Aircraft Leasing Organizational Structure

David, a pleasure to have you with us today. I think a good place to start would be to really explore the structure of the aircraft leasing organizations and the teams. Given the portfolio is global, how is the business structured?

It depends, primarily, on the size. A smaller company, or a smaller branch, starts out relatively small. You probably have a sales guy and then he’s reporting back to headquarters, somewhere. If it’s a small company, just starting, there are a small number of people. Those people still have to take on the same tasks, essentially, that are there in a big organization. The salesperson, obviously, to generate and originate the leads. You’ll need finance people to make sure that the finances are under control. Those might be your pricing people, as well. You’ll have a risk person, who may or may not be your finance person. Certainly, you’ll have legal people, tax people, perhaps. Sometimes, if you’re a small company, you might start with outside counsel, but aviation law is considerably different from other types of law, so it’s important to make sure you get people who are knowledgeable in the field.

With the tax people, when you grow in size and become international, in particular, you need people that know the ins and outs of all the tax treaties, between countries and jurisdictions. That becomes quite an important piece that can be overlooked. Technical people are extremely important to the transactions, particularly if it’s used aircraft or pre-owned aircraft, because you can really get caught from just missing paperwork or having an inspection gone wrong. Those are critical, but not so critical when you’re just dealing with new aircraft. If you’ve ordered a bunch of aircraft or you’re just doing purchase leasebacks, that’s not as critical, up front. But when it comes to repossessions or redeliveries, those are some very key people.

What is the biggest challenge with the somewhat decentralized structure? I understand it’s centralized for the HQ and then you have various different regions that are working the same portfolio.

I’ve been in Asia for 30 years and always had a headquarters back in the States. When it’s Asia and the US, it’s not too bad, because you’re 12 hours out. But once you get a European entity in there, as well, then you’re always forced to have calls in your night. Europe hooks up in their daytime and the morning in the States. It does make for a lot of late nights, when you’re out here in Asia. But it comes with the territory; it’s part of life and you get used to it. It can be more difficult not having your entire team out here with you. First of all, they don’t understand the customer as well because you are, primarily, the only advocate for the customer that they don’t know. If it’s an American or a United or a BA or something like that, everybody knows them. When you’re talking Srivijaya or Nok Air or something like that, it’s more difficult. It’s hard to explain and it makes the process more complicated and more challenging.

Let’s say you’ve got a customer in Malaysia or South East Asia, for example, do you have to compete, internally, to allocate aircraft to the customer or do you have a designated number of aircraft for the region? How does that work?

For most companies, you’ve got certain assets you’re trying to place as quickly as you can, at the best price you can. You’re fighting it out with every other salesperson. Quite honestly, the jurisdictions in Asia are tough, from both the legal standpoint and the financial standpoint. It’s more difficult to get management to agree with your deal, as opposed to sticking with a Lufthansa or something like that, which they’re familiar with. It is quite a fight, sometimes.