Jetrader - Spring 2018 - 45

The definition of scale in our business continues
to change almost on a daily basis, so not too
long ago the size of the number 10 player was
$2 billion. Today, the size of the number 10
player is over $10 billion. Today we have three
groups with more than $20 billion in assets.
the four-engine products by either Airbus
or [Boeing]. But other than that, we will
selectively underwrite the transactions
where it makes a difference to our client and also ticks all of our boxes from a
return perspective.
In our part of the world, long-haul aircraft are part and parcel of the fleet strategy. As we embed ourselves in our clients
and provide them solutions, that is a very
critical part of what we do, and that's why
we get the seat at the table. We have the
capital commitment to take on that exposure and do it in a way that we think will
make sense.
GB: In most businesses, the CEO will
sit where his or her cohorts are sitting,
as well, but in this instance you have a
center in Dubai as the traditional DAE
headquarters and you have a center in
Dublin, which is the traditional AWAS
headquarters. Does that prove any difficulty for you going forward?
FT: We go to market from six locations.
We're in Singapore, Dubai, Dublin and three
locations in the U.S. From a management
team perspective, of the 10 people who
report to me, five of them sit in Dubai, four
sit in Dublin - here, where we're talking -
and one of them sits in New York.

For us, that's intentional because we
want to make sure that every part of our
organization feels like it's connected to
the body. Having that dispersed leadership
team has its cost. It would be far easier to
walk down the hallway and make decisions,
but having that dispersion has benefits,
as well, particularly because our largest
employee base is here in Dublin. So, 80 out
of our 140 professionals on the leasing side
are based here.
Having that connection is very important to us. In fact, we have an internal
mandate that every one of us - including me - who has an office in either
Dubai or Dublin, has to have management visibility into the office that is not
their normal office. This allows people
to feel connected to what we do and
have an opportunity to talk to people.
I end up spending a lot of time here [in
Dublin]; I have an office downstairs,
and all of the people who are based in
Dubai have an office here. People who
are based in Dublin have an office in
Dubai, so we are making it work. It's a
model that is different, and we acknowledge that it has some issues and costs
associated with it, but we think that overall it's something that will work really well
for the company.

GB: In terms of looking forward from the
industry point of view, what do you see
as the greatest challenges for the industry over the coming years and, ultimately,
the greatest challenges and potential
opportunities for DAE?
FT: There are a few things that are
manifesting now. A lot of the new capital, the new liquidity that came into this
marketplace, came in with returned expectations that were totally different than
the return expectations that traditional
players had enjoyed in that business. They
came in with return expectations that were
calibrated more to what their choices were
back in their home markets or in whatever
other things that they were investing in.
The liquidity that had gone along with
that also came in at rates that are totally
different than what the industry had
traditionally funded itself with. If you
put those two things together, the question we all have to ask is, 'Is this a paradigm
shift towards lower returns?' Or, is this, as
some people say, 'Don't worry. This will go
away when the first shock comes around'?
For us, it's a legitimate question and
in many ways the stronger players - us
included - have to hope for some sort of
shock to happen so that we can see what
the real capacity is in the marketplace and
then make commitments around that capacity. Whether that will happen anytime soon
is anybody's guess. It's unlikely, but liquidity shocks have a way of coming around
when nobody expects them.
On the other side, the level of lease rates
today is a challenge, particularly to people
who invested their capital when fuel prices
were "X" and escalation was "Y," and they're
struggling to make money.
It's a challenge for people like us who
want to put more money to work in this
particular business, but we're struggling
to justify the investment case for doing
that. Of course there are the more mundane
challenges around production rates, etc.,
but in terms of fundamentally thinking
about where this industry is structured
and where this industry is headed, we have
to solve some of these things before we
have a good sense of what's next for each
one of us. Of course, the bigger you are
the more protection you have relative to
some things not working out to expectations, and that's also where I think scale
will make a big difference.
Jetrader * Spring 2018 45

Jetrader - Spring 2018

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