Jetrader - September/October 2008 - 9

a Chinese portfolio. I take issue with those who say you cannot be successful or work with the best names in the industry if you are not a large and established player. All you need is trust. J: What have been your toughest challenges? TM: One of the toughest challenges I face, is to ﬁnd transactions that ﬁt our high standards. I have never been instructed to go out and “build a platform,” and often wonder at the logic of such moves when you can build a leasing company organically and hopefully avoid transactions entered into at difﬁcult points in the cycle. We do not have ambitions to be high up in the league of airline leasing companies and I and the corporate “we,” have no ego. I recently heard a presentation by Tim Clark of Emirates. He explained how Emirates choose who to work with and the deciding factor is not necessarily price. I have also found that many of the airlines with whom we speak decide to work or continue working with us because they like our approach, even though there may be ﬁnancially more attractive offerings in the market. It is not just about the headline number. J: Do you operate by any particular guiding principles? TM: We invest in transactions that make economic and common sense. LCI could have a portfolio of hundreds of aircraft, and one day we might, but we have no absolute or prescribed investment goals and adapt our strategies in line with market economics and our common sense approach. We are not a public company and have no obligations to the rating agencies or analysts in the investment community. My only duties are to my shareholders and my customers, so decisions are made on a case-by-case basis and not as part of some plan to win favor or maintain our position within the public markets. Every aircraft has to be leased, and I subscribe to the philosophy that there is a fair price for everything, so paying $50 million for a 737-800 or an A320 makes no sense in the majority of cases. I am also very against the idea of paying large premiums to airlines who inﬂ ate their RFP pricing. I don’t see the role of the leasing company to be one of corporate ﬁnancier or venture capitalist. I see huge risks in leasing aircraft at above market levels unless you have a ﬁrst-class credit on risk, and that tends to be rare in such situations. It is more often the weakest players that are willing to agree to such rates, and signing the lease is often the start of negotiations. The problem of RFPs generally is that you only win if you have the lowest pricing and softest terms, so you win and lose at the same time. I prefer private transactions, and my approach is to ask the airline to provide me with its wishlist, and I try to oblige. The greater the airline’s imagination, the closer to fantasy will be my answer. The established players are generally realistic. I also have a moral problem with the approach of getting an abnormally high rate from an airline because of market circumstances. Airlines keep little black books on opportunists, and I pride myself in dealing with friends who incidentally are clients. As someone who personally interacts with airline customers, I have the experience of having been on their side of the table. Every negotiation is a further step in the partnership. Jetrader Jetrader 9 e ra
Jetrader - September/October 2008

Table of Contents for the Digital Edition of Jetrader - September/October 2008
