overall demand for air travel will continue to grow and remain positive. I'll now turn the call over to Mike Inglese to address our financials.

Mike Inglese: Thanks, Ron. Aircastle delivered strong results in the second quarter. Net income for the quarter was $20 million, while adjusted net income was $24.2 million. Our operating cash flow over the last 12 months was $511 million, a 3.5% increase over the comparable prior 12-month period. These results enable Aircastle to deliver trailing 12-month cash ROE of 14%, which is above our historical average of 12.6%, reflecting the improved quality of our portfolio and enhanced liquidity profile. Our unencumbered flight equipment and unrestricted cash reached a record $5 billion at the end the second quarter. During the quarter we acquired 19 aircraft for more than $560 million, and as of today, have closed approximately $800 million of new investments for 2016. We are on-track to having a successful year for new acquisitions and continue to see good value in new generation narrow-body aircraft, which are quite cost efficient for airlines given the cheap price of jet fuel. We believe the quality of our portfolio has been enhanced by the nature of our acquisitions. We've doubled the number of current-generation narrow bodies in our fleet over the past five years and have expanded our customer base by 20% in the past 12 months. All the while, we've been pushing out the average remaining lease term to provide greater stability to our revenue base. During the first half of 2016, we sold a total of 14 aircraft for proceeds of approximately $340 million, and year-to-date gains on sale of flight equipment of $15 million. Five of these aircraft were sold to our two joint ventures with Ontario Teachers' Pension Plan and IBJ Leasing of Japan. In addition, we also disposed of two old 747 freighters early in the third quarter, as we took advantage of an opportunity to accelerate our exit from freighters. As a value investor, we seek to buy into weakness and sell into strength. Targeted aircraft sales at attractive prices reduce the residual value of risk across the fleet and enables us to reallocate our capital and increase overall liquidity. The 45 aircraft sold since the beginning of 2015 had an average age of 15 years and an average remaining lease term of approximately 3.7 years. Turning to our results for the second quarter 2016, lease rental and finance lease revenues were $180.3 million, down $6.4 million or 3.4% year over year, due primarily to the net impact of the sale of aircraft. In addition to the 14 aircraft sold this year, we sold 31 aircraft in 2015, for combined gain on the sale of flight equipment over that 18-month period of $73 million. We anticipate that our new acquisitions will generate lease revenue that will more than offset that sold aircraft, while resulting in a better quality portfolio overall. Total revenues for the second quarter were $190 million, down $14.6 million year over year. The main reason for the decline was lower maintenance revenues, which were down $8.8 million, along with lower lease rental revenues. The decrease in maintenance revenues was driven by higher scheduled lease expirations in the second quarter of last year that entailed sizable return compensation payments. Adjusted EBITDA for the second quarter of 2016 was $182.4 million versus $214.6 million for the prior year. In addition to the lower lease rental and maintenance revenues, gains from the sale of flight equipment were approximately $19 million lower than last year, last year's unusually strong second quarter with respect to aircraft sales. Specifically, in the second quarter of 2015, we sold 10 aircraft versus one aircraft in this year's second quarter. Adjusted net income for the second quarter was $24.2 million, down $23 million year over year, reflecting lower total revenues of $14.6 million, lower gains on sales of approximately $19 million, partially offset by lower aircraft impairment charges of $7.2 million. We conducted our review of all our wide-body and freighter aircraft in the second quarter of 2016, given weaker market dynamics for this aircraft. As a result of this review, we recorded an $11.7 million non-cash impairment charge for one 16-year-old A330 scheduled to come off lease this quarter. This charge was partially offset of $4 million of maintenance revenue. During the second quarter, we also recorded an impairment charge of $5.1 million related to the sale of two 747 freighters, which have been scheduled to come off lease over the next eight months. These sales were completed in early July. We will perform our annual fleet review for narrow-body aircraft as scheduled in the third quarter, and although we just started working on this analysis, I would note market conditions for narrow-body aircraft remain reasonably strong. Interest expense for the second quarter was $62.5 million, an increase of about $1 million over the prior year, driven by a higher debt balance versus a year ago. Depreciation expense declined by $2.3 million, mainly due to aircraft sales, while SG&A for the quarter increased by approximately $700,000, mainly due to higher compensation expense. Our second quarter tax provision of $2.4 million represented about 11.5% of pre-tax income. We think we're still on track for a 10% to 11% effective tax rate for the full year. At the end of the quarter, we owned and managed 179 aircraft with a net book value of $6.8 billion including, including 142 unencumbered aircraft, having a book value of approximately $4.5 billion. Of the 179 aircraft owned and managed, 10 aircraft are held in our two joint ventures. At the end of the second quarter, they had a net book value of approximately $612 million. Our portfolio lease rental yield in the second quarter was 12.4% and our net cash interest margin was 8.5% on an annualized basis. We anticipate our yield and margin to decline modestly and temporarily in the third quarter, reflecting the time required to deploy our recent capital raises and downtime associated with two of our 747 [ph] debt purchases and other aircraft transitions. We expect a return to higher levels in the fourth quarter of this year. Our liquidity position continued to strengthen during the second quarter, and we believe that our capital structure, credit metrics, business strategy, and management depth will, in due course, results in an investment-grade rating. At the end of the second quarter, we had $493 million of unrestricted cash and $675 million of unused revolver capacity. Total borrowings were approximately $4.4 billion, including $3.3 billion of unsecured debt, which currently accounts for about 75% of our total debt. At the end of the second quarter, the weighted average coupon on our debt was 5.07%, and the weighted average maturity of our debt portfolio was 4.1 years. Our net debt-to-equity ratio was approximately 2.2 times. Thus far in 2016, we have raised $1.1 billion of new financing from various sources worldwide. In addition to the $700 million we described in the first quarter earnings call, during the second quarter of 2016, we closed a $400-million term facility with five global banks secured by 17 aircraft. This facility has a maturity of seven years and can be expanded to permit additional funding. The first draw under this facility for approximately $167 million took place in late June. During the quarter, we also repaid our securitization number two and freed up over $500 million of collateral. As we've demonstrated consistently, we remain committed to allocating capital efficiently between value-enhancing investments and returning capital to shareholders. Since the beginning of 2016, we've repurchased over 1.8 million shares for approximately $34.4 million at an average price of $18.84 a share. Since 2011, we've repurchased $191.8 million of our shares at an average cost of $13.28. We will continue to use our existing share repurchase authorization opportunistically going forward. On August 2nd, our Board approved a $0.24 common dividend payable on September 15th. And we've paid out $646 million in dividends since going public in 2006 and have increased the dividend six times since 2011. As usual, our guidance elements for the third quarter have been included in the earnings press release and PowerPoint, both of which were posted to the website today. Of note, you will see that we expect to see increased lease rental and finance lease revenues as result of deploying capital that we've raised during the first half of the year. To summarize, Aircastle had a strong second quarter. We remain on track to create value and increase shareholder returns by capitalizing on our unique market position. We'll continue to acquire accretive assets, pay dividends, and opportunistically repurchase shares. Our future capital commitments are modest and our conservative capital structure is flexible and provides strong access to cost-efficient financing. We're positioned well to seize on market opportunities as a leading value investor in the commercial aircraft leasing space. And with that, operator, we're happy to open up the call to Q&A.

Operator: [Operator Instructions] We would take the first question from Arren Cyganovich from D.A. Davidson.

Arren Cyganovich: Thanks. Just looking at the wide-body and freight review, obviously, the A330-200 write-down is the one stuck out. What is it about the remaining 15 of those aircraft that you have that put them at a better carrying value on the balance sheet? Is it the remaining leases that are attached to those aircraft? What it's associated with those that gives you more confidence in the carrying values of those?

Ron Wainshal: Hi Arren, it's Ron. The aircraft that we impaired is one of the three oldest in our portfolio among the wide bodies, and it comes off lease in the next few weeks. The other aircraft that of that vintage have lease terms going on, and in one case, we expect that it will extend with its current customer. It's just a matter of the particular circumstances of this aircraft.

Arren Cyganovich: Okay, thanks. And then with respect to your comments relatively weaker values for new technology aircraft and lease rates, I don't believe you own any of those. So where do you get those details and to the extent that those values have come down? When is it more attractive for you to go out and try to buy some MAX's and NEO's and A350s and 787s? I would think that there they would be a shift in value proposition for you to look into those aircraft.

Ron Wainshal: We think they're fabulous aircraft, but everything here is an economic proposition. And it's hard to ignore the difference in fuel prices today versus, say, three years ago when these aircraft were introduced. The difference is profound. I think we're looking in fuel prices being about two-thirds lower than they were when many people bought them. So at the moment, we don't own any here, correct? And I'm convinced that we will, but it's just a question of pricing. I think in terms of how we see the opportunities in the markets, we're in touch with customers all the time, and for that matter, with the manufacturers. So there are -- in some cases, we're making placements where the customer has been quite transparent with us about their alternatives.

Arren Cyganovich: Okay, thank you, very much.

Operator: We will take our next question from Gary Liebowitz from Wells Fargo Securities.

Gary Liebowitz: Good morning, gentlemen, and happy anniversary.

Ron Wainshal: Thank you, Gary.

Mike Inglese: Thank you, Gary.

Gary Liebowitz: Ronnie, you mentioned that you're seeing buying opportunities from other lessors who are looking to sell their 5-year to 10-year-old aircraft. And you're talking about that for a little while now. I'm just curious, how does that opportunity set compare today to where you thought it would be, say, at the beginning of the year? In other words, are seeing these large lessors bringing even more aircraft to market for sale than you would've thought at the beginning of the year?

Ron Wainshal: I think it's probably fair to say that there has been a pretty constant stream. Of course, there is always smaller movements, but I think that the main theme is there's a good stream of that. Many of our leasing company peers are looking to provide a funding stream for other number one. Number two, I think there's a general group-think type of phenomenon where new technology is good and old technology is bad. Like I said when I spoke with Arren, I believe that the new technology aircraft are attractive and interesting airplanes but the question is pricing. And we just can't ignore fuel prices today. We're the only permanently capitalized Company that's playing in this space. We don't mind being contrarian. The risk-return profile here is very, very attractive.

Gary Liebowitz: And then also, can you give us a general update on your customer watch list and maybe specifically, on your Brazilian customers?

Ron Wainshal: Our customer watch list is in great shape. As I mentioned during my remarks, we've seen a little bit of improved business tone in Brazil, albeit from a very bad place. There is a little bit of relief because of the strengthening of the local currency there, and given that half or more of the payments that airlines make are in dollars, that helps an awful lot. Our customers are in good shape. I should note that Azul just announced this morning that it sold a large portion of its shares to a Chinese company and they have been an example of the positive actions that the airlines have taken there in terms of adjusting capacity, recapitalizing and keeping a lid on costs. So we feel pretty good about Latin America, though it's something that we watch carefully. In general, remember its summertime, so the seasonal forces here are positive. We remain concerned about all the places we've been watching in the world, primarily those places that are more resource-intensive and reliant on fuel. Russia inclusive, Turkey is [ph] item for us too.

Gary Liebowitz: Thanks, Ron, maybe just one more for Mike. There was a big jump in maintenance payment liabilities during the quarter. Is that because the planes that you're requiring now are coming with a big pile of reserves?

Mike Inglese: Yes, put simply, yes. When you buy planes, you're assuming maintenance liabilities and typically that reduces the cash that you're laying out on day one to acquire those planes. But that is -- you're buying that lease and you are assuming those maintenance liabilities that you revalue at fair value when you acquire those planes.

Gary Liebowitz: Thank you, very much.

Operator: We will take our next question from Helane Becker from Cowen and Company.

Helane Becker: Thanks, operator. Hi guys, thank you for the time. I just have a question about the portfolio review, and I appreciate that you did it ahead of schedule for the wide bodies, did you think -- or do you think the narrow bodies are holding up in value? Because it just seems to be in conflict with your comments too about the next-generation wide-body aircraft the MAX's and the NEO's, and the fact lease rates on them seem to be maybe coming down a little bit. I don't want to put words in your mouth.

Ron Wainshal: Let me be clear, because the nomenclature here can be confusing. When I say the new technology airplanes, I'm talking about the MAX's and NEO's; I think those rentals are pressured by fuel prices being low. In contrast, the aircraft we own, which is NG -- new generation for Boeing or CEO for Airbus are in very good shape because of low fuel prices. I think demand -- the market for those aircraft is quite strong.

Helane Becker: Okay, all right. So the way -- I got it. No, I just didn't want to put words in your mouth, so I wanted to make sure I completely understood that. And then in terms of the freighter business, so are we to think that you guys are out of that now and it's no longer going to be -- going forward and you moved on to other more attractive aircraft?

Ron Wainshal: Let me just summarize where we own today and where we stand and what the plan is going forward. We own nine freighters; four of those are about 25 years or older and they are converted freighters. They were once passenger aircraft and turned into freighters, and they are not so efficient. Those aircraft do not have a bright future. They are the marginal capacity in a market that's awash with excess supply. So our plan for those aircraft is to scrap them when the leases are over. Those leases should be over in the next two years. So that will leave us with four aircraft. Those four aircraft are about 10 to 12 years old. They are factory built freighters so they are more efficient, and we think they have a much brighter future. I think the freight market overall is still challenged, but what makes me feel somewhat better about these aircraft is the fact they are very cost effective in the low fuel price environment, and I think they are actually great value compared to a 777 freighter which has a very high capital cost or a 747-8, which is also very expensive and maybe doesn't have as bright of a future.

Helane Becker: Got you, okay. Your comment on Turkey, I was looking at that last week because of, obviously, issues over there. Would there be a difference in your mind between like Turkish versus Pegasus kind of thing?

Ron Wainshal: First of all, let me say I think Turkish is an impressive airline and has had very good success. And the fact that their government-owned in that context is pretty important. That's not to take away anything from Pegasus, which also is a fine airline, but they don't have the same type of institutional sponsorship. Our exposure in Turkey, just to address it, is a total of five narrow-body aircraft with a book value of around $100 million, so it's less than 2% of our overall book. It's been one of the more important markets in terms of growth historically, so notwithstanding it's a small role in our portfolio, it's a situation we want to watch carefully.

Helane Becker: Great, okay thank you so much for all of your clarifications. I appreciate it.

Ron Wainshal: No problem. Thank you, Helane.

Operator: We will go next to Christopher Nolan from FBR & Company.

Christopher Nolan: Ron, your comments earlier, you said you thought that investor demand for aircraft was improving. But then I thought I caught a comment later on that you thought gains on sale would be under pressure, the margins, and am I missing something here?

Ron Wainshal: Let me clarify. First, I will say at this time to my prepared remarks, that there's been volatility in the market. And I think it's pretty dramatic what we've seen over the past nine months in terms of switches between risk-on and risk-off mind-sets. Those switches tend to have a more pronounced impact when you get into lower -- into older aircraft where the financing availability is lower. I would say that the overriding bigger theme, which is more constant, is the search for yield by investors around the world and the search for dollar investments with yield. I think competition for new airplanes is super high, and I think we differ a little bit from the appraisers. We see prices actually going up, as a general matter. Now as it relates around sales activity, realize it takes a few months to germinate a deal and to consummate it. And so the deals that you see closing in Q2 were things that started in Q1 or earlier. And so my comments and Mike's comments about what's ahead suggest that you will see more in Q3 and beyond, but this part of the market is a more -- because we're focusing on selling older aircraft, tends to be a little bit more erratic.

Christopher Nolan: Are you seeing the stronger prices for the narrow bodies or for the older wide bodies?

Ron Wainshal: Narrow bodies have a better tone all the way around, but we have been very successful in selling both.

Christopher Nolan: Got you. Mike, in case I missed it, did you say what the number of lease expirations are in the second half of the year?

Mike Inglese: We only have one aircraft left to place in 2016.

Christopher Nolan: Great, those are my questions. Thank you.

Operator: We will take our next question from Andrew Light with Citi.

Andrew Light: Good morning. Are you seeing much increase at all in competition in your chosen near like segments? Any new entrants given the more attractive returns you see in this segment than there are than the new segment? Do the Chinese lessors play in this business at all?

Ron Wainshal: Good afternoon, Andrew. I think there's always competition. I think what is notable in the mid-age space is that, as I said before, we're the only --permanently capitalized major Company in that space. We don't see the Chinese investor there; they are less experienced, as a general matter, and they tend to focus on new aircraft. So we don't bump into them too much. Most of the competition comes from fund-based investors, and they have -- each has its own story and its own unique angle on the market. And many of them are folks I respect quite a lot. But what I would say is that the access to financing is the thing that's a varied. During the beginning of the year, the ABS market started to freeze up. There was more of a risk-off mind-set back then, and we found that the competition wasn't quite as robust. I think it's probably picked up recently. I'll note that in the last two or three weeks, we've seen a couple for ABS deals for these aircraft pop up again and get executed successfully. So we are more optimistic about asset sales and a little bit more -- probably facing a little bit more in the way of competition on the buying side.

Andrew Light: Thanks, and have you been following the launch of this fund by the former CFO of Ryanair, Stellwagen Capital, who appeared to be only for a $1 billion to $5 billion fund offering sale and finance lease-back funding in competition to traditional sales and operating lease-backs on the -- I was interested in your thoughts. Is this is a new development or has this been around for a while?

Ron Wainshal: I'm generally aware of fund and what they're trying to do. I wouldn't call it particularly path-breaking. I think there's has been a lot of very interesting approaches to the market from funds from all over the world. And I think many people have woken up to the attractiveness of the industry's fundamentals and tied that with the free yield. I think this just one of another of series of entrees into a good sector.

Andrew Light: Okay, thank you very much.

Operator: We will go now to Michael Linenberg with Deutsche Bank.

Michael Linenberg: Good morning, gentlemen. I wanted -- if we could just go back on the 747-400's that you sold. Now is that -- I didn't hear it all and I apologize, is that a third quarter event?

Mike Inglese: The sale was concluded in the third quarter, that's correct.

Ron Wainshal: But the impairment, the hit was in the second quarter and there will not be any further charge in Q3 in that regard.

Michael Linenberg: I see, so and that hit in the second quarter, that was what, $5.1 million, Mike?

Mike Inglese: That's correct.

Michael Linenberg: And there's no offsetting maintenance revenue?

Mike Inglese: Not in this particular circumstance.

Michael Linenberg: Okay, great. And then my second question, when I look at your net-cash interest margin, it's actually been fairly stable over the last five years, and that obviously includes periods where you had a lot of volatility like 2011. We had that Arab spring, we had energy prices of 40%, there were several economies that were near or in a recession. More recently it's trended lower, and I just -- I'm not sure if this is a trend or if it's just noise in the marketplace or a mix of your fleet. How should we think about how that trends out over the next year or two/ Are we going to see it stay around this 8%, 9% range or are we going a little bit lower? I know it's a big-picture question here.

Ron Wainshal: Let me take a crack at it first, Michael, and then I'll let Mike add any other comments he'd like. I think the 8% to 9% range, probably on the higher end of that is what -- where we'll be trending. Mike did make a note that in Q3; we might be dipping down a little bit because we have a number of aircrafts that are in between leases. The leases are signed, but we have to go and do some work to deliver them. And we also just raise a lot of cash from the sale -- from the bank deal we did so we have a little bit of the negative carry from that but I think that as just a Q3 thing and nothing more. I think you should be considering that margin in the mid-eights, maybe better if we have a good quarter in terms of asset sales.

Michael Linenberg: Just one other, Ron, and this is big picture. You've been around the industry for a long time and we're -- You even mentioned -- you said something along the lines of $37 trillion of sovereign debt now -- or of that, one-third of that now has a negative yield. As we go down this path and more and more securities are sporting a negative yield, do companies like yourself have to rethink long-term ROEs or hurdle -- or investors have to reconsider hurdle rates? Are we going to see naturally just downward pressure on a lot of the different benchmarks in how people measure cost of capital? Is that natural or not?

Ron Wainshal: I don't think there's anything natural about $15 trillion having negative interest rates, but that's where we are. I was reading this morning about how the Bank of England is reducing its interest rate to a 322-year low. This is an unusual period of time, but as I think we all know from being in the industry for a while, there's a lot of volatility. If you think about the relationship between price and yield, low yield generally means high price, and high price is where you get into trouble. If we had perfect certainty that everything was going to go according to our underwriting assumptions, then everything would be fine. But we don't assume that and we are very focused on price, of course, the yield matters, too. But price is an important absolute determinant as well.

Michael Linenberg: Very good, thank you for that.

Operator: We will go next to Nishan Mani with JPMorgan.

Nishan Mani: Good morning, guys. I wanted to ask you a question, and Ron, you'd alluded to this earlier in your prepared comments about production rates for the wide bodies and the OEMs. We've seen a series of cuts across the 380, the 777, and 747 in the past six months, and I'm wondering from your perspective, how much more do we need to see from the OEM perspective in order to restore supply and demand balance going into 2017 and onward?

Ron Wainshal: Let me start out by saying first of all that, I'm going to carve out the 380 and the 747 from the discussion here, because that's not an area we're playing in. Our focus is going to be on the 250 to 350 seat type of the market. I think the first thing I'll note is that the 787 is now the most produced rate of wide bodies ever at 12 a month, and so the effect of the 787 is not small. I understand that it's making up for lost time with all the production delays, but it is having an impact. The 330 has been adjusted downward by Airbus in terms of production. The 777 has a little bit so far, and Boeing has indicated that it might consider further. I think both manufacturers would be wise to consider or reconsider their plans as we see the demand suffer a little bit. Wide bodies are a different proposition than narrow bodies because of the commitment for customization and the cost involved. And when people are scared, they're more likely to hold off on those things. I'm not going to give you a specific target, and it is probably a lot more complicated than for me to say it, but I would say less is more in today's market.

Nishan Mani: That's fair, and thank you very much for that response. Just as a follow-up question to your comments on what you're seeing on fuel prices and how it impacts your decision to not to commit to some of the newer programs available from Boeing and Airbus. Have you heard similar sentiment from plain [ph] departments at the major airlines? Because for the past 18 months or so, the airlines have been somewhat reluctant to admit that they plan their fleets in short-cycle fuel assumptions, but rather, think about things from a 10-, 15- or 20-year fuel perspective. So just wanted to get your sense on how you square those two diverging thoughts. Thanks so much.

Ron Wainshal: While every time I have a discussion with an airline, I ask them what they think about fuel. And as you can imagine, not everybody has the same perspective. And I also think it's worth emphasizing that simplifying fleet planning into only 15-year cycles or only short term is overly simplistic. If you were in a businesses as volatile as an airline industry and you only plan for 15 years, you'd be dead. So these guys are looking at both, and they should. It's hard to generalize and just to say, okay, they will only plan for long term or for short term. They'll have lots of adjustments and the adjustments can come in different forms like extending a lease for short time to keep something in the fleet and pushing things off that might be a new technology and maybe have a better future. If I had to summarize the current tone of our aligned discussions is more for longer, and I would say that translates into something along the lines of $40 to $60-a-barrel of crude. Or call it $1 to $1.50 of jet fuel per gallon and that's the sentiment at the moment. Having said that, we're all really bad at predicting this stuff.

Nishan Mani: I think that's absolutely right, and I think that it puts you guys in a unique position right now, particularly compared to the other publicly traded source. I will turn over now. Thanks so much for the time, guys.

Operator: For our next question, we'll go to James [ph] with Credit Suisse.

Unidentified Analyst: Thanks, good morning. Appreciate you taking the question. Can you guys give us a sense of where your debt-to-equity ratio might go or where you're comfortable -- how high you're comfortable taking it before you get an IG rating? And maybe provide some thoughts about where it might go as a ceiling after you get an IG rating?

Mike Inglese: I think those two things are related and they're pretty much the same. We think somewhere between 2.75 and 3 times is probably an appropriate level to operate. This business model and I think at that metric, I think you are in the investment-grade sweet spot fighting, assuming you have the right metrics. Otherwise, in terms of funds from us, the total debt in terms of your mix of your debt profile, you still have the same portfolio quality and diversification that we have. So there's a lot of factors that goes into, but I think it all comes back to around high 2s, around 3 is probably where you can wind up comfortably in this business.

Ron Wainshal: I'll just reemphasize that we think we have credit metrics that are investment-grade. We can't control what the rating agencies do. It is an aspiration of ours, but we do have a good loyal following in the market and our bonds trade well. But it is something we want to achieve in time.

Unidentified Analyst: Sure, if I could get a second question and related to a different topic, you said that you're seeing airlines make different -- more delayed decisions when they decide to lease wide bodies. And you started to touch on their thought process when you responded to the previous question. Can you flesh that idea out to help us understand what you think the airlines think and how they make decisions with respect to leasing wide bodies, specifically the 777 and the A330?

Ron Wainshal: I will first start with general, then go into more specific. When you're a fleet planner or a business manager and volatility in your market increases, you're more reluctant to make commitments. That's a general truism, and I think the current business environment, particularly in many places that have been high-growth places for aircraft leasing and for aircraft travel in the world have gone through macroeconomic or geopolitical types of issues. And so the statement holds true as a general matter, whether it is narrow-body or wide-body or regional jets or what have you. But it's always the case that wide bodies are more custom tailored to an airline. There is more of an investment in the cabin and all the idiosyncrasies for that particular airline. So the amount that's at stake is more and typically lessors look for longer lease terms if they are going to pay for that stuff to amortize that down. So it's a natural phenomenon. It's not an unusual thing for this particular moment in time where you have a spike in the volatility. I think we've seen this many, many times over the last decade, and so it's just a natural reaction. Do I think it will continue? I'm sure it will abate at some point. And for us, as we manage our fleet, part of it is a matter of finding the right counterparty because not everybody's thinking about it quite like I just said and finding the right circumstances.

Unidentified Analyst: Thank you.

Operator: We will go next to Justine Fisher with Goldman Sachs.

Justine Fisher: Good morning. My first question is on the RJ market. We've read recently -- over the last month that there have been an increasing number of RJs in storage, and it's -- and some people are arguing that market might be softening a little bit. You guys obviously placed aircraft with Azul and they've been a big user of the RJ. But can you talk to us about the pipeline and when you guys need to place those aircraft and what you're seeing out there and the discussions that you're having?

Ron Wainshal: Our first delivery doesn't begin until 2018, and we get roughly seven a year through 2021, so they are still a ways off. The regional jet market is a little bit of a smaller niche. We focused on the bigger side of that where we think there's greater stability, and so -- but that's not a long lead time kind of an aircraft. The customization the goes into regional jets is quite limited and so is the investment element there. I think the tone of the market right now is weak, but I think that's a market that's still incredibly relevant. There are a lot of very old aircraft that are needing replacement. There is a general gauge towards upgauging from 50 to 70, from 70 to 100, and our aircraft is hitting very well there. I would also say finally that the market position of the E2s is really -- it's definitely good. So we remain bullish about the aircraft and are pleased with what we've been able to do so far.

Justine Fisher: Thanks. The second question is on the environment for placing aircraft. If you could -- it's hard to actually ask you to give the answer specifically, but if there was a barometer whereby -- that you could use to gauge how easy it is to place aircraft now versus what it was nine months ago, maybe a scale of 1 to 10, how are those discussions going? Obviously lessors are placing them, and from our perspective, looks like everything is going fine. You can take aircraft out of Brazil, put them into China. The demand seems to be humming along. But qualitatively, are those conversations becoming more difficult?

Ron Wainshal: I think rentals give you a pretty good -- it's a price for gauging demand versus supply, and I would say that for the narrow bodies, it's been pretty steady and steady at a good place. For the wide bodies, 330s, 777s, I would say that it's been weak and weak at a consistent level for some time.

Justine Fisher: Okay, thanks. And then the last question is on the aircraft that you guys sold to the JVs. How did you decide to sell those particular aircraft? Was it airline exposure? Was it the age of the aircraft? I think it just because we're trying to get our fingers on the pulse of how we know which aircraft are going to go to the JVs as opposed to stay at aircraft. I know a lot of it is to manage concentration limits, but can you walk us through some of the reasoning behind these particular sales this quarter so that we can start to get an understanding of that?

Ron Wainshal: Let me start with the general -- the theory behind each of the JVs, and they're different, and they have to be different because otherwise they would be in conflict. The first JV, which was with Ontario Teachers where we had the bulk of exposure, was set up by the time when we saw great opportunities to do large sale restocks, but we were reluctant to take all that risk for ourselves. So given that we thought about risk and return and this market in a similar way to the Ontario Teachers team, finding that --creating that vehicle made a lot of sense to manage exposures. We've completed the sale of a number of narrow-body aircraft where we have high exposure to those particular lessees during the first quarter. So that, at the moment I don't think is a place where you'll see a lot of growth in the near term because the competition for large sale leaseback deals is quite robust. With the IBJ Leasing joint venture, it was aimed at a sector of the market where we've less success in penetrating because of the aggressive yield competition. It's basically focused on the higher quality narrow bodies with very strong leases -- lessees. The first aircraft was one that came out of our portfolio. When we created the JV we agreed to sell the JV, an aircraft to -- and we have two aircraft that we've agreed that are coming and joining the portfolio as well; that's a mutual discussion between us and our partners at IBJ Leasing. And we've been aiming at a number of different contexts, Justine. Some are bidding on new sale lease backs; some are coming out of portfolios. I'll give you an example, an anecdote. We're in the process of working on a portfolio acquisition where one of the aircraft is, by our standards, low yielding and not in a good tax jurisdiction for us. And the JV is interested and better capable of owning that aircraft than we are. So we're going to do that together and it basically allows for us to pull through a bit of business that we otherwise couldn't. So it's a win-win.

Justine Fisher: Thanks very much.

Operator: We'll take our next question from Mark Streeter from JPMorgan.

Mark Streeter: Good morning, Ron and team. One of the things we observe here at JPMorgan, at least our view is that one of the reasons why your stock doesn't trade at a higher multiple is cause investors are confused. And we've touched upon several of the inputs that go into how to view aircraft values or lease rates. We talked about fuel and how that has an impact, obviously, on the attractiveness of certain aircraft. You talked about supply and demand; supply in terms of production rates and demand in terms of traffic, and we've talked about cost of debt and availability of debt. Several of the analysts have asked about this competition for yield and hurdle rates and so forth given what you cited, these figures about $17 billion of negative rates, sovereign debt, and so forth, a large percentage of what's out there. So when we add it all up, I'm asking for some clarity from you to give the market maybe some more conviction as to how to think about the long-term attractiveness of what you're doing here. In terms of your lease rates on aircraft, some are going up, some are going down, yet with this competition for yield and so forth, there is a natural downward pressure on all assets across the globe. The returns that have been generated historically might not be available going forward, and so when we add all this up, what is the bigger concern or the bigger driver for you of this laundry list of issues that are impacting your business? I don't know if you can just help us try to clarify all this. It's not an easy question.

Ron Wainshal: No, you are covering a lot of stuff here. Let me make a couple of comments in response to that. The first is that you're right; there's a lot of yield competition, it's of course, not limited to airplanes. But as we look at our space, we believe, as I said during the prepared remarks about the basic principles about growth and about expanding share for lessors, I think that's -- those articles are for us. The other important part is that it goes up and down. Now there are some parts of the market right now that are really high up and we're not touching that. The core premise that we have -- think of us as an investment manager and think of us as an investment manager with a lot of very diverse opportunities. The things that we bring to the table are a unique way to extract and create the opportunities. We believe, and this is a matter of -- a view point, time will tell, but we believe there's excellent value, both in absolute terms and relative to the low interest rate environment in the particular niche of the market that we can unlock. We can do that because of the team, because of the capital structure, and because there's less competition in that space. When I try to summarize what you say and say how is it that we can deliver an investable proposition for our customers? The yield that we can generate on the assets we think after considering all the yield and depreciation so far -- so forth, is quite attractive. The lease rate factor on our new deals are in the 1% plus category. The cost of funding that we are able to put in place benefits from the competition for yields. Also, very, very importantly, we share part of this with our investors. Our dividend yield right now looks super good compared to what the alternatives are. I think when we began the Company; we had as a core founding principle that we'd be a dividend payer. And I think of dividend-paying companies from the vantage point of the investor as a lower risk proposition. Because we're returning a certain amount of our profits every quarter to you, and if we need to get more, we'll ask for your permission as opposed to getting the money from you and saying, and10 years later we'll let you know how it's going. And so in a low-yield, high-competition environment with lots of movement, the movements are essential. We think we offer a good value.

Mark Streeter: I think it's pretty clear, and you've already alluded to this that the competition for yield, the new money that's coming to the market has been focused on the most commoditized aircraft product. Sale lease backs, that's where lease-rate factors have drawn from historically, 1% or even -- 1% to something in that 0.7 range or something like that on the newest sale lease backs. Have we seen any creep into the middle of the market or any of this new money impacting the yield available for you in your sweet spot? Or has it been just isolated to the simplest, easiest to get your arms around type product?

Mike Inglese: Probably the simplest way to answer that, Mark is things change all the time. If you look at the activity that we've had over the past few years, we've migrated from new aircraft and sale-leaseback yields to used aircraft to new ones and back again. The competition for mid-age aircraft and current- generation aircraft is, I would say, episodic and it's tied to the availability of debt. So when debt conditions are more robust and more accommodating for used aircraft, then we face more competition and vice versa.

Mark Streeter: Got you, last question for me. Scale is obviously something that's very important to the rating agencies and I know it's still your goal to get to investment-grade and so forth. Can you just make any comments about there are several portfolios or platforms that are still available or will become available later this year? And you -- is M&A something that's on the table? I know you're not going to talk about specifics, but are you at least looking at some of these platform opportunities? Any color you can give us would be helpful.

Ron Wainshal: I think we always try to be involved in whatever is available, whether it's one airplane or a platform. That's true today and it has been true consistently. Whether we -- M&A is really, really hard to gauge, and there's been -- we're probably part of this general view that consolidation is going to happen at some point or another, but it's really hard to plan out. We like to be part of the conversation. Whether that turns out to be something we do, I have no idea. But whatever we do, we'll be very disciplined. We're in it for the long haul, and I think the last thing we want to do is to take what we think of as a fundamentally well-positioned platform and take it astray just for the sake of size. That's something you should take away.

Mark Streeter: Thanks for your time.

Operator: We will go next to Kristine Liwag with Bank of America Merrill Lynch.

Kristine Liwag: Hi guys. My question is more about fleet strategy. So you've been clear about your value-driven fleet strategy of buying into weakness and selling into strength. But the aircraft that you purchase this quarter; I'm mostly focused on the 5- to 10-year-old current aero bodies. And with your commentary, it seems like this asset class remains strong because of cheap fuel. Can you just help me bridge the gap and help me understand why it's an attractive time right now to buy this asset class?

Ron Wainshal: Part of it is cheap fuel. These aircraft are very cost competitive. When we buy these aircraft, the -- well, first, let me step back and say when you buy an aircraft, for the economics to make sense, you have to assume that it's going to last a while, right? And it's particularly true when you buy a new airplane. Think of it as a -- a lease as an aircraft investment as a series of lease cash flows over time, their net present value back. So if they're buying something that's into its second lease or well into its first lease or what have you, the residual ultimate disposition value is a lot closer. When we underwrite a lot of these leasing purchases, we're thinking about, well, what happens if this is the last lease ever? I don't think it will be. The downside scenario there in terms of yield, it ends up being pretty attractive. I think the market doesn't share that view, and I'm actually quite happy about that. We see excellent value on a risk-adjusted basis for these aircraft, and nobody knows what fuel prices will be like when you look out 5 or 10 years when these leases come off. But the way we have sensitized that from our economic modelling perspective leaves us feeling pretty good.

Kristine Liwag: When you say that the market does not share this view, is this because these are getting close to end-of-the-line aircraft or is it because the market doesn't believe that oil is going to be this cheap forever? Or is it higher residual value risk once the next gen becomes a much bigger piece of the fleet?

Ron Wainshal: I think there's a general -- if we consider what we buy versus what every other big leasing company buys, we're the only ones that are willing to consider used aircraft. So that's the origin for my -- it's an observation. What the rationale is probably varies. I think it's always easier from a technical perspective to buy an aircraft that it's new. It's always easier from a financing perspective to buy something that's new. And it's probably a more simple and straightforward sell to your shareholders or ultimate investors that we bought new and it's shiny and good, and therefore, it's simple. But for us, we don't have a problem with complexity. We don't have a problem taking a view that's not shared by everybody else, and actually we prefer that.

Kristine Liwag: And maybe one more, in the quarter you purchased aircraft in spec from the Brazilian order stream. In the past few weeks, you've seen Southwest defer some 737s. Can you discuss the pipeline for more transactions like this being speculative on the order book and swooping in last minute? And how do these opportunities compare to a year or two ago?

Ron Wainshal: I wish I could predict those. These are really opportunistic, and I couldn't have told you a month in advance of the deal happening it was going to happen. There are not that many of those, so we're not counting on that as being the main source of our business. But as I mentioned during the prepared remarks, we also found another opportunity for two new A321s that was also what I'll call [ph]. And the reason for it was the origin of that field is different than the one coming out of Brazil. This was one where ECA financing was suddenly not available, and I couldn't have predicted that. But as we travel around, we try to be opportunistic and open-minded and react but this is here and there business, unfortunately because I like it.

Kristine Liwag: Great, and the frequency of these opportunities popping up compared to previous years?

Ron Wainshal: I think it's hard to generalize. If I had to try to generally when you have more volatile times, you might see more of these. But I wouldn't be modelling anything in, if I were sitting in your shoes.

Kristine Liwag: Great, thank you, very much. That's very helpful.

Operator: We'll take our next question is from Christopher Nolan from FBR & Company.

Christopher Nolan: A quick follow-up; for the $400 million secured loan facility, what is the net book value of the collateral that secures that?

Mike Inglese: The value is probably in the neighbourhood of 70% or so there, Chris.

Christopher Nolan: So it's roughly 300 -- 350 of aircraft securing $400 million in bank?

Mike Inglese: When the full $400 million is draw that will represent about 70% of that the net book value of the assets.

Christopher Nolan: Okay, I'm thinking the reverse. Okay, thanks, Mike.

Ron Wainshal: By the way, just to clarify, that's being drawn down in tranches.

Christopher Nolan: Okay, that's fine.

Operator: There are no additional questions in the queue at this time.

Frank Constantinople: Thank you for your time today. If you have any follow-up questions, feel free to call me at 203-504-1063. Have a good day.