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Fly Leasing Ltd (NYSE:FLY)

Q3 2013 Earnings Conference Call

November 7, 2013 9:00 AM ET

Executives

Matt Dallas – Head-Investor and Media Relations

Steven Zissis – President and Chief Executive Officer, BBAM LP

Colm Barrington – Chief Executive Officer

Gary Dales – Chief Financial Officer

Analysts

Helane Becker – Cowen & Co. LLC

Richa Talwar – Deutsche Bank Securities, Inc.

Gary Liebowitz – Wells Fargo Securities LLC

John Godyn – Morgan Stanley & Co. LLC

Glenn Engel – Bank of America Merrill Lynch

Doug Runté – Deutsche Bank Securities, Inc.

Operator

Good morning. My name is Brandi, and I will be your conference operator today. At this time, I would like to welcome everyone to the FLY Leasing Limited Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Matt Dallas, you may begin your conference.

Matt Dallas

Thank you, and good afternoon. I’m Matt Dallas, the Investor Relations Manager at FLY Leasing, and I’d like to welcome everyone to our third quarter 2013 earnings conference call.

FLY Leasing, which we will refer to as FLY, or the company throughout this call, issued its third quarter earnings results press release earlier today, which is posted on the company’s website at www.flyleasing.com. Representing the company today on this call will be Colm Barrington, our Chief Executive Officer; Gary Dales, our Chief Financial Officer; and Steve Zissis, the President and CEO of BBAM, the company that manages and services FLY’s fleet.

I’d like to begin the call today by reading the following Safe Harbor statement. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the outlook for the company’s future business and financial performance. Forward-looking statements are based on the current expectation and assumptions of FLY’s management, which are subject to uncertainties, risks, and changes in circumstances that are difficult to predict.

Actual outcomes and results may differ materially due to factors that are summarized in the earnings press release, and are described more fully in the company’s filings with the SEC. Please refer to these sources for additional information. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations or otherwise.

This call is the property of FLY, and cannot be distributed or broadcast in any form without the express written consent of the company. A replay of this call is available for one week from today. An archived webcast of this call will be available for 90 days on the company’s website.

With that, I will now hand the call over to Steve Zissis, the President and CEO of BBAM. Steve?

Steven Zissis

Good morning, everyone, and welcome to our third quarter earnings call. Today I will keep my comments fairly brief, while Colm and Gary go through most of the details. As we closed our third quarter, we’re happy to report that all our 2013 remarketings have either been extended, remarket to new customers or committed under LOIs. We expect to have a 100% utilization of the fleet by late 2013, early 2014.

To reconcile our comments today from the last earnings call. At that time of our last call, we had seven aircrafts available. During the third quarter, we extended two aircraft, delivered three aircrafts to a new customer, although two of these deliveries did happen after the quarter end and the remaining two aircraft to subject to LOIs and expected to deliver in late December of 2013.

As we move into 2014, we have 20 aircrafts scheduled for remarketing. Of these 20 aircraft, six have been extended, another five are likely to be extended and the balance of nine aircrafts will be remarketed with four of these aircraft available in the first half of 2014

Lease rates for Airbus A320s are now trending upwards with 2014 lease rates up approximately 15% over rates in 2012 and 2013. Providing, we’re seeing no sudden increase in supply due to bankruptcies or external shocks, we expect this trend to continue and rates to improve as we move into 2014. On the Boeing 800, we are seeing a surge in demand for 2014 and expect rate for mid-life 800s to improve nicely from current levels.

During our prior calls, we indicated a growth rate of approximately $300 million to $500 million of additional assets for 2013. As of today, we have closed 10 aircrafts and committed to another 6 aircrafts that will result in approximately $650 million in expansion of our fleet for 2013. We have ample amount of capital available to continue our growth into 2014, and expect a 10% to 15% growth in our fleet.

I’ll now hand the call over to Colm.

Colm Barrington

Thank you, Steve, and good morning everyone and thank you for joining us. Consistent with the guidance provided on our last earnings call, FLY is a reporting a breakeven quarter for the third quarter of 2013.

We will discuss today the factors which contributed to this result. But more importantly, as we look forward, we are optimistic about growing the revenues and profitability of the business in the quarters ahead as we deployed the significant amount of capital available to us.

Our adjusted net income in the quarter is below last year’s figure due to lower aircraft utilization rate this year, and lower rentals on some re-leased aircraft. Based on current agreements with airline customers, we expect to have all our aircrafts on-lease by the end of the current year, it will improve our Q4 utilization and will enable us to start 2014 with 100% utilization rate or very close to it.

Specifically, we have now resolved the repossession, refurbishment, and re-leasing issues related to the four aircrafts that were leased to an Indian airline, and that have negatively impacted FLY since early 2012.

Meanwhile, we’ve reduced our net leverage to 2.7 times and lowered our contract interest rate to 4.4%. Compared to the third quarter of 2012, we’ve therefore reduced our interest expense by approximately 17%. These lower interest rates and interest costs at least partially offset the lower lease rates experienced from some of our re-leased aircrafts.

We took advantage of market conditions during the summer to place shares and raised $172.6 million through replacing of 13.1 million shares at a price of $14 per share. Our decision to raise equity capital at this time was driven by a careful analysis of the per share outcome for our shareholders.

We continue to see this as an opportune time to deploy capital into aircraft acquisition. The combination of purchase prices and lease rates available in the aircraft acquisitions today are particularly attractive when we consider the leveraged returns and free cash flow profile of the assets in the context of today’s financing markets.

When deployed in aircraft acquisitions, the capital raised in the share placement will be accretive to the per-share earnings and cash flows of business. And while dilutive to the book value of the business on day one from the compound returns on this invested capital over time, we except the placing to be accretive to the per share book value of the business over the medium-term.

In 2013, FLY has now added a total of 10 aircraft at a total cost of $567 million. These aircrafts include one Boeing 787-8, one Boeing 777-300ER, and eight Boeing 737-800s. Eight of these 10 aircrafts including two wide bodies, are new aircraft manufactured in 2013.

These acquisitions have easily exceeded our stated growth targets of $300 million to $500 million, and have contributed to reduction in the average age of our portfolio to less than 9 years and to an increase in our average lease term to more than four years. The new acquisitions will also have a positive impact on our core leasing revenues and net income in Q4, in 2014 and beyond.

During 2013, we have sold 10 aircrafts with an average age of 14 years for a total of $104 million, and for an aggregate gain of $6.3 million to our net book value. Again, FLY has demonstrated that it can dispose off older and less attractive aircraft at a premium to the net book value. In the last five years, FLY has now sold total of 22 aircrafts with an average age of 13 years, and for an aggregate gain of $49 million above our net book value.

As of today, our portfolio has increased to 109 aircrafts, values of approximately $3 billion. This compares to a fleet book value of $2.6 billion at the end of 2012, a 15% increase. FLY has the capital to maintain this strong growth in 2014, and we continue to see attractive acquisition opportunities. We expect to announce further acquisitions by year-end and have set a growth target of 10% to 15% for 2014.

As Steve said, all of our aircrafts are now on lease or committed leases in the fourth quarter. This combined with our new acquisitions makes us feel confident about improved financial results in 2014.

Our confidence in FLY’s ability to generate profits and cash flow is reflected in our attractive dividend policy. FLY declared its 24th consecutive quarterly dividend on October 15. This dividend of $0.22 per share will be paid to shareholders on November 16th. FLY has now paid total dividends of $6.12 per share since the company was launched on the New York Stock Exchange just over six years ago. And this is despite the fact that we’ve come through a very severe period of global financial and economic turbulence.

However, the global airline industry is currently strong, with air traffic and airline load factors at or near all-time highs. Demand for leased aircraft is also strong, and we are seeing improvements in lease rates. IATAs latest airline industry profit forecast for 2013 is $11.7 billion, and $708 billion of revenues, led by North American carriers, this is a significant improvement over profits of $7.4 billion in 2012.

The positive trend is expected to continue with IATA’s preliminary 2014 forecast showing its member’s profits at $16.4 billion on revenues of $743 billion. These positive trends are feeding into the global aircraft leasing industry where conditions remain buoyant.

As we look ahead to 2014, FLY has therefore well positioned to benefit from these positive industry conditions based on the strong financial position and its growing fleet. In the light of these improving global economic and industry conditions, and slight increased scale at earning opportunities, our Board has decided to increase our quarterly dividend to $0.25 per share starting with the dividend to be declared in January 2014, and to be paid in February 2014. We hope that our shareholders will see this as a continuing vote of confidence in FLY, and in its ability to continue to provide superior returns to its shareholders.

I’d now hand over to Gary Dales to take you through our financial results in more detail.

Gary Dales

Thank you, Colm. We are reporting net income for the quarter of $304,000. This compares to a loss of $29.4 million for the same period in the previous year. Through the end of the third quarter of 2013, we’ve added $424 million in aircraft acquisitions, and all of our aircraft are now on lease are committed to let lease, and will be generating revenue by the end of the fourth quarter. The full impact of the acquisitions that we’ve made will continue to be reflected in the fourth quarter and into 2014.

We expect that fourth quarter operating lease revenues will range between $82 million and $86 million. For the nine months ended September 30, 2013, our net income was $39.1 million, or $1.20 per share as compared to net income of $16.7 million or $0.63 per share for the same period in 2012.

Adjusted net income for the third quarter of 2013 was $2.7 million or $0.07 per share as compared to $5.4 million or $0.21 per share for the same period in the previous year. For the nine months ended September 30, 2013, adjusted net income was $52.5 million or $1.65 per share, which compares to adjusted net income of $63.1 million or $2.43 per share for the same nine-month period in 2012.

Total revenues were $79.1 million in the third quarter of 2013, a decline of $7.3 million from the third quarter of 2012. Third quarter 2013 revenues include only $17,000 at the end of lease revenue. Whereas revenues for the third quarter of 2012 include $5.8 million dollars at the end of lease revenue. And the third quarter 2012 revenues include $1.7 million in equity earnings from our investment in BBAM, which was sold in December of 2012.

Operating lease revenues declined approximately $6 million in the third quarter of 2013, compared to the third quarter of 2012. The end of lease revenue record which we mentioned makes up $5.8 million of the decrease.

Revenue from aircrafts that were sold in 2012 and earlier in 2013, generated $5 million of revenue during the third quarter of 2012. Offsetting these decreases is operating lease revenue generated by aircraft acquired in the latter part of 2012 and in 2013, and aircraft has been placed on lease with new lessees after a short time off lease. A net $8.7 million was added to revenue from these two activities when comparing to the third quarter of 2012.

Total revenues for the nine-month period ending September 30, 2013 were $284 million, which includes $47.6 million of end of lease revenue, and gains of $6.5 million from aircraft sales earlier in the year. There was a decline of $11.2 million in operating lease revenue due in part to the lack of revenue from aircraft that were off leased for portions of this period.

End of lease revenue is lumpy and difficult to predict. However, at this time, we are not anticipating any end of lease revenue for the remainder of 2013.

Total expenses for the third quarter of 2013 were $78 million. This compares to $117.8 million for the same period in the previous year. The 2012 expenses included $32.3 million of swap termination costs. Excluding this one-time swap termination cost, operating expenses are still down 9% in the third quarter of 2013 compared to the prior-year.

Interest expense is down $6 million or 17% driven by deleveraging and lower interest rates. SG&A expense and maintenance and other expenses have also declined as a result of getting aircraft back on lease.

There was also a decline in our share-based compensation expense. These decreases were partially offset by an increase in depreciation expense from the aircraft acquisitions over the past few quarters.

For the nine months ended September 30, 2013, our total expenses were $238.4 million compared to $280.2 million for the same nine-month period in the previous year, a decline of $41.8 million. $32.3 million of the decline relates to the 2012 swap termination costs.

In general, expenses were negatively impacted in 2013 by upfront maintenance expenses incurred in connection with delivery of aircraft to new lessees. However, this was more than offset by a reduction in interest expense and a decline in SG&A expense.

Interest expense is down $19.5 million and SG&A expense is down $2.9 million. Our provision for income taxes for the third quarter of 2013 was $815,000, and $6.6 million for the nine months ended September 30, 2013.

At September 30, 2013, our assets totaled $3.3 billion, of which $2.9 billion is invested in flight equipment held for operating lease. Our total cash balance is $362.8 million, of which $207 million is unrestricted. This compares to total cash of approximately $300.6 million at December 31, of which $163.1 million was unrestricted. We have been focused on reducing our net leverage, which we define as the ratio of net debt to shareholders’ equity.

We measure net debt as the book value of secured borrowings, less unrestricted cash and cash equivalents. Our net leverage ratio was 2.7 times at September 30, down from 3.6 times at year-end.

With that let me turn it back to Colm for his closing remarks.

Colm Barrington

Thank you, Gary. As you can see from our presentations, we are excited about the improving conditions for the global airline and aircraft leasing industries, and the opportunities that these conditions present to FLY. We are also excited about the developments of FLY during 2013, and our prospects for 2014 and beyond.

Our increased dividend policy reflects these market conditions, it reflects the opportunities that FLY has availed off and it reflects our optimism in the future. We look forward to briefing you further in our progress on our next call in March 2014.

With that, we’re ready to take questions.

Gary Dales

Operator, would you open up the line for questions please?

Question-and-Answer Session

Operator

Certainly. (Operator Instructions) Your first question comes from the line of Helane Becker with Cowen.

Helane Becker – Cowen & Co. LLC

So, this is one of my questions. You raised equity in the last quarter and then you declared, and you increased the dividend in this quarter. I'm just kind of curious as to why you would do that? Why not raise less equity and keep the dividend the same?

Colm Barrington

Helane, we actually raised equity in July and we will increase the dividend in January. But look, we are a dividend paying company. We've set this company up as a dividend paying company and we have given undertakings to our shareholders who we'll continue to pay dividends. We have increased the scale and scope of the company reasonably significantly over the last two years and quite significantly in the last few months. And we see the company generating additional cash flow. This allows us to pay the increased dividend and that's our policy.

Helane Becker – Cowen & Co. LLC

Okay. And then my other question just has to do with the amount of available capital now to acquire additional aircraft. Did you say what that was?

Colm Barrington

As Gary said, we had something over $200 million of...

Gary Dales

Cash.

Colm Barrington

Free cash right now.

Gary Dales

And we have the acquisition of facilities available and there is just less than $300 million available under the acquisition facility. So...

Helane Becker – Cowen & Co. LLC

Okay.

Colm Barrington

So, as of today and we have something over $500 million of available cash. And we're obviously looking at ways of expanding this.

Helane Becker – Cowen & Co. LLC

Perfect, okay thank you very much.

Colm Barrington

Thanks, Helane.

Operator

Your next question comes from line of Richa Talwar with Deutsche Bank.

Richa Talwar – Deutsche Bank Securities, Inc.

Just a few questions from me. First I wanted to get some more details on the three A340s in your portfolio. One that I believe is fairly old, I think 20 years old. It's becoming more clear that big operators of the aircraft, Emirates, Lufthansa, SAS, are looking to replace the model with newer generation wide-bodies. So can you discuss your general thoughts around the long-term liability of that aircraft, and then maybe provide what the remaining carrying value of those aircraft are in your portfolio, and if we should be concerned with any potential impairment risk there. Thanks.

Colm Barrington

Okay, Richa. Well, first of all, our threes A340s were part acquired as part of our large portfolio acquisition in late 2011. And we acquired them as prices that reflected market conditions in 2011 in that we've acquired them at relatively low prices. When we were doing that acquisition, we – I'm sorry secondly, the aircraft are on relatively long-term leases, to good credits at good interest rates. So we have a good cash flow out of those aircraft for the next several years. And thirdly, when we’re evaluating that portfolio, we assumed a residual value for those aircraft, not much above the value of the four engines on each of the aircraft, the scrap value of the aircraft plus the value of the engines.

So we are reasonably comfortable with where we are with those aircraft. We got them cheap and we've got good lease rates, got long lease terms and we have a relatively conservative residual expectation. So we're reasonably comfortable with our A340 position.

Richa Talwar – Deutsche Bank Securities, Inc.

Great, that's great to hear. And then secondly, I wanted to get your thoughts generally on the 787. So you took the 787-8 and I guess, in light of common theme in the industry just from more longer gauged aircraft or, yes, so I just wanted to get your thoughts on why the 787-8 versus the 787-9 or 787-10 is it just because the opportunity with presented itself now and the economics worth and maybe you'd pursue the larger gauge aircraft going forward? Thanks.

Steven Zissis

Yeah Richa, this is Steve. Obviously we're a big fan of the 787 model. Both the 787-8 and 787-9 are tremendous aircraft. And looking for opportunities presented themselves, we would take advantage of acquiring 787-9, but as you know the 787-8s were the first ones to be delivered here in the Boeing line, and we're trying to get opportunity to do those. So obviously with our first 787-8 in the portfolio, but you should expect us to be doing more of the 787-8 as they become available.

Richa Talwar – Deutsche Bank Securities, Inc.

Okay, thank you.

Steven Zissis

Yeah.

Colm Barrington

Thanks, Richa.

Operator

Your next question comes from the line of Gary Liebowitz with Wells Fargo.

Gary Liebowitz – Wells Fargo Securities LLC

Thank you, operator. Question about your mid-life 737 acquisitions during the quarter, were you able to finance those or were those all cash deals?

Gary Dales

No. Hi, Gary, this is Gary also, we would finance both of those, one was done with bank debt and one is part of our term loan portfolio.

Gary Liebowitz – Wells Fargo Securities LLC

Once again, can you just talk about the trends in the bank debt market for these mid-lifed aircraft? I mean, we all know for the newer planes is plenty of liquidity but have these found better in the mid-life market?

Gary Dales

I think Gary, as you probably aware of, are generally better in the banking market and BBAM has been in the banking market for one-off aircraft acquisitions for a long, long time, and particularly in the limited recourse market from European banks and they have been able to find us opportunities to finance everything we've come across to date. So there appears to be a good appetite for financing mid-life as well as the new aircraft right now.

Gary Liebowitz – Wells Fargo Securities LLC

Great. Thanks. And Steve, I think you mentioned that you were seeing a nice recovery in A320 lease rates. Were you referring specifically to new aircraft or is this across all vintages?

Steven Zissis

No. Gary, keep in mind that we do not have any new Airbus A320 delivery. Everything in the FLY's fleet is 2006 to 2002 type vintage. And so, in my prepared remarks at the beginning, I was referring to what we would call in the mid-life A320 market and what we're seeing there particularly is that lease rates are now trending upwards.

Now albeit it's from a very low level, but the market does seem to be recovering, demand has definitely picked up and when we compare our actual lease rates in 2012 and 2013 to what we see rates for 2014 aircraft, we're up about 15% to 20% on average.

Gary Liebowitz – Wells Fargo Securities LLC

Okay, great. And then just…

Steven Zissis

So I think first in early signs that we definitely got a recovery in the airbus market and then on the 800 market, we're seeing excess demand for the 800 right now. So we expect rates to definitely increase substantially on those in 2014.

Gary Liebowitz – Wells Fargo Securities LLC

Okay. Okay, great. And also, you had mentioned you had four planes; you are remarketing with lease expirations in the first half of 2014, would you characterize these as some of the more challenging assets like A319s or even B57s or are they more in demand type models?

Steven Zissis

If we look in 2014, we do have a mix of 737, 800s, 700s, 319s and 320s and there would be no surprise to everybody that the 319 markets still remains challenging. So in the first quarter – sorry, in the first half of 2014, I think we've got one 319 that is available, but there are extension discussions going on. So there is good chance we'd just extend that, Gary.

Gary Liebowitz – Wells Fargo Securities LLC

Great. Thanks for the details, Steve.

Steven Zissis

Yeah.

Colm Barrington

By the way Gary, I think, don't categorize the 757 as being a difficult aircraft to market, there is superb demand for 757s right now.

Gary Liebowitz – Wells Fargo Securities LLC

Okay.

Operator

Your next question comes from the line of John Godyn with Morgan Stanley.

John Godyn – Morgan Stanley & Co. LLC

On some of the comments in your prepared remarks and your responses to the last question there, you had used the word surge in demand for some of these aircraft types that you are seeing and some of these lease rates and growth numbers year-over-year are very bullish.

I was hoping that you could sort of elaborate on what's driving this kind of inflection that we're seeing here. I have the sense that we've been in a period where replacement demand has been the majority of demand, but are we seeing a growth bid out there from airlines? What's driving this kind of urgent need to get aircraft and to bid them up at the rate that you are describing?

Steven Zissis

Well, I would just caution, John, it's hard to generalize. So, maybe look, I'll take this one piece at a time. And this is just our views, right? I'm not sure our competitors, which share the same view. But, when we look at the 800 market, the 2014 and 2015, the line is pretty much sold out. And, all except maybe, I'm going to say, three or four deliveries are placed on the new site. Generally, we're finding that airlines are finding the value in the mid-life 800s; it's more expected than paying up for brand new aircraft.

And, the reason for that is, lease rates in the last two or three years have come down across almost all aircraft types, and so airlines on a relative basis are finding used aircraft more attractive. The other thing is that, we go out and we canvas most of our lessees out there and we monitor their fleet plans for 2014, and what became very surprising to us was the amount of demand for mid-life 800s amongst our customers.

It far outstripped what we could identify as supply in the market, and we are definitely seeing rates moving up on the 800s very quickly now. Now, again I caution you this is just our opinion, I'm sure our competitors got different opinions about what's going on out there, but that's what we see. On the A320 market, I think it's a bit different, A320 market I think has suffered from just an excess supply for many years, mainly because of bankruptcies and airlines shedding of excess aircraft.

And that's affected the lease rates dramatically on A320s and A319s and we've seen all the re-marketing is in the last three years with lease rates that were substantially below what everybody expected on these asset types. Now, as there has no been – there has been no significant bankruptcies in 2013 and demand starts picking up, there is a balance regaining in the marketplace, and therefore you are seeing lease rates starting to firm.

So, I think it's as simple as that on the 320 side. It is more just a balance of supply demand and the lease rates picking up. Now, again, John, as I mentioned in my earlier comment, this is from a very low base. So, lease rates going down 30%, in the last couple of years and then recovering 15%, it's still not a great outcome, but it's better than we were at.

John Godyn – Morgan Stanley & Co. LLC

Okay. That's very helpful. And just as context, we heard similar comments from your – earlier this week, so the peers are saying similar things. Steve, just to put a point on it, though you'd mentioned something about fleet plans and Boeing 737-800s how demand for out stripped supply, is that a demand for growth or for a replacement and is there any color that you can give us on that point?

Steven Zissis

No, I think it's primarily growth, but also I think as the world economy is stabilizing and people are getting a little bit more confidence it's just worldwide growth. Airlines are now more prepared to plan for than they were, say 12 months or 24 months ago. I mean certainly what we saw, you know after the financial crisis in the last year and the year before was airlines were very hesitant to plan any growth or any additions to fleet, so just didn't know where things were going. Now people are a lot more confident and fleet planning with most of these airlines that we talk to who are now you know two years, three years out, which is a very helpful sign.

John Godyn – Morgan Stanley & Co. LLC

That's very helpful. And just last question on sort of similar line of thinking on wide-bodies, you didn't highlight any wide-bodies that's being the surge in demand as you sort of looked at fleet plans of customers. Is this supply demand differential only a narrow-body phenomenon on right now or what are you seeing on any key wide-body aircraft side. Thanks.

Steven Zissis

I can just talk in general that we do see demand definitely for wide-body, but because our fleet has a relatively low amount of wide-bodies in it. As you know, we only have 11% in the FLY's fleet and in the general BBAM fleet it's less than 10%. We don't have, I would say a great crystal ball on wide-body demand. I think other people who are experts in that area could give you better advice.

John Godyn – Morgan Stanley & Co. LLC

Fair enough. Thanks guys.

Colm Barrington

Thanks John.

Operator

(Operator Instructions) Your next question comes from the line of Glenn Engel with Bank of America.

Glenn Engel – Bank of America Merrill Lynch

Hi, good morning. Question on new leases that you're signing, how long are the terms? And on the remarketed leases, how long do those terms tend to be?

Steven Zissis

Look, Glenn. All of them were in that five to six-year range that we're signing up.

Glenn Engel – Bank of America Merrill Lynch

You mean the more recent ones?

Steven Zissis

Yes, on the more recent ones, they're all in the five, six range. We do have a couple extensions that are running in the two-year. But there – I would say there are only a couple aircraft that we're doing there. Most everything is five, six years now that we're extending.

Colm Barrington

Except I think Steve for the new aircraft, we've acquired would tend to be in 10-year to 12-year range.

Steven Zissis

Sorry. I thought he was referring to remarketing.

Colm Barrington

Yeah.

Glenn Engel – Bank of America Merrill Lynch

No, no, that's what I was asking. The aircraft that you've acquired this year is generally in the 10-year to 12-year range.

Colm Barrington

That's right, yeah. The new aircraft, I think of the 10 aircraft, Glenn, we've acquired this year eight are brand new aircraft, and I think the minimum lease term of those, many of those is 10 years and some goes far as 12 years.

Glenn Engel – Bank of America Merrill Lynch

And do you have any views on sales of aircraft? Is there any rough amount you'd expect to sell in the fourth quarter in 2014?

Colm Barrington

We don't have any aircrafts scheduled to sell in the fourth quarter of this year, but we're in the market on a daily basis, Glenn, so opportunities could arise.

As you can see, we've already sold 10 aircrafts this year. So it could be that we might have one or two more by the year-end. But we don't have any specific deals tied down right now.

Glenn Engel – Bank of America Merrill Lynch

And the comments about growing 10% to 15%, I guess that implies you're expecting about $400 million or $500 million of aircraft purchases in 2014?

Colm Barrington

Yeah. I mean we're about $3 billion today, so 15% is $450 million, so right in the middle of the ballpark.

Glenn Engel – Bank of America Merrill Lynch

Okay. Thank you very much.

Colm Barrington

Thanks, Glenn.

Operator

Your next question comes from the line of Douglas Runté with Deutsche Bank.

Doug Runté – Deutsche Bank Securities, Inc.

Doug Runté here, Deutsche Bank. A follow-up question on the A320 market. When you talked about those percentage change in lease rates, were you speaking specifically to the A320-200 or more broadly across the A320 narrow body family including A319?

Steven Zissis

No. Just to the A320.

Doug Runté – Deutsche Bank Securities, Inc.

So the A320 proper?

Steven Zissis

Correct.

Doug Runté – Deutsche Bank Securities, Inc.

What are you seeing in the A319 market? And I guess more broadly, are you seeing material distinctions between CFM, which I think dominates your fleet versus IAE.

Steven Zissis

Look, the A319 market is still very soft and really the only differentials we see in the marketplace are airlines that are looking for what we call the high density A319 aircraft.

Doug Runté – Deutsche Bank Securities, Inc.

Okay. So the 2 over 1 doors?

Steven Zissis

Yes. That's the only differential that we're finding in the market.

Doug Runté – Deutsche Bank Securities, Inc.

Okay, great. Thanks very much.

Steven Zissis

Yes.

Operator

Your next question comes from the line of Gary Liebowitz with Wells Fargo.

Gary Liebowitz – Wells Fargo Securities LLC

Thanks. It looks like your receivable balance debt is staying pretty low, am I to assume that some of the Indian customers that have been in the news lately are still current? And also, is it still just the two lessees that are on a cash basis revenue recognition.

Gary Dales

Gary, this is Gary. On a cash basis, we've taken those aircraft back and those are the ones that Steve has talked about placing in the fourth quarter. So they are no longer in our receivable balance.

Gary Liebowitz – Wells Fargo Securities LLC

Okay.

Gary Dales

The Indian carrier is a part of that balance that we have at year-end, but we are in discussions and we think we're going to be caught up by year-end with those guys there, expect to get some capital in during the fourth quarter.

Gary Liebowitz – Wells Fargo Securities LLC

Okay, great. Thank you very much.

Colm Barrington

Thanks, Gary.

Operator

And there are no further questions at this time.

Colm Barrington

Thank you very much for joining our third quarter earnings call. We look forward to updating you again next quarter.

Operator

This concludes today's conference call. You may now disconnect.

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