1. By Xiaoya Xiong (Carrie), Zichao Wang (Zich), Hari VijayanNovember 13 th, 2014

2. Agenda Introduction Current Holdings Business Macro-economic Review Management Philosophy Recent Stock Performance Financial Analysis Financial Valuation Recommendation

3. Introduction A leading aircraft leasing company that provides airlines worldwide with operating leases on new aircrafts. Rental revenue accounts for 97.4% of total revenue. AL is also involved with aircraft remarketing and sales, fleet analysis and planning, aircraft financing and support, and aircraft management for 3 rd parties. [2] Customers are mainly large commercial airline companies. Relationship with 200 airlines across 70 countries. Owns 193 airplanes, of which 90% are flown internationally. Employee strength- 63 people. The company was founded in 2010 and has its head-quarters in Los Angeles, CA. [1] Source : 1.10-K Page 4, 2.Airleasecorp.com/about

4. Current Holdings Purchased: 400 shares @$ 22.32 on Dec 18, 2012 Cost basis: $8,928 Current Price: Closed @$37.28 on Nov 12th,2014 Market Value: $14,912 Gain: $5,984 (67.03%)

5. Business Overview The company purchases new commercial jet transport directly from manufacturers and lease them to airlines throughout the world to generate attractive returns on equity. Purchases are funded by internally generated cash, debt financing and excess cash. Suppliers include companies like Airbus S.A.S, Boeing, etc. Customers include companies like United Airlines, Air France, Air China, Emirates, etc. [2] Fleet principally comprise of Boeing-737, Airbus A320, Embraer E190 class of aircrafts. AL has developed a globally diversified financing group that has generated $4.4 billion in financing. The company also sells aircraft from its operating lease portfolio to third parties and other leasing companies. Provides fleet-management services to investors and portfolio owners for a fee. Major Competitors: AerCap Holdings N.V., Aircastle LTD and FLY Leasing Limited Business performance is principally driven by the growth of fleet, term of leases and interest rate on indebtedness, supplemented by the gains of aircraft sales and trading activities. Source : 1.10-K Page 5, 2.Airleasecorp.com/customers#

6. Business Strategy Fleet is comprised of fuel-efficient and newer generation aircraft. This helps in reducing obsolescence risk and in maintaining residual value. Cyclical risk in aviation industry is mitigated by managing customer concentration and lease maturity in operating lease portfolio. Leases require all payments in US dollars and protect the company from all currency risks. Monitors the financial health of lessee to reduce credit risk. Purchase costs are reduced by sourcing components of aircraft separately. Leases are backed by cash deposits and reserve payments. Leases are always operating, where company retains residual rights on aircrafts. Lessee is responsible for tax, insurance and maintenance of the leased aircraft. Leases comply with F.A.A standards. Source : 10-K Page 8,9,10

7. Business Segments

8. Recent Financial Performance Total revenues of $858.7 million in 2013, an increase of 30.9% from 2012. Total revenues of $261.9 million in last quarter, an increase of 21.3% from 2012. 101,822,676 shares of common stock are outstanding. Company’s $2.1 billion unsecured revolving credit was upgraded to investment grade. [2] $5.9 billion total debt in 2013, an increase of 34% from 2012. Effective tax rate was 35.1% in 2013. All 193 owned aircrafts are currently leased and are obligated to make $6.2 billion in non- cancellable lease payments. Signed lease agreements for 98 aircrafts that are being manufacturing for delivery through 2023. Has committed to buying 78 new aircrafts from suppliers in the near-future. Source : 1.10-K Page 5 2. http://www.streetinsider.com/Credit+Ratings/Air+Leases+(AL)+$2.1B+Revolving+Facility+Assigned+BBB-+Rating+at+Moodys/9648607.html

9. Macroeconomic Analysis IMF GDP Growth Forecast Commercial air travel and air freight activity are broadly correlated with world economic activity and expanding at a rate of 1 to 2 times the rate of global GDP growth. – AYR 2012 annual report Leasing company’s can lock down profits more accurately based on trends in economy and are less dependent on actual state of economy (this assumption does not account for credit risk) Source : World Economic Outlook, IMF October 2014 edition

10. Macroeconomic Analysis Source : World Economic Outlook, IMF October 2014 edition, 10-K Page 45

11. The extrapolating historical leasing trends indicates that the total number of aircraft on operating lease will increase from 6800 in 2010 to 8500 in 2015, an increase of 1700 aircraft. This increase will be driven by both new aircraft deliveries as well as sale-leaseback transactions. Macroeconomic Analysis Source : Airbus Market Forecast 2013-2032 Page 35

12. Porter’s 5 Forces CompetitionThreat of SubstitutesPower of SuppliersPower of BuyersThreat of New entrants STRONGLOWHIGHMEDIUMLOW Competition from other leasing companies, aircraft broking, etc. Similar products (They all are planes!) even though AL has a newer fleet compared to competitors. 95% of industry is accounted for by the top 50 companies. Only very big airline companies can afford buying their own planes. However, even then this is inefficient compared to leasing. Leasing is the only other way an airline company can operate. The number of airline manufacturers is limited, and there are very few big names. E.g. Boeing, Airbus. This gives suppliers substantial edge in controlling pricing. High in mature market where competition is high and financing options are more. Low in emerging markets where competition is low and financing options are less. Cost of new planes is high. Customer base is important with most of the revenue coming from retaining customer relations. New entrants play a different game (used/older planes) and don’t mix with big players.

13. SWOT analysis STRENGTHSWEAKNESSESOPPORTUNITIESTHREATS Senior management has an average of 23 years experience in aviation industry. The fleet is comprised of young, fuel efficient and modern aircraft. Improvement in credit- worthiness has reduced the cost of debt. Increasing diversity in customer base. Debt covenants on D/E, dividend ratios, minimum net worth and interest coverage ratios, change of control provisions and provisions against aircraft disposal. On-going litigation with ILFC and AIG Growing replacement market in North America and Europe. Forecast of Tripling demand in emerging markets. Forthcoming change in lease accounting standards. Continuity in business, retaining customers is of volatile and riskier nature in aircraft-leasing. Technological innovations can obsolete the existing fleet. Over-supply in market can significantly impact future earnings.

14. CEO - Steven F. Udvár-Hazy, an aircraft leasing industry pioneer. Employees and directors are given stock-based compensation The management is looking forward to increasing the fleet size, and expanding more in the global market. Management expects to finance the expansion plan by raising more unsecured debt. Focus on meeting needs of replacement markets in North America and Western Europe with a newer fleet. This can improve the market share of the company. Improve and diversify the presence in emerging markets where a higher lease rate can be commanded due to lack of financing options. This can increase the profitability of the company, Management Philosophy Source : 10-K Page 44, 48, 2014

15. Technical Chart Source : FreestockChart Comparable analysis

16. Recent Stock Performance 52wk Range: 30.01 - 42.89 Shares Outstanding: 102.39M Beta: 1.51 P/E :17.27 P/B : 1.43x EPS : $2.16x Div & Yield: 0.40% Current Price: Closed @ $37.28 on Nov 12th,2014 Market Cap: $3.82 billion Source : Yahoo Finance Summary

17. Financial Analysis

18. DuPont Analysis The sharp increase in leverage is a major factor in the increasing ROE

19. WACC Valuation

20. DCF Valuation

21. Revenue Projections & Growth

22. Comparables Valuation

23. Decision Drivers STRENGTHS Strong Potential Economic Headwinds Promising Aircraft Leasing Industry Growth Young Fleet, Fuel Efficient and Modern Aircraft CONCERNS Current Stock Price > Fair Prices from Valuation Aggressive Debt Financing Strategy On-going Litigation with ILFC and AIG Short-Term outlook is not promising

24. Recommendation : SELL 200 Shares @ Market The DCF valuation generated a per share price of: $32.92 The Comparables valuation generated a per share price of: $29.50 The per share price on market-close on 12 th November 2014: $37.28

25. Q&A