Operator: Please standby as we are about to begin. Good day everyone, and welcome to the AirCastle Q4 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Frank Constantinople, go ahead sir.

Frank Constantinople: Thank you, Annie. Good morning everyone and welcome to AirCastle Limited's fourth quarter 2017 earnings call. With me today are Mike Inglese, Chief Executive Officer; Aaron Dahlke, Chief Financial Officer and Mike Kriedberg, Chief Commercial Officer. We will begin the presentation shortly, but I would like to remind everyone that this call is being recorded and a replay will be available through our website at www.AirCastle.com, along with the earnings press release and our PowerPoint presentation. I would 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 will direct you to AirCastle Limited's earnings release for the full forward-looking statement legend. And we will now turn the call over to Mike Inglese.

Michael Inglese: Thanks Frank. And welcome to AirCastle fourth quarter 2017 earnings call. Today I'm going to discuss our results for the year, current market conditions and our strategy for 2018 and beyond. I will then turn the call over to Aaron Dahlke to cover our financial results for the year and the fourth quarter after which we will open it up to Q&A. During our discussion today I would like to once again summarize the AirCastle’s investment thesis. Our industry has solid fundamentals, air traffic growth remains very strong and continues to significantly outpace global GDP growth. Globally aircraft leasing demand also remain very strong. Our balanced approach towards capital allocation is focused on long term value creation for shareholders and includes a solid dividend yield alongside prudent opportunistic growth. We have generated strong historical cash returns for our investors and are optimistic about future. 2017 was a great year and we closed particularly active fourth quarter, for the full year we earned a $148 million or $1.87 per diluted share with adjusted net income of $170 million or $2.15 per share. It was a very busy year for our company. We successfully transitioned AirCastle’s leadership while hitting our financial target and we successfully placed seven wide-bodies on long term leases. We also sold another three wide-bodies along with four freighters and our last six classic aircraft. Our disciplined approach towards growth resulted in about 3.5% increase in the net booked value of our aircraft portfolio versus the prior year even reflecting an active sales campaign. We remain focused on growing the business in a conservative accretive and profitable manner and for 2016, we recorded a solid cash ROE of 15%. During the fourth quarter, we acquired 40 aircrafts for $920 million and sold eight aircraft for $70 million. Of proceeds and recorded a gain of $19 million. For the year, we acquired 68 aircraft for $1.6 billion, sold 37 for over $830 million producing a full year gain on sale of $55 million. Our strategy is to continue to grow in a disciplined, focused and accretive manner. In a competitive market, we achieved strong investment results by finding situations which play to our competitive advantages of speed and execution uncertainty. Our fleet transformation over the past several years has been significant and we have intentionally increased our investment in mid-age narrow-body aircraft. Our total fleet of owned aircraft being 224 units at the end of the year, 192 of those are narrow bodies. This represents 66% of the total net book value of our fleet versus 34% five years ago. While our fleet aims increased modestly over the past year, this is a natural result of acquiring aircraft where we see the best available risk adjusted returns. At year-end, wide-bodies represented 29% of our net book value, two-thirds of which are A330s. At the end of 2015, wide-body aircraft represented 40% of our fleet NBV. I'm also pleased to report that during Q4, we signed agreements to extend our transition to four 777 and five A330s leaving us with just one wide-body to place before 2020 that aircraft is an A330 with the late 2019 lease expiry. As of today, our remaining 2018 placement task consists of four narrow-body. With respect to our E-Jet order, which is now begin delivering until mid-2019, we have three or four active campaigns with Embraer involving a number of airlines that are interested in these high quality regional jets. Although progress has been slower than anticipated, we are involved in more active discussions today and have seen more of interests from airlines very recently. Our credit metrics continue to improve during 2017, and we were placed on positive outlook by S&P last May for potential upgrades to investment grades. As we continue to strengthen our credit profile, we have been improving our bottom lines by pushing down our debt costs. We are confident that as along with our active portfolio management approach we will drive increases in our sustainable earnings and cash flow over the long term. Given our philosophy of providing a regular return of capital to our shareholders, AirCastle's Board approved our 47th consecutive quarterly dividend of $0.28 a share payable on March 15. The dividend yield on shares is currently around 5% since 2011 we have increased the dividend eight times from $0.10 a share per quarter to $0.28 per share. AirCastle is well positioned in its unique and profitable role in the aircraft leasing business, with a deep and experienced management team, a conservative capital structure, we can be nimble and opportunistic when profitable transactions are presented. As the largest permanently capitalized investor in mid-age aircrafts in the industry, we have the ability to adopt quickly to protect some market dislocations plus we are not tied down by large investment commitments. Let me now spend a few minutes on the current business environment. Most recent IATA aircraft results just came out for full year 2017. They demonstrate continued demand growth very strong at 7.6% year-over-year, in addition load factors came in at very high level over 81% for the full year. While growth rates vary significantly around the world, airlines in general have been performing well. Asia continues to be strong benefiting from relatively robust economic performance and demand stimulus facts from the low-cost carriers. Europe, North America and Latin America are also reporting good growth with high load factors. According to IATA global airline profits exceeded $30 billion for the fourth time in history. Although fuel prices have increased approximately 25% from the end of 2016 through last week though they are still down approximately 40% compared to where they were in 2012. Moderate fuel prices are positive for lessors in general and particularly good for AirCastle’s fleet of mid-age current technology aircraft. This is tangibly demonstrated the demand we have seen for aircraft that we have sold over the past few years, the gains we have been able to generate from those sales and the strong lease placement efforts and expansions we have seen in the narrow-body market. Turning to rental rate mid-age narrow-body rates remain solid and current generates narrow-body demand remains very good, though demands for wide-bodies continues to be somewhat softer. With respect to aircraft values prices have been rising due to traffic growth financing availability and lower interest rates, strong traffic growth and low oil prices tend to increase useful economic life of current generation aircraft while financing availability and lower interest rates improves the affordability of investing in aircraft in general. Over the past year and particularly in Q4, we continue to find good opportunities to selectively invest. Approximately two-thirds of $1.6 billion that will be closed during 2017 involves transaction with other lessors to help them manage their less fee diversification, fleet statistic and fleet age target. About half the aircraft we acquired during the year or acquired on what we consider to be their last leases and we priced the part out, which we believe dramatically reduced as a residual value risk associated with these investments. During the year, we also worked with several airlines to help them bridge the gap for taking delivery of new aircraft on the order from OEM while maintaining enough capacity to satisfy current air traffic growth. Fleet planning flexibility is one of the main reasons airlines lease aircraft and our ability to close quickly, provide execution certainty and finance mid-age aircraft is an advantage against smaller competitors where we rely on structured finance markets to raise capital. As we look ahead, we remain confident in the fundamentals assumptions that underlie our flexible opportunistic investment approach. There strong underlying fundamentals driving the demand for air travel and aircraft and we expect that air travel demand will continue to grow over the long term net multiple of GDP, that demand for aircraft leasing will grow with that demand, that suitable investment opportunities will be available and that those opportunities will vary overtime. That said, we continue to find investments that we expect to deliver shareholder value growth overtime and we will continue to sell aircraft to improve our portfolio mix, reduce residual value risk and recognize gains when appropriate. We plan to continue to take advantage of the strong demand for mid-age aircraft and we anticipate that this strategy will contribute it positively through 2018 results. As indicated, we have made great progress in a number of areas over the past year, we have worked through a leadership transition, we continue to grow in a disciplined fashion, we have improved the overall quality of our fleet and we continue to share that profitable growth with our investors. 2017 was a very successful year and we are well positioned going forward. With an outstanding team and platform we remain focused on managing for prudent growth in a competitive investment environment. With the conservative capital structure that we believe will enable us to drive increased value overtime. I will now turn the call over to Aaron to briefly review results for the full year and the fourth quarter.

Aaron Dahlke: Thanks Mike. As Mike stated earlier, AirCastle had a very successful 2017. For the full year, we earned $148 million, or a $1.87 per diluted share with adjusted net income of $170 million or $2.15 per share. We acquired $1.6 billion mostly narrow-body aircraft and sold 834 million of assets at a healthy profit. To our disciplined investing approach and portfolio management efforts, we continue to increase our sustainable earnings base, while certainly reducing our exposure to leave you with higher risk aircraft. In the fourth quarter, lease rental and finance lease revenues were $179 million down 6.5% or $12.4 million year-over-year, due to the impacts of lease transition and extensions and late fourth quarter asset acquisitions. As Mike mentioned earlier, we transitioned or extended several wide-bodies represented approximately 11% of total net book value. Total revenues for the quarter were $177 million, down $27 million or 13% from the previous year primarily driven by lower maintenance revenue and $12 million in lower lease rental finance revenue of $12 million. The decrease in maintenance revenue was due to the fewer lease expiry in the fourth quarter of '17 versus the fourth quarter of '16. For the full year, total revenues increased by $23 million or 3% due to higher maintenance revenue of $22 million and higher lease rental and finance fees revenue of $4.6 million. For the quarter, net income was $55 million and adjusted net income was $57 million down $12 million and $13 million respectively year-over-year. The change for both mainly reflects lower total revenues of $27 million partially offset by $6 million peak recent depreciation expense and lower interest expense of $11 million. For the full year, net income was $147.9 million and adjusted net income was $169.6 million both roughly flat. Adjusted EBITDA for the fourth quarter of 2017 was $184.6 million versus $220 million last year due to lower maintenance revenues of $12 million, lower lease rental and finance revenues of $12 million and lower gains from sale of flight equipment of $5 million. For the full year adjusted EBITDA rose 4.4% to $801.6 million from $768 million in the prior year. Maintenance revenues were $225 million higher and gains on sales were higher by $60 million and lease and finance fees revenues increased $4.6 million driven by net fleet growth. These improvements were partially offset by higher cash SG&A of $6.5 million due to an increased compensation and related employee headcount. Interest expense for the quarter was $55.9 million, $241.2 million for the full year representing decrease of $11.3 million and $14.4 million respectively versus the prior year. interest expense declined primarily due to the repayment of $500 million and 6.75 coupon debt in April that was replaced with the $500 million [indiscernible] coupon debt issued in March. Depreciation for the quarter declined by $6.1 million and that was primarily due to the timing and number of aircraft sold during the year. In the fourth quarter, we recorded a deferred tax benefit of approximately $4 million related to the transfer of aircraft out of Singapore to other jurisdictions and a reduction in the Singapore income tax rate from 10% to 8%. We have also recorded a differed tax benefit of $2.8 million related to a rate reduction in the U.S. from 34% to 21%. For the full year, our income tax provision totaled $6 million which represented an effective tax rate of 4%. Excluding these adjustments our effective tax rate was approximately 8.8%. At the end of the fourth quarter, we owned 224 aircraft with a net book value of $6.7 billion and for the 195 on encumbered aircraft for the net book value of $5.3 billion. In addition, we managed another 12 aircraft with net book value of 641 million through our joint ventures. For the fourth quarter of 2017, our portfolio lease rental yield was 12% and our net cash interest margin was 8.63%. Cash ROE for 2017 was 15%. Turning to our capital structure. At year end, we have had $212 million of unrestricted cash, $635 million of unused revolved capacity. Total borrowings were $4.4 billion including $3.5 billion, our 80% of unsecured debt. The weighted average coupon on our debt at year end was 4.9% and weighted average debt maturity was 3.5 years and our net debt to equity ratio was 2.2 times. We are committed to allocating capital efficiently between the creative investments and return of capital to shareholders. On February 9th the Board approved a $0.28 per share dividend payable on March 15th. We have now paid out more than $768 million in dividends since going public, in 2006, and we have increased our common dividend eight times since 2011, from $0.10 to $0.28 per share per quarter. Since 2011, we have re-purchased approximately 190 million of our shares at an average cost of $13.29 per share, and we currently have a share repurchase program in authorization which we can use opportunistically of the remaining balance totaling 96 million. You can find guidance elements in our first quarter of 2008, in our earnings release and earnings presentation also which are posted to our website this morning. I would like to provide some background and concept on the guidance. Our maintenance revenue is expected to be down significantly in 2018 due to fewer scheduled lease transition with only four narrow-bodies remaining to place in late 2018. This is a result of our lease placement success which is ahead of schedule and a higher level of lease extensions which results in differing maintenance revenue until the new lease expiry date. We are guiding to a combined lease rental and finance lease revenue of between $182 million to $187 million which is up slightly on a sequential basis versus the fourth quarter. And which takes into account of fourth quarter’s large acquisition volume, sales activity and a straight-line revenue impact from long term lease extensions with our wide-bodies. To summarize, 2017 was a strong year. We further strengthened our franchise by acquiring 68 attractive mid-age aircraft, 67 of which were narrow-bodies and profitably selling 37 aircraft to produce gains and continue to de-risk our portfolio. We achieved a strong cash ROE and ended the year with [indiscernible] improved fleet profile. In the process we also returning significant capital to shareholders increasing our dividend by 8% during 2017. Our cash flows remain strong, our future capital comments are modest. Our capital structure is flexible and conservative and we continue to maintain good access to additional financing. All of this positions us well to see future market opportunities in a disciplined fashion across the commercial aircrafts for these new markets. And with that operator, we are happy to open up the call for Q&A.

Operator: Thank you so much. [Operator Instructions]. And we will take our first question from Gary Liebowitz with Wells Fargo Securities. Please go ahead.

Gary Liebowitz: Thank you operator and good morning gentlemen. Michael, I was a little surprised that the average age of the fleet went up again during the quarter. Can you talk about what the profiles of planes that you have been adding? Looks like and is it similar to what is in the pipeline?

Michael Inglese: Yes. So when we look at 2017, I think the average age of the aircraft we acquired were somewhere around eight to nine years across the spectrum. And also frankly, we sold our way out of a handful of younger wide-body aircraft across the year and that's kind of the main drivers. As we said earlier, we are seeing better value in mid-age narrow-bodies. And frankly we are trying to stay away from the sort of last off the line effect of current technology as we think about moving the business forward. So where we are today - what is in the pipeline is a mix of different assets, I don't want to get into the specifics yet, but in terms of what we saw last year and what we expect to see this year, I think it's probably going to be in that eight plus year range of assets that we think make sense given where we see the best yields in the context of our own cost of capital.

Gary Liebowitz: Thanks. And my follow up is, your receivables and it's still not a very large number, but they more than doubled versus September end. Is that HNA related and maybe just give an update evaluation exposure.

Michael Inglese: Sure. The year-end receivables was not HNA related. We had a couple of customers who unfortunately took the liberty of using these working capital across year-end. I can tell you today that receivable numbers well below half of what it was at year-end and there is roughly about $0.5 million that's more than 30 days today. Some of which is related to our very modest HNA exposure where across the HNA family we have three narrow-bodies on lease and they have been running somewhere around monthly in the context of the issues that dealing with across the HNA family.

Gary Liebowitz: Okay. that's what we have been hearing from other lessors. Thanks, I will get back into queue.

Michael Inglese: Thanks, Gary.

Operator: [Operator Instructions]. Next we will hear from Catherine O'Brien with Deutsche Bank. Please go ahead.

Catherine O’Brien: Good morning gentlemen. So given the extended Airbus delays. Have you seen any increase in demand to extent the aircraft you have coming off lease over the next couple of years. And then kind of a related question to that, are you concerned that some of these short-term extension on aircraft due to these delays could put pressure on the leased aircraft values once the Airbus gets totally back on track?

Michael Inglese: Look I think we have seen through the throughout the past year and expect to see in the short-term continued interest in extending the leases on current generation technology, some of which is related to the Airbus and the GTF issues some of which is also related to where the price of fuel is and what the economics are for airlines in managing their fleet as it exist today and their expected growth. So between those two effects, we have seen continued interest in mid-age aircraft and at some point and we believe we have priced in how this will play out over time. Of course current technology in 10 years you will have the inflection point of more NEOs and MAXs in the market than current technology aircraft. But there is a pretty long life scope for getting from where we are today to somewhere in the middle of the next decade, and we expect to continue to see strong demand for current technology aircraft.

Catherine O’Brien: Thanks for that color. And then just one more. So do you think that higher interest rates necessarily means higher demand to lease aircraft if that financing more expensive? And then do you think that answer is different between a customer looking to purchase and/or lease new versus mid-age aircraft?

Michael Inglese: Look if the interest rates are going to rise as it appears they will for the reason of global economic growth ultimately I think that’s a good thing. I think it will raise the cost of financing for people around the world. I think it will also eventually raise lease rates asset values over time. And so every airline thinks about it differently and the math between the new versus existing technology, there is more than just fuel benefit there is the capital cost there is the fuel and there is the operating issues that airlines are looking at in the context of what is the total cost of ownership for foreign asset that I'm looking to add to my business. So I don't know that it's going to necessarily change decisions in the short-term, but ultimately it's something that every business is going to need to factor into how they are thinking about capital deployment and efficiently.

Catherine O’Brien: Okay, great. Thank you so much for the time.

Operator: And from Cowen we have Helane Becker. Please go ahead.

Helane Becker: Thanks operator, hi guys thank you for the time. Mike as you think about the rest of the year and any financing that you might have to do, do you think that or are you seeing the market any concerns about your ability to raise the capital at or given what is going on with HNA?

Michael Inglese: No look we don't have any short-term plans for raising capital we do have a lot of unused revolver capacity available. I do have a bond maturity late this year of $400 million that we will take care of in due course. But in the context of what we have seen so far in the market we haven't seen anything other than perhaps there has been some liking out in yields on the lessor’s bonds in the marketplace in the last month or two. But it's not of a magnitude or any other inkling that makes particularly concerned at this point in time. But obviously it's something we need to keep an eye on as we think about new investing we obviously have to think about our incremental cost of raising capital toward that growth.

Helane Becker: Okay, great. Thank you very much.

Operator: Next is [indiscernible] from Credit Suisse. Please go ahead.

Unidentified Analyst: Thanks for taking my question. Can you guys characterize the environment for larger portfolio acquisitions or even whole platform acquisition, can you described your philosophy for evaluating them as potential acquisition opportunities?

Michael Inglese: Sure. So there is rumor to be a few portfolios out in the market today. Frankly, we try to look at everything that's in the market to get an understanding of what is there and ultimately even if you are not an active participant or you are not a winner you get some intelligence that helps you to think about the state of the market. When we think about portfolio purchases it's like anything else. What is the totality of what you are buying, what do we think the value proposition is and do we think that buying those assets is going to produce the return at higher than like weighted average cost of capital and running that business. And so the idea that where I am today that I would wanted to still buy a bunch of assets to still I can say my assets are bigger that I thought was dilutive to my shareholders would it make a lot of sense to me.

Unidentified Analyst: Okay. And kind of what are the key factors that are driving I guess the lack of acquisition opportunities and what would it take to see those factors create opportunities for you guys?

Michael Inglese: I'm not sure what meant by lack of acquisition opportunities? There are still all these assets for sale in this business, whether they come in big buckets of 50 airplane or 20 airplane that varies overtime. And sometimes the time business is are for sale. So as I said, we look at almost everything that transact in the world that we can. And we haven’t found an opportunity that we thought made sense for us in any significant scale around things that we are talking multiple billions of dollars or adding platform skills. We don't need platform skills.

Unidentified Analyst: Thank you.

Operator: From Compass Point we have Scott Valentin. Please go ahead.

Scott Valentin: Good morning everyone, thanks for taking my question. Just with regard to the pipeline. I guess you mentioned $540 million. I assume that all won't close in the first quarter, it’s probably over two quarters. Is that the right way to think about some portion in the first quarter some portion in the second quarter?

Aaron Dahlke: Now actually Scott, that's a good point, frankly the existing pipeline - very a little of it will actually probably close in the first half of this year and the bulk of that $500 million is second half and probably pushing late third quarter and into the fourth quarter.

Scott Valentin: Okay. And then just as we think about the whole year, I think in the past you guys have talked about kind of $1.5 billion has being a target for annual acquisition, is that still fair kind of rough target to use that something you guys kind a think about?

Michael Inglese: Look nominally we have invested about $1.5 billion per year for each of the last five years. It's reasonable to think that we will source opportunities, but it's never a guarantee, but we are always going to look out for things that can make sense for us. And for the things that make sense you would prepare to take our leverage up a little higher to drive a better earnings and higher ROE for the business as well.

Scott Valentin: Okay. And then just one final question. On Page 14, you guys have currently yield and the cash net margin. Just wondering yield is kind a down overtime as rates have come down probably competition. The margins are relatively stable for the last two years. How do you see that shaping out going forward as rates have moved up? I mean will you able to increase lease yields given the competitive environment. And then on the foot side, imagine cost-to-funds up a little bit between higher risk rates plus wider spreads I'm just wondering how you see that kind of cash margin kind of shaking out over the next call or 12 months?

Michael Inglese: Yes, so when I think about the complexion of the portfolio and the types of opportunities we are seeing sort of revenue yield of acquisitions we have done in the last year or so and what I would expect to see going forward are probably between 11% and 12% range in terms of the revenue yield. When we look at our funding cost our maturity this year is four and five [indiscernible], hopefully we can do something inside of that in the context of replacing that but that’s a TVD. And then some of my future maturities are still at relatively high coupons in the context of what we have been able to achieve overtime. So in the next 12 month its probably I would say flat and maybe a little downward pressure on net interest margins, but overtime it's going to depend upon how the interest rate environment plays out in a growing economy and what the timing is or how the yields available on these assets that reflect that movement.

Scott Valentin: Okay. Alright, thanks for the help. Thank you very much.

Operator: We will next hear from Jamie Baker with JPMorgan.

Jamie Baker: Hey good morning Mike and everybody. Given the growth opportunities that you have opined on today $1.5 billion or so, how do we think about leverage? How much is too much in your mind?

Aaron Dahlke: Look, as I said depending upon the nature of the opportunities we think we could run this business at somewhere between 2.5 to three times overtime and have a very solid well diversified low beta operating model with the asset that we own. We haven’t seen those opportunities just yet, we have been a very big seller in the last few years so our sort of net growth has been more modest and consequently our leverage has stayed down, but we think with we have put the right opportunities and at the right price we think we could run this business with a little bit more leverage than we have historically.

Jamie Baker: Okay, that’s helpful and just a quick follow-up. Any new thoughts or relative progress in terms of S&P rating?

Michael Inglese: So look we announced our year end results today and we will be visiting with all of our friends at the rating agencies over the course of the next few weeks to a month then we will be pushing hard to get our friends at S&P to be where we think we should have been a long ago. So I can't tell you my chances of success, but its front and center and what we are focused and join the drive to what we think the right answer.

Jamie Baker: Got it, understood. Hanks so much for the remark and I appreciate that.

Operator: From Citi we have Kevin Christy. Please go ahead.

Kevin Christy: Maybe you could provide a little bit more color on the 14 aircraft commitments in 2018 or maybe you won’t. But when I take the 540 divided by 14 its pretty significant number so just wondering if you can give more color about the aircraft there?

Michael Inglese: Sure so it’s a mix of mid-age and narrow-bodies that are little younger than we probably did last year and its some newer aircraft as I said all turns in the back half of year. So I'm not sure I want to get into more color beyond that now, but the back end stuff is newer stuff and the front end stuff is more mid-age narrow-bodies with less lease and credits that we currently don’t have any exposure with.

Kevin Christy: Terrific, thank you. You talked about the interest rates and the effects of interest rates in the airlines looking at their capital allocation decisions. And how many of your customers, do you think are actually making a buy versus lease decision as appose to a leasing with you versus leasing with someone else decision? Because my sense of it is, is that a lot of those airlines are not in the position given their growth rates or other factors to actually be buying?

Michael Inglese: Yes, I would agree with you that across the world the vast number of airlines are looking at what is the best lease opportunities rather than some of the majors here in the U.S. who are doing or some of the majors around the world who are doing lease versus buy analysis.

Kevin Christy: Okay. Thank you.

Operator: From Bank of America Merrill Lynch we will hear from Kristine Liwag. Please go ahead.

Kristine Liwag: Hey good morning guys. Freight traffic was up 9% last year, the strongest demand since 2010 from IATA. And it sounds like there is strong positive momentum for freight. With such a strong backdrop, I guess I'm surprised that your net sellers of freight aircraft this year. Can you provide more color on how you see these assets classes? And also what kind of return you were able to garner from the freight aircraft that you won through the course of your ownership?

Michael Inglese: Sure. So when we think about our decision to try to exit some of the freighters last year Christine, frankly it was we were looking at our first leases coming off on some [ERF] (Ph). Looking at our overall exposure and frankly we thought a bit as a way to hedge our debt, the freight recovery that appears to be underway. So we still have a handful 747 main deck craters on lease with AirBridge cargo well into the next decade and we will see the benefits of that in the context of AirBridge's results if the freight recovery is sustainable and moves forward as people are talking about. Now, but given what we had and what we saw as the market prospects 12 months ago in light of the conditions, then we thought it was prudent to hedge our best and sell off the few of those planes which at the time resulted in the impairments we took earlier last year. And net-net, if I look at our total freighter investment thesis over the course of our history and looking our expected returns, they are probably somewhere in the neighborhood of 5% plus returns on our cash investment, they were not losing money if you will. But 5% is not necessarily my cost of capital either. So we did okay, but not fabulous.

Kristine Liwag: Thank you for the color. And maybe what is your appetite for purchasing assets? Granted if they come available from HNA Group's Avalon business. And would you be willing to lever up higher than three times if the right opportunity comes along?

Michael Inglese: So to the extent that HNA or Avalon advertising assets in the marketplace, we are certainly looking at some, we haven't done any transactions with them in the context of that exercise yet, it doesn't mean we might not in the future. And in the context of overall leverage, if there were some really compelling reasons to venture above three times in a way that we thought we could manage that down overtime and change the dynamic and strategic position of our business, it's certainly something we would consider seriously.

Kristine Liwag: Great. Thank you very much.

Operator: From Goldman Sachs, we have Justine Fisher. please go ahead.

Justine Fisher: Good morning. I have a question about the outlook for acquisition opportunities in the secondary market over the next few years. And one of the issues that we have been hearing about over the last couple of months is what will happen to the industry in the early part of the next decade when a lot of lessors recently got into the business and may have paid high prices for assets with aggressive visual assumptions just kind of get into it, and one has started to selling those assets to keep [indiscernible] for similar reasons as a lessor that you have been buying portfolios from over the last year. So when those newer lessors start to sell assets there might be a miss match between where they are willing to sell and where buyers are willing to buy just on the assumptions they made when they were underwriting those yields. So as a lessor who is focused on his growth pipeline in the secondary market, how do you see that playing out? I mean do you expect liquidity in the secondary market to decline because those lessors won't be able to sale as many assets, how does that play out for someone like AirCastle in terms of your pipeline?

Michael Inglese: So look when I think about who I have been buying aircraft from in the past two or three or four years its none of those people who you think might try to sale planes in three or four years that probably in many people's collective you may be paid too much when they bought them. So to the extent that the people who we have conducted business with over the last five to 10 years all have very big order books and will be recycling their own capital and will be managing their own fleet through age targets, et cetera. We think there will be a adequate investment opportunities for someone of our scale to do what we think make sense in that context, whether its pick somebody who is based in Asia who paid a lot for assets and wants to tried to sale them if they don’t sale them at realistic prices they won't get sold.

Justine Fisher: Okay, so there will still be enough liquidity, but maybe not as much liquidity in the assets as the market might expect from the size of the installed base out there just because some of those planes just may not find buyers.

Michael Inglese: Perhaps, yes.

Justine Fisher: And then I just wanted to clarify on your net interest margin comment going forward. I know you were talking about the opportunity to refinance some of your bonds that were issued a few years ago at lower rates. But then aside from that I mean I'm just looking at the cap restructuring in your slide presentation, so you have got your 6.25 in 2019 and higher coupon runs as well as your 753s in 2020. But aside from taking out those bonds what else is going to make that net interest margin go higher. I just wanted to clarify. I mean do you see that happening from lease rates at all or is it really just borrowing cost?

Michael Inglese: Look and when I think in the short-term is just borrowing cost in the next 12 months are going to be hard to move because where we are in our maturity structure, but overtime we still have a pretty high coupon things out there that we believe we will do better on. And then to that leads you with lease yield. And as I said if interest rates are going to go up, because the world actually has a global economy that’s growing then I think perhaps lease rates in aircraft values will follow. There will be some lag, I can't tell you how much, but I would expect in time that you will see opportunities as the financing cost increase, I would expect lease rates and values to increase and we will see how that spread plays out overtime. And then the third element for us is if we get enough grade to our credit rating we would expect to see some additional benefits from the financing cost as we roll forward over the next few years.

Justine Fisher: Okay, great. Thank you very much.

Operator: We will next hear from Jason Arnold with RBC Capital Market.

Jason Arnold: Hey guys good morning. Just curious if you could comment on the secondary market demand and the equation on the sale side. Just curious if you can comment on maybe the entities you are selling into and then also maybe on the aircraft kind of older younger, wide-body versus the narrow kind of where you have seen opportunities returning your fleet. Thank you.

Michael Inglese: Sure. In the past couple of years, we have sold that some of the folks who've been more active in the mid-to-back half life sector in terms of [ADS field] (Ph). We have also been selling to a number of Asian investors and funds based in Asia who are looking to increase their exposure to U.S. dollar assets and aircraft assets in particular. So it's kind of been a mixture across those two subsets of people and across those folks differing investors have different appetite for narrow-body or wide-body. And so as we have been looking and pruning our own wide-body exposure overtime, and we do have one more in hopper for sale that's included in our sort of gain on sale guidance for the first quarter, there is another wide-body that have a contracted sale and we expect to close in the first quarter.

Jason Arnold: Okay, superb. Thank you very much.

Operator: We have now [indiscernible] with Baird & Company.

Unidentified Analyst: Thank you very much. Mike we have heard for the last several quarters, that many of the airlines who traditionally would purchase new aircraft are now electing to go into the used market. Have you seen any incremental demand from those carriers, and has it added to the liquidity of the mid-age market?

Michael Inglese: Yes, look I think we had seen the airlines who are more willing to look at existing assets in terms of adding to their fleets and some fleets in the context of what they are doing around their business. And it certainly has increased liquidity possibilities sort of on both sides of the equation in the context of mid-live assets.

Unidentified Analyst: And has that helped to kind a change your posture from moving towards the older aircraft. Because maybe there is better values there because of the incremental demand or are they unrelated?

Michael Inglese: I would say they are marginally related, the primary driver for us is where we see value and if you will the onward sale of mid-aged assets in the context of additional buyers is something we think about, but it's rarely the underwriting case upon which we decide to make those investments.

Unidentified Analyst: Okay, great. And quick follow-up and much more of an administrative question. I just want to confirm that all of the HNA entities that which have leases with you, they are all current, would it be correct?

Michael Inglese: As I said before, they have been running generally about a month behind. And for us as I said it's three narrow-body aircrafts spread across two their airline affiliates. And over 38 exposure to airlines is very modest at this point in time.

Unidentified Analyst: Okay. And you still have I assume deposits that you can draw upon. And I also assume that you have not drawn upon those deposits at this point, would it be correct?

Michael Inglese: That's a reasonable assumption.

Unidentified Analyst: Okay. Thank you very much.

Michael Inglese: Thank you.

Operator: [Operator Instructions]. We will take our next follow-up from Gary Liebowitz.

Gary Liebowitz: Thanks Mike. On your Embraer order how should we be thinking about escalation risk. It seems like if we were seeing inflation pickup maybe some of those commodity indices start to pickup. Are you exposed there to the rising commodity prices or labor prices in your Embraer contract?

Michael Inglese: I think in the context of our Embraer contract our escalation factors they are not straight forward some CPI index necessarily that an outsider contract, but like most in the OEM contract there is a an escalation break point and then there is some sharing and things of that nature. So it's an issues we keep our eye on, but it's in the context of relatively normal construct for an OEM contract.

Gary Liebowitz: Okay thanks. So just you mentioned earlier that 11% of your book value those wide-bodies that got extended in Q4 I'm just trying to estimate what the revenue impact might have been. Do you have a range or an average of the declines in the lease rentals that you are seeing on those wide-body aircraft on their extended leases versus the prior ones?

Michael Inglese: Yes. I think the comment was that during 2018 we had some aircraft that represented about 11% I don't think it was all in Q4. And to be clear the A330s that we signed new agreements were one that came out of Singapore that are on short-term leases to tap that once the tap lease is expired we will go to what we believe is a very strong credit with very little investment from us for a long-term. And so we are very happy about those and those sort of rent resets happened already when they came out of Singapore and went to tap. The 777 that we talked about for the fourth quarter was a predominantly the once we have with LATAM that have been extended for a long term and again the extension - when you do an extension it causes immediate straight lining effect of those assets so even though the original leases didn’t expire until late 2018 and into the middle of 2019 now that we have done those extensions the new math including the extension period start to drive the way. It doesn’t change the cash profile through the original expiries, but it changes the revenue recognition profile. And I think if I remember correctly Gary you published a report a week or so ago [indiscernible] video around 777 lease rates and I think that can give you a reasonable color about the state of what those look like going forward.

Gary Liebowitz: Okay thanks. Just one housekeeping for Aaron, you mentioned the maintenance revenue expect to be much lower in the first quarter and I guess throughout 2018, if you were not chose having to model full-year maintenance revenue is something like $10 million a reasonable number?

Aaron Dahlke: We don’t give our full year guidance on that Gary. But you can take of what we did in the first quarter and…

Gary Liebowitz: So there is something that’s less than 10 million.

Michael Inglese: Look, 10 is probably a reasonable number maybe a little bit more but if you look at our history over the last four years it ranges from like 34 to 90. It's not going to be anywhere near those big numbers and its going to be below that smaller numbers. That’s a good way to think about it.

Gary Liebowitz: Thank you very much.

Frank Constantinople: Thanks Gary.

Operator: It appears there are no further questions at this time. Mr. Constantinople, I would like to turn the conference back to you for any additional or closing remarks.

A - Frank Constantinople: Thank you very much for your time today. If you have any follow up questions feel free to call me at 203-504-1063. Have a great day. Thanks again.

Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.