Welcome to the AerCap Holdings’ 2013 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. The call is being webcast and an audio version of the call will be available on the company’s website. This call is also being recorded for replay purposes. I‘ll now hand over the call over to Peter Wortel, Head of Investor Relations. Please go ahead sir.

Thank you very much, operator. Good day everyone. Welcome to the 2013 second quarter results conference call. With me here in Amsterdam today are Aengus Kelly, AerCap’s CEO and Keith Helming, AerCap’s CFO. In today’s call, we will discuss our second quarter earnings for 2013. Before I read the disclaimer language, I would also like to point out that we will not be hosting a lunch for analysts and investors in New York today. Before we begin, I want to remind you that some statements made during this conference call that are not historical facts may be forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. In addition, this conference call contains time-sensitive information that reflects management’s best judgment only as of the date of the last call. AerCap does not undertake any ongoing obligation other than that imposed by law to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after this call. Further information concerning issues that could materially affect performance related to forward-looking statements can be found in AerCap’s earnings release dated August 6, 2013. A copy of the earnings release and conference call presentation are available on our website at aercap.com. This call is open to the public and is being webcast simultaneously at aercap.com and will be archived for replay. I’ll now turn the call over to Aengus Kelly.

Thank you, Peter. Good morning to everyone in the U.S. and good afternoon to those of you in the Middle East and Europe. Thank you for joining us today for our second quarter earnings call. I am very pleased to report that the key strategic decisions taken and executed by AerCap over recent years have culminated in AerCap reporting record half year earnings of $1.19 per share for the first half of 2013 and $0.59 per share for the second quarter. Our record earnings per share and industry leading profitability have been driven by a core set of principles which we have rigorously followed. It is the combination of highly disciplined aircraft acquisitions and disposals as well as our long term stable liability structure that has enabled us to return $420 million to our shareholders, obtained an investment grade credit rating and generate this record earnings. These industry leading results and credit standing could not have been realized without the capabilities of the AerCap platform and its ability to actively manage our aircraft portfolio and liabilities. Key transactions that have placed aircraft in the position it is in today include the sale of AeroTurbine, the timing and scale of the American Airlines and LATAM transaction, the sale of ALS and the repurchase of 25% of the company’s outstanding shares at a 40% discount at day share price and an almost 50% discount of book value per share. The most transaction is of course the LATAM deal. This demonstrated like American Airlines and Singapore Airlines deals that patience and discipline will yield extremely attractive and large-scale growth opportunities. Some of the key benefits of the LATAM deal are firstly, it provides us with the most in-demand new technology widebody aircraft in the market, on long-term lease to one of the strongest…

Thanks very much guys. Good morning. I'll start on page four of the presentation. Our reported net income for the second quarter 2013 was $75.1 million. Adjusted net income, which excludes the various items listed, was $67.1 million, a 13% increase over the second quarter of 2012. For the first half of 2013, reported net income was $143.1 million and adjusted net income was $135.1 million. Page five, reported earnings per share were $0.67 in the quarter – second quarter 2013. Adjusted earnings per share were $0.59 during the same period, an increase of 37% over the second-quarter 2012. For the first half of 2013, reported earnings per share were $1.26 and adjusted earnings per share were $1.19. The average shares outstanding during the first half of 2013 were 113.4 million which is approximately 26 million shares lower than the same period in 2012 as a result of shares repurchased in 2012. Page six, total revenues in second quarter 2013 was $247 million. The small decrease from prior year was driven primarily by lower basic lease rents as a result of the sale of the ALS portfolio, the proceeds of which are being reinvested in future growth of new technology aircraft. This decrease in basic lease rents was partially offset by higher gain on sale of aircraft. Page seven, net interest margin or net spread was $160 million in second-quarter 2013. The annualized margin as a percent of average lease assets was 8.5%. The decrease in net spread was driven primarily by the sale of older aircraft, including the ALS portfolio, partially offset by purchases of new aircraft. Page eight, the impact from sales in second quarter 2013 was a pretax gain of $10.5 million and was $21.5 million in the first half of 2013. In the first half of…

(Operator Instructions) Our first question today comes from Michael Linenberg from Deutsche Bank. Richa Talwar – Deutsche Bank: Hello everyone. This is actually Richa Talwar filling in for Mike. My first question is just on what you said, Gus, regarding opportunities currently in the market. I was wondering if you could tell us from a geographical perspective where you are seeing a lot of opportunity and how you expect your portfolio to shift in terms of geographical exposure going forward.

The opportunities are pretty much global to be honest with you. Our portfolio as you know has trended more towards the North American market due to some of the transactions we’ve done recently as we see that being probably the most stable market out there. But of course, there are pockets of demand all over the world. And I think you'll probably see our portfolio trend and increasing shares into the Americas, North and South America obviously with the LATAM deal, and a reduction coming out of the European market, with the Asian market still making up around a third to 40% of this. Richa Talwar – Deutsche Bank: And then on your comments regarding allocating capital, can you refresh us on your views regarding a dividend and why you think share repurchases are a better venue for returning capital to shareholders?

Well first of all when it comes to allocating capital, when we look at spending money it's got to be accretive to shareholders. So if I can buy aircraft that are going to generate the return that I need and they are modern fuel-efficient airplanes that’s obviously the core of the business and we will do that. To the extent that we don't see those, then we will return capital to shareholders as we have done in the past. The fact that we were able to purchase the shares at such a large discount I think made us a fairly obvious to us that, that was the correct way to go rather than paying a special dividend for 400 million plus when we were able to buy back shares at a 40% discount to where they are trading today.

Our next question comes from Gary Leibowitz from Wells Fargo Securities. Gary Leibowitz – Wells Fargo Securities: Gus, are you seeing anything with your customers that would suggest that the third quarter utilization rate should be meaningfully different from second quarter?

No, Gary, we are almost halfway through the third quarter. I mean it’s always transient around the same level, the high 90s, at portfolio of our size, we’ll always have aircraft in transition given we are moving so many airplanes. And so you will always have 1% or 2% of downtime naturally in the book but no, we don’t see anything that, that wouldn't be -- it should be just in line with normal. Gary Leibowitz – Wells Fargo Securities: And for Keith, your slide on the 2013 financial outlook did mention basic rents that line item is usually there. Do you have an outlook for the top line?

I will get back to you on that one, Gary. Gary Leibowitz – Wells Fargo Securities: And then just one last one. Keith you cited, I think it was $2.9 billion of purchase commitments beyond 2013. Do you happen to have what the 2014 and 2015 numbers are?

We will lay that out for you guys as well.

We will now take a question from John Godyn from Morgan Stanley. John Godyn – Morgan Stanley: Thanks a lot for taking my question. Gus, first of all, just hoping you could talk about the return profile on sale leaseback transactions and how it kind of compares to your normal targets or your existing weighted average ROE.

Well, I guess there are two leaseback markets to be fair, John, that the weekly break-off that everybody shows up, for new 20 people bidding for one aircraft with Air France or Air Berlin, or Peru whoever it is, and that’s not where we play, if you know. That’s a highly commoditized business. However where we go in for sale leaseback is in much better size, where there is little to no competition. American, LATAM, Singapore, they were all bilateral deals that weren’t competed transactions, because we are bringing unique things to the table. In American obviously we did it on the eve of the bankruptcy, no one else had the firepower at the time to do t. In the case of LATAM, given the fact that we are the most active aircraft trader in the world by probably a distance along the GCAST, when we buy something we know the value of it. So when we bought those A330s, we have sold more A330s than anybody in the world. So we knew the value of what we were buying and nobody else really understood the market as well as we did. So we could figure out how to do a very large scale transaction with LATAM, because you are bringing to bear the key skills to the platform and in something that isn't a commoditized or baked off – we could sale-leaseback, there’s one or two airplanes, you do generate returns that are materially higher than the run rate of the business. When we invest extra -capital it has to be at a very high level of returns – not to allocate capital to shareholders. John Godyn – Morgan Stanley: And I think in the past you have talked about at least a 15% return hurdle. Just to put your comments in (multiple speakers) that’s helpful.

That’s an after-tax number. Operating a pretax that’s the hard after-tax number. John Godyn – Morgan Stanley: When we think about the fleet profile going forward, historically and I think currently, too, you still have a good concentration of A320 family aircraft. You talked about how the lease rates there are firming. But with the NEO around the corner, I think there is some risk in that part of the portfolio. On the other hand, you've done a tremendous job kind of managing around that risk. Can you just help us think about how you think about the A320 family concentration on a go-forward basis?

Think of about A320 is – look it’s the biggest seller in the world. That is the definition of the ubiquitous aircraft with the amount of use it has. So there is no issue of replacing it. But actually just to correct one thing, our single biggest exposure to what we got on order and what’s on the books is the 737-800s and of course over the term of the last 18 months two years we’ve materially reduced this exposure to the 320 family. But the 320 is still an airplane that you can place all day long, there is no problem placing it. So given that it’s all of extra carrying value. Are you carrying – you know that this airplane can be leased, no problem, it’s like a 737, you can move it. It’s a question of the price. Now if you carry on the book and you’ve over-paid for it, then you are in trouble. And if you haven’t and we've demonstrated I think to you in numerous occasions mostly recently with the ALS transaction where we sold a big portfolio of predominantly A320, it’s a 50 aircraft deal we did, almost at book value. And so we monetize all the profits that were associated with that vehicle that were several hundred million-dollar to retain earnings to monetize. So I think John, that’s the best indicator I can give you and it all comes back in this business you have to buy the stuff right. If you are over-paid for it sooner or later you’re going to get dumped. And on the 320s for us we've demonstrated time and again that we fall to rise and that's the key. And on 320, we would buy 320 today no problem John. We look at 320s all the time,…

Sure certainly. If you go back to A330, originally you had 767 as the clear market leader, almost a monopoly on the market for small widebody airplanes. Then and the 330 came along, they have seen the 90s, it took Airbus a few years to get really up and running get the best engines on it, find the right price point but then it is loss for 767. The 787 was built to compete with the 330 to take part of the market back. And reason it was developed – it’s so hard to recapture market share. The idea was to stop the proliferation of the 330 customer base. With the 330 customer base doubled between the launch of the 787 and today, it’s actually doubled in size. So we are seeing of that huge customer base, you know which can move the airplanes. Again it comes back to the purchase price, you can always move them. So the 330 is for – they made us the only small widebody airplane out there. The 767 – a lot of them in operation but they are on their last leases, they are being part of our et cetera. So the 330 is a replaceable airplane but you have to be cognizant again as you rightly point out that as you go forward if you were ordering these thing in that timeframe of 2010, ‘11 when all the orders were coming in and you are taking delivery in 2015, you’re probably going to have some issues with the price point but again our orders came a long way before that and I think the best data point I can give you on our 330s is you can see the gains we booked on the sales of the recent 330s we bought. We’ve booking double-digit million gains. John Godyn – Morgan Stanley: So just to summarize on the A320 and the A330, is it fair to say that the punch-line is you feel like the values that those aircraft are recorded on your books are very favorable versus current market prices? Is that a fair way to think about the situation.

I think the issue on the 320s or 330s or 737s for that matter, would be if you ordered them at the peak years of 2010 2011 before the new technology was on the horizon, and you are taking delivery in 2013, ’14, ‘15 you've probably got some issues. But the best indication I can give you rather than me just saying – look at the heart results, look at the results of our credit, no one has sold as many airplanes that we sold 330, 320, 737s at $310 million gain on all the aircraft we sold over the last several years.

We will now take the question from Scott Valentin from FBR Capital Markets. Scott Valentin – FBR: Just Keith, starting with SG&A, you mentioned it was around $24 million. There were some one-off projects in there. Do you know what the amount of those one-offs were just trying to get an idea what core estimate should be going forward.

It’s about $3 million, 3 million of funding projects, so going forward the quarterly run rate of $21 million is what you should expect. Scott Valentin – FBR: And then just kind of a big picture we've seen long-term rates rise. You guys run a pretty matched book. Your guidance for the year is still 4% kind of cost of funds. Just wondering what you're seeing in terms of funding costs and maybe what you're seeing, do you expect lease rates to rise to maintain that margin or do you think there could be a squeeze?

The lease rates are a function of interest rate, if you look at our leases, particularly for the new airplanes, they will adjust its able interest rate. So for example, if you say a base lease rent was $300,000 it will move up or down for $20,000 for each 1% shift in the 10 year treasury. So it will match exactly that. So the lease rates historically have always been ultimately a function of interest rates. So that’s been the core tenet of the business and we don't see any evidence over the course of effectively 20 years that that’s changing. Scott Valentin – FBR: And then one final question. The $417 million you have scheduled for delivery in the second half of 2013, is that pretty evenly spaced over the last two quarters or will one quarter have more than another?

It’s pretty evenly spaced.

Our next question comes from Glenn Engel from Bank of America. Glenn Engel – BofA Merrill Lynch: Net margins have been drifting down for you and I guess for the industry, not hugely but still drifting down over the last year or two. Is that going to start stabilizing and turn around or as you continue to take newer planes, does that keep pressure on that number?

The reason that, net spread percentage have decreased over the last year or so is because we have sold a lot of the older aircraft which has a slightly higher effective yield if you will. When you look – you actually look page 14 of the presentation in the supplemental information at the very bottom we normalized the net interest margin excluding the sale of the ALS portfolio. So you can see that outside of the sale of those assets, the older assets, that the margin is relatively constant. And that’s where you should expect to see going forward now for a while.

To add to that, Glenn, this goes back to my point about discipline in capital allocation, we could of course hold on the ALS portfolio and we just printed record EPS numbers, if we held on would that even be higher? But it’s the discipline they are saying, we have this portfolio of mid-life airplanes, we want to monetize retained earnings associated with it and reinvest it in the future of the business which are the 350, 787s, the NEOs, things like the LATAM deals, the American deal, and that takes discipline to do that. And making sure that you are not just looking at the short-term or the next quarter but you are looking at the long-term future of the business and so we've managed to keep the average age of the portfolio constant or slightly decreasing as well as generating record earnings. Glenn Engel – BofA Merrill Lynch: The second question more on the widebody side, the A330 has been your mainstay. Are you looking at -- the 787's seem interesting. And two, it seems like your competitors now, who generally were just focused on narrowbodies, seem to be much more focused on the widebodies, catching up to your strategy. Is that starting to make it a much more competitive market for you?

Again if you want to show up for the weekly take off for the 330 or 777, are sure you'll get a boost to your P&L on the short-term because the lease rentals will be high but if you’ve overpaid for it in the long run it’s going to come back to bite you. We have not approached the market in the fashion as you know, we believe there is plenty of opportunity out there if you work hard and you are disciplined those opportunities will show up like the LATAM deal where it wasn’t to compete the transaction and like the Singapore Airlines transaction we did on the 330s. But there's no doubt that if you're chasing a bit of yields in your P&L then you are there on a weekly basis, it’s questionable if you will have the long-term returns that justify the risk that you are taking. 787s and A350s are going to be the future there is no doubt about it. We believe 787 will be a fantastic airplane and as well as the 350 and we are certainly focused on that aircraft type as you have seen we have done our deal on the 787s via the LATAM transaction and we will certainly look to do more.

We will now take the question from Ryan Zacharia from JAM. Ryan Zacharia – Jacobs Asset Management: Just a couple. The project-related fees, what were those associated with? And should we expect those to run off on a go-forward basis?

Again these were one off type project, they are funding related projects and going forward starting next quarter you should not see this level of expense again, the quarterly run rate for SG&A should be around $21 million. Ryan Zacharia – Jacobs Asset Management: And then just as it relates to depreciation, I was a little surprised to see the jump, about 7% sequentially. There was only like a 3% increase in the average flight equipment. Was there anything going on there atypical, or is this the new run rate?

No, if you look at the depreciation as a percentage of the average lease assets it should be around 4.3% I think last quarter was 4.2%. So that’s more or less what the run rate should be going forward. Ryan Zacharia – Jacobs Asset Management: And the incremental $10 million of gains that you've guided to -- that's all going to come in Q3?

The Q3 transaction, correct.

We will now take a question from Arren Cyganovich from Evercore. Arren Cyganovich – Evercore Partners: Just thinking about your asset strategy of selling aircraft particularly I guess when you have higher concentrations. Absolutely understand what you're doing there, and the gains are positive near-term, but it is somewhat dilutive longer-term unless you are reinvesting those fairly quickly. So is it a reflection of the fact that you have a high amount of confidence in reinvesting those, say, $300 million of cash you are getting back from those assets, just to make investors feel that a little bit better about earnings growth going forward? It's great to have the near-term benefit, and it shows you have a good strategy and you're buying the assets at a good cost. Just want to have some comfort in your longer-term outlook.

Well from our standpoint we do believe that there is ample opportunity out there as I said before and we’ve shown you time and again that we do reinvest that money, if you look at the sale of ALS, the sale of AeroTurbine, both generated very substantial amount of capital and both were reinvested, be it in returning capital to shareholders or things like the American deal, the LATAM transaction. As I said we've contracted 72 aircraft purchases in the last 20 months alone without a single speculative order from the OEMs. So there's tremendous opportunity out there. If you step back and look at the industry there is two suppliers, there is about eight or nine leasing companies in the world that matter and there is 800 airlines out there. There's plenty of opportunity and the airlines will always need a stable -- always need capital providers and the dynamics of the industry hasn't really changed that much over the last 15 years. We've a very small group of large global lessors with a global platform and I don’t see that changing and also from our standpoint it’s about making sure that you’re not just worried about the next quarter that's why we sell some of the aircraft to midlife airplanes, you are not focused on maximizing just for the next quarter, you want to reduce the credit exposures, certainly very heavy credits also. And so we stick to our discipline of doing that and that discipline has generated record earnings in the first half of this year. I don’t see any reason to change that. Arren Cyganovich – Evercore Partners: And then lastly, on the funding cost side, you have interest rate caps in place; I think you have around $1.5 billion maturing in the second half of this year. Are those going to be replaced with similar instruments? And is there going to be any impact in terms of the cost of your funding from that? I know you have the guidance so it shouldn't, but I am just curious as to what to expect from hedging.

The largest portion of the cap we are running off this year and next year and again those -- the aircraft that they are supporting it will be going on new leases and we will be putting in new interest rate protection if you will, likely fixed rate debt or something like that.

We will now take a question from Isaac Husseini from Barclays. Isaac Husseini – Barclays Capital: Had a question on the cash, the temporary reduction of $100 million. Just wondering if you can give us some color on the decision, why the decision was made to fund those planes temporarily with cash?

We have several funding transactions going on, so we wanted to put some of these aircraft into those funding transactions and those weren’t effectively completed until post second-quarter. So we had the cash available to temporarily put the funding aircraft, so we did so. These deliveries happened in the last few days, in the quarter, they happened on the 28, 29 June and hence why they were cash funded. Isaac Husseini – Barclays Capital: And then I think if I'm not mistaken, you provided ROE targets at some point. Maybe it was during your investor day for 2013. Is this something you could provide an update post-LATAM?

We can, I think the ROE at this stage for 2013 is expected to be around the 12% level.

Our next question will come from Varino Yancankeep from Seaforth Group. Varino Yancankeep – Seaforth Group: A little bit of a similar question to the one just asked. In terms of cash balances, you closed the quarter with $157 million, which to the best of my knowledge is one of the lowest levels in recent memory. Is there a number there that you are comfortable with, or a matrix that you are following in order to manage your cash holding? And maybe can you refresh us as your source of liquidity in addition from internally-generated cash flow?

First of all, the 150 million in cash balance at the end of the second quarter has now been increased by 100 million, so we are back to the 250 million level. We also have four aircraft – we have to fund it in cash which will be debt funded shortly, so that will generate some cash as well. We also have as you recall unsecured revolver of $290 million, which are used as back up liquidity as well. So although the cash balance is down from prior quarters our liquidity remains very, very strong.

It’s a very robust liquidity position, if you add in the cash position today plus the unfunded aircraft plus the undrawn revolver at debt equity ratio there is substantial liquidity available if the right opportunity arises. Varino Yancankeep – Seaforth Group: My second question is at the end of 2002, the average lease tenure of your portfolio was 6.9 years. Do you have it updated as of June 30 of this year?

It’s 6.6 years at the end of the second quarter 2013. Varino Yancankeep – Seaforth Group: And if I look at the numbers on page 20, where they show the average terms of new versus used aircraft, I'm just wondering, it seems like directionally that the average tenure of the new leases is lengthening versus 2012 and average tenure for the user group is actually shortening. It is just a coincidence based on a transaction you have been involved or this is a general industry trend?

The used aircraft lease, if you look back over the last several years you will see they always trend in and around five years give or take, they are always around five years either side of it. What happened in FY 12 why there was a six-month increase on average given the number of airplanes we moved was there was a number of new – there was a number of aircraft that were used or placed on extremely long-term lease which was unusual, that’s what drove it up. In terms of 166 months a lot of that is driven by some of the recent transaction we have done on the sale leaseback side particularly with American Airlines but again the norm for the new airplane historically had been around a 12 your mark.

We will now take a follow up question from John Godyn from Morgan Stanley. John Godyn – Morgan Stanley: Keith, I think I heard you say that 12% ROE this year. Is that an after-tax ROE? And does it include the gains on sale that we've seen year to date?

It is an after-tax ROE. It’s probably slightly north of the 12% but it would include the gains yes. John Godyn – Morgan Stanley: Gus, if I could just ask a follow-up on some of the line of questioning we heard today, given your size and scale, you've done a great job being nimble operating in the secondary market for aircraft and growing. But is there a size or scale at which point the market, the illiquidity of the market becomes a challenge for you? And maybe it does make sense to supplement the growth profile with a manufacturer order that might benefit from economies of scale or volume in the sense that a larger order will get you a better price? Can you put your scale in context with how big you could be in the future before we might see a shift in strategy?

We would order to be honest John, if the deal is right we don’t want it tomorrow and we are always talking to the OEMs, we are always looking at proposals from the OEMs in large-scale. The thing with a leasing company and the OEM is we used to be owned by an OEM we know how they think. When GPA was the largest customer of both OEMs and the reality is the leasing company together to get a very attractive deal off them you need to be there, when you're seeing aircraft deliveries exceed aircraft orders during a year. That typically means that you are in a tough market and you need to have a balance sheet take can pay for these orders in that type of market. In 2013 we had been in that situation at all, quite the opposite. So the OEMs haven't needed the lessors because their core customer base, the airlines have been filling up their order book. Now if we could change, if we see that some of the record orders start to get deferred I can assure you that we are always talking to the OEM if we see the right deal and size we will do it. To be honest, we are here to make money for shareholders, that's why we are here. We’re not here to be big, or beautiful but having said that I know that given the dynamics of this business Air traffic is going to grow. If we are sitting here in 10 years’ time the one thing I know of this business is that the number of people fly and number of ASKs, available seat kilometres per annum will have doubled, that’s due to the he emerging markets, some growth in developed market et cetera but that’s been the historical trend, every 10 years it doubled. So you know that’s a given. You also know that your customer base is for the most part non-investment-grade and will always stay the same due to the relatively low prior eventually in the airline business. And over the inherent our last 20 years there hasn't been more than eight or nine leasing companies who really matter. So there's plenty of opportunity out there given those dynamics to grow the business, be it in the sale-leaseback market, or be it with the OEMs and we have ordered in and scale with the OEMs as well in the past. We try to do it when we feel that they need us more than we need them.

As we have no further questions at this point of time, I would now like to turn the call back to your host today for any additional or closing remarks.

Thank you operator. Well thank you all very much for joining today for the earnings call and we look forward to talking to you again in three months’ time for the third quarter results. Good afternoon, thanks everyone.