AerSale at Wells Fargo Conference: Strategic Expansion and Optimism

Published 12/06/2025, 17:02
AerSale at Wells Fargo Conference: Strategic Expansion and Optimism

On Thursday, 12 June 2025, AerSale Corp (NASDAQ:ASLE) presented at the Wells Fargo Industrials & Materials Conference 2025, offering a strategic overview that highlighted both optimism and challenges. The company, led by CFO Martin Garmindia, expressed confidence in exceeding 2024 results, driven by a strong inventory position and expansion in its tech operations. However, challenges remain in gaining adoption for its AeroWare product.

Key Takeaways

  • AerSale aims to surpass its 2024 performance, leveraging a robust inventory and expanding tech ops.
  • Asset sales will be irregular, but an increase in whole asset sales is anticipated this year.
  • AeroWare faces adoption challenges, yet AerSale is working to demonstrate its benefits.
  • The company targets a 25% internal rate of return and is exploring M&A opportunities.
  • AerSale’s multidimensional extraction process is seen as a competitive advantage.

Financial Results

  • AerSale expects to outperform its 2024 results due to strong inventory.
  • The impact of tariffs has been mitigated through international sales and cost transfers to customers.
  • Asset sales are projected to be inconsistent, with an increase in whole asset sales expected.
  • In Q1, only one whole asset sale occurred, but serviceable inventory has grown.
  • Used Serviceable Material (USM) sales enjoy approximately 25% margins, while Engineered Solutions product margins exceed 50%.

Operational Updates

  • The tech ops business is expanding, with plans to maximize capacity at the Goodyear facility.
  • The Millington facility in Tennessee, operational since last year, will be commercialized this year.
  • Expansion in pneumatic capabilities and doubling of aerostructures facilities is underway.
  • AeroWare adoption is challenging, but efforts are ongoing to gather operational history.
  • MRO capacity is in high demand, with a focus on onshoring maintenance activities.
  • The 757 freighter conversion market is experiencing increased demand.
  • Military business remains a minor segment, contributing 5% or less.

Future Outlook

  • AerSale plans to grow its leasing portfolio, particularly in engine leasing.
  • Monetization of the AeroWare product is a focus.
  • Capital deployment priorities include acquiring feedstock and exploring M&A opportunities.
  • The company is cautious about M&A, ensuring acquisitions are accretive and synergistic.
  • AerSale anticipates a retirement wave, influencing market dynamics.

Competitive Landscape

  • AerSale’s multidimensional extraction process is seen as a key competitive advantage.
  • The company competes by offering leasing, parting out, and whole asset sales.
  • AerSale’s ability to pay more for assets stems from its capacity to extract maximum value.

For a detailed understanding, readers are encouraged to refer to the full conference call transcript.

Full transcript - Wells Fargo Industrials & Materials Conference 2025:

Martin Garmindia, CFO, AirSale: Yes,

Unidentified speaker: let’s kick it off. Next company we have is AirSale, and we’ve got Martin Garmindia, the CFO. So Martin, thanks very much for making the turn.

Martin Garmindia, CFO, AirSale: Thank you for the

Unidentified speaker: Maybe just to kick it off high level for those that aren’t familiar with AirSale, could you talk a little bit about the different parts of the business and what you guys do? Sure.

Martin Garmindia, CFO, AirSale: So we service large commercial aircraft, so both Boeing and Airbus platforms. We do that through our asset management side and our tech ops side. We buy midlife equipment, so assets that are ten to twelve years old have kind of exited the OEM warranty period. And then we can do several things with those assets. If they are in a condition where they’re flyable, we can put them into our lease portfolio, both the aircraft or remove the engines and put the engines in the portfolio.

We also find opportunities where we can sell those assets to other operators, so we’ll do that. Or we can break down those assets into their components and parts and that’s our used serviceable material business. On the tech upside is where we have our maintenance repair and overhaul facilities or MROs. We have three on airport MROs in The United States and we three off airport MROs that do landing gear components and accessories overall. And also in our tech ops side, we have our engineered solutions group, which creates unique products where we improve the operations of an existing aircraft either to meet a regulatory mandate or to improve the overall operation of that aircraft.

And that’s usually done through a supplemental type certificate awarded by the FAA.

Unidentified speaker: Got it. That’s a good overview. Can you talk a little bit about kind of the outlook for this year? You guys reported not too long ago, but we’ve had noise around tariffs and other things. Just any thoughts on that the demand environment has changed?

No.

Martin Garmindia, CFO, AirSale: I mean, we’ve been like everybody trying to keep up with the ever changing environment when it comes to tariffs. Fortunately, we’ve been working on various strategies to try to mitigate the overall impact. We’ve used bonded warehouses. We service a lot of customers that are international. Over 60% of our business has been international.

So we have the opportunity to if it’s foreign sourced inventory to keep it outside internationally and then we can sell it and pretty much avoid the tariff impact. Where we have had to pay overall tariffs, we have been able to pass the majority of that cost on to our overall customers. So that would be foreign material that is being consumed in The U. S. But right now, we’re not seeing a major impact overall from the tariff issues.

We’re not seeing kind of impacts on supply chain or anything like that. I’m sure like a lot of different industries, everybody is trying to understand what the normalization will be. And then no one’s really making any decisions right now.

Unidentified speaker: Yes, yes. Got it. Got it. And then in terms of the year, I I know you guys don’t like to give specific guidance, but just qualitative thoughts on the various parts of your business, how sort of how fast they could grow?

Martin Garmindia, CFO, AirSale: Sure, sure. I think we’re in a very good position to definitely exceed twenty twenty four’s results overall. And I say that because we are coming into the year with a very strong inventory position. So we’ve been fortunate that we have been able to buy in a very tight market good overall material that will serve not only our USM business, but also we’re repairing some of that material that will allow us to grow our leasing portfolio specifically on our engine leasing portfolio and also serve some whole asset opportunities. So we feel good on that and that’s going to drive our asset management side.

On the tech op side, we are starting to ramp up our business. We did complete a major project that we had in Goodyear for a U. S. Carrier, but we’re starting to work with multiple customers to fill that overall capacity. And actually, out of everything, there’s a silver lining.

We’re starting to see opportunities where we can go from using half of that facility to kind of using all eight facilities. We also have our expansion projects that are coming in and we’ll start generating revenue. We have our Millington facility in Tennessee, which is another on airport MRO that will start that came online last year and will start getting commercialized this year. And then our two expansion projects, both adding pneumatic capabilities and doubling our aerostructures facilities. So as those facilities come through and those are starting to come in, in the next couple of weeks, we expect revenues to start ramping up.

And also on our engineered solutions side, we have our air safe product that has a regulatory requirement coming due next year. So we’re starting to see a good steady flow of those sales, and we expect that to start picking up in the half of the year. So with all of that, we feel pretty good about the prospects of this year.

Unidentified speaker: Yes, interesting. Okay. We’ll definitely come back to the year where I think one of the things, I guess, we saw in the first quarter, you guys sometimes can have asset sales, which tend to be lumpy. But I guess as we look out over the next couple of quarters, anything we should expect in terms of cadence of a lot of those flow through one quarter? Or is it just

Unidentified speaker: too early

Martin Garmindia, CFO, AirSale: assets are absolutely lumpy. And I think ever since we’ve gone public, we’ve told that to investors that, that will definitely have some volatility in our overall earnings. But it is a key part of our business. We definitely find opportunities where folks will pay more than we potentially see on leasing those assets or parting them out. So that will continue to be a key part of the overall strategy.

Q1 did only have one of those overall assets. We, as I mentioned, have been able to build up our serviceable inventory, specifically on engines. So we do anticipate that we’ll have a higher level of whole asset sales for the remainder of the overall year.

Unidentified speaker: Yes. Got it. Got it.

Unidentified speaker: Could you talk about a little bit about the aircraft in the engine that you’re able to acquire now, what the market looks like in terms of used serviceable material availability and just sort of confidence on your ability to sort of monetize those assets?

Martin Garmindia, CFO, AirSale: Sure, sure. On the overall market, it continues to be a very tight market. Overall, operators still don’t have the confidence on the new OEM production coming in and that production being reliable. So until that happens, you’re not going to really start seeing a kind of larger wave of overall retirements. So what we are seeing are aircraft and engines that need work that are potentially unserviceable, and we’re buying that overall material.

That’s perfect because that is that we can break down and service into our USM. But we also use our engineering capabilities and our engine know how on looking at some various components that we’ve been buying and putting them together. So making engines out of overall parts and getting an additional revenue stream by making engines that we can sell or that we can put in the overall leasing portfolio. So that has worked kind of well for us overall. What gives us the confidence when we deploy capital?

We’re very cautious when we deploy capital. It could be only one criticism you could give us overall. We use our proprietary models. We look at the overall market. We look at sales trends.

We look at cost of catalog list price of new overall material and we price it that way. We look at the existing fleet. We see exactly what retirements are going to come through based on vintages of the overall aircraft. So we have a pretty good lay of the land. And assets are long term assets.

So and we’re in the midlife space. So when assets start coming into that end of life, we start getting out of those overall platforms. And then we start moving to some of the newer assets that are starting to come in. But we have our model. We target a 25% gross margin internal rate of return.

Our history has supported that overall position. So when we deploy capital, we have pretty good conviction that we’re going to get our returns.

Unidentified speaker: And kind of related to that, I mean, sort of availability has been tight for a while. I think it’s improved. And like you said, as we get more visibility into deliveries, maybe it gets a little bit better. Is that a better sort of profitability environment when there is more assets available because you can buy them cheaper? Or then does do you sell them for less?

Or sort of what’s better?

Martin Garmindia, CFO, AirSale: Yes. It will overall be supply and demand. So obviously, there’ll be more material overall. Prices will adjust accordingly overall. So but what it will bring us, and we’re very excited about it, it will bring a lot of assets.

So it will allow us to grow our overall revenues. And we’re constantly looking at the overall market because there is an overall change in dynamics. So obviously, we had supply chain constraints over the last twelve, eighteen, probably twenty four months ever since we’ve come out of COVID. And you’ve had almost U. S.

Sand material selling at a premium to OEM new because there is no OEM new. So you’ve got to be very cautious of that overall market, and we do. And we anticipate, again, as we’re looking at overall platforms, not to get too ahead of ourselves because we do anticipate that, that retirement wave is coming, and we want to make sure we’re in a good inventory position when that does.

Unidentified speaker: Yes. Got it. Makes sense. You touched on AeroWare earlier, but I guess could you just dive a little bit more into that product, what you’re seeing in terms of demand for July, where I think is where it’s qualified now? And then any plan to roll that out to other models?

Martin Garmindia, CFO, AirSale: Sure. So we continue to work with various operators on the AeroWare product. So for those that aren’t familiar with it, it’s a very innovative product, allowing the pilot to use a head wearable display to be able to see all his instrumentation and through an enhanced light vision camera, be able to see through the overall weather. We’ve been working with those operators. What we have found, it is a difficult proposition to introduce new technology into the overall cockpit.

So what we’re doing now is we’re working with several operators to potentially put these assets in on aircraft to start getting operational history. So one of the things that’s happening now, we’re seeing it is the events that happened in DC, that overall tragedy that happened in New York with pilots flying blind. There is a need to enhance the ability for pilots to operate the aircraft and to relieve some of that pressure on the air traffic controllers. This technology can provide that. And looking at it, and we’ve been talking about it in Q1, there’s ADS B technology that the government and the FAA transitioned from old radar to GPS tracking of aircraft.

Well, that’s called ADS B Out, sending the signal out to the air traffic control. There’s ADS B In, which allows that signal to go to the aircraft. So now the aircraft could actually monitor, very similar to technology we’re seeing in our cars. I go having a head wearable display where you have pretty much three sixty degree because it’s following GPS, we think it’s definitely an enhanced way of using that technology over fixed HUD or a fixed display overall. So we still believe that this is transformative.

I think once we start getting that operational history, it will be strong. We’ve convinced the FAA’s technical team to give it a 50% visual advantage. We’ve talked to the overall training team. But don’t think until we start having air traffic control, see the benefits of that technology, start giving operators priority to dispatch and land that we’re really going to get into the next step. And we’re there, we’re going to start working with these operators to start getting information.

Unidentified speaker: Yes. And can you talk a little bit about the financial impact of that product, in terms of like how profitable it is once you’re producing at a high level, but also the investment that you’ve made in that, does that start to roll off? And does that sort of help cost wise?

Martin Garmindia, CFO, AirSale: Sure, sure. So the catalog list price is approximately $1,500,000 Now that’s not all our product. We this is a partnership with Universal Avionics, which is an Elbit subsidiary. So that’s roughly about a fifty-fifty split on that overall product. Our margin profile, we anticipate to be strong.

For our other engineered solutions products, it’s been in excess of 50%. We have been producing our portion of the overall kit. So we do have a handle on cost and obviously there’s cost opportunities once we start ramping up production at a greater level overall. So the economics are strong. It also gives us a lot of opportunity for potential discounting for any potential initial orders.

So the economics are definitely strong. So we’re focused on it. Most almost all the investment has already been spent on these assets. So now it’s a matter of getting it out there, kind of almost evangelizing the message of this product and monetizing on that opportunity.

Unidentified speaker: Yes. Got it. And how do you think about sort of, I guess, profitability for the business overall? I mean, as you mentioned, multiple different kind of sub parts of the business and a little bit of noise around kind of product sales. But could you talk a little bit about how kind of the margins in each part are trending from here?

Martin Garmindia, CFO, AirSale: Yes. I think our overall margin profile will start to increase. So our leasing portfolio has always enjoyed strong overall margins. Again, we’re buying assets in a lot of part assets that are pretty much close to part of value, so close to that salvage value. So our margin profile has been strong.

As that grows, that will increase the overall leasing portfolio. Engineered Solutions product, as I mentioned, have enjoyed a 50% overall margin. So that’s also going to be accretive to the overall mix. Our USM sales have enjoyed about 25 margin. Again, you’re going to start seeing more of that coming through.

So we’re excited about all those prospects. On our MROs, which are traditionally what you would say maybe lower overall margin opportunities, we have taken a deep dive into kind of our operations and really kind of worked on efficiencies and labor utilization. So we also expect those businesses to start enjoying a better margin profile, which is great because we have a lot of good prospects there to grow that side of the business.

Unidentified speaker: Yes. Got it. Could you talk a little bit about MRO capacity? I mean, you touched on it earlier, a little bit of expansion there. We’ve heard a lot of the hangars are full kind of across the industry.

But how does that stand? And what’s kind of the outlook there?

Martin Garmindia, CFO, AirSale: Yes. So we’re seeing a lot of overall demand on the MRO space. On the on airport MRO, we did conclude an overall project that we had with a major U. S. Carrier that kind of ended at the end of last year, fully in December overall.

So we’ve been talking to a lot of different customers and we brought in a new executive to help us with overall marketing and sales of those units. And it’s been a very strong demand. We’re definitely seeing, as you noted, operators both with desire to bring back onshore some of the maintenance activities that are being performed, definitely especially ultra low cost carriers, cargo operators definitely wanting a more kind of specialized and more close kind of maintenance amount. So that is going great. We feel very good at the prospects.

Again, we were using about four of the overall bays at our Goodyear facility. We’re seeing opportunities to potentially use all eight bays overall. So that excites us. Our Millington facility is, for the most part, we have completely revamped it. So it’s state of the art, centrally located, very good labor pool.

So we have a lot of prospects there of customers who like it just in the fact that they can almost have a dedicated facility for them. So we have some good overall prospects there. And then on the expansion projects, on the two other expansion projects that we did on the component side, Aerostructures business has been busy since pretty much we purchased it five years ago. I go the opportunity to triple that footprint obviously will mean that we can more than triple the size of that overall business. And we already have customers that have scheduled to do overall audits to get us approved.

And they’ve told us once that capability is there and that capacity is there, we’re going to take advantage of it. Same thing for our pneumatic project. We’re already doing some pneumatics. We’re testing that overall equipment. So we expect both of those sites will be able to ramp up as soon as those facilities come online.

So absolutely still a very strong aftermarket, and we’re very well positioned to take advantage of that.

Unidentified speaker: Got it. Got it. A couple of things I’ve heard from other sort of MRO operators complaining about for a long time now. One is ability to get parts on time to finish some of the shop visits. The other is getting enough labor headcount just to do all the work.

So I guess, have you seen has that been an issue for you? And if so, is that starting to get better at all or is still a challenge?

Martin Garmindia, CFO, AirSale: There is still definitely some challenges in certain overall components and parts. We have seen an improvement on that. And we’ve been able to mitigate when it comes into the airframe material because we do repair some of our overall airframe. And when again, it’s the lack of actually finding a part because we have a USM inventory, we can repair our own material to get our assets out. Where we have seen pressure is on the engine side because we don’t do engine repairs, so we do outsource that.

But what we have done is, again, we’ve used our USM inventory. We’ve built our overall modules. So that’s expedited the process and also lowered the cost for our repairs. And we were seeing probably last year kind of a very long cycle to get those engines out. That has greatly improved, probably still a little longer than it normally took.

But that’s starting to give us the ability. We have overall 10 engines now that have come out of that overall repair process that are marketing. We have another 10 engines that are starting to come out and will come out in the next probably two months overall. And I go, so we’re starting to see that cycle improve overall.

Unidentified speaker: Yes. Got it. Could you talk a little bit about capital deployment priorities for the business? You guys have done some share repurchases. Is there plans for that to be a big part of the mix with M and A?

Just anything you think about? Yes. From a capital deployment perspective, we

Martin Garmindia, CFO, AirSale: did do a stock buyback. We were looking at the stock. And obviously, we believe our stock is undervalued. We’re trading at below tangible book value. So any share buyback would be buying pretty much our existing assets at a discount.

Also talking to investors, understood that the overhang of the Leonard Green Holdings was definitely putting pressure on the overall stock. So we did negotiate an agreement where we could buy $45,000,000 of shares at a discounted price and kind of alleviate that overhang, bring Leonard Green down to a much smaller level overall and overall decrease our overall share count overall. I don’t anticipate or foresee any additional purchases of stock in the current year. I think we have a lot of strong opportunities to continue to buy feedstock to grow the business. M and A, so we have taken an approach when it comes to not doing M and A, but building it on our own.

I think there’s definitely some good opportunities that we’re seeing out in the market that obviously would be quicker to buy something that’s already operating. So we’ll be looking at potential M and A opportunities. But when it comes to M and A, we’re going take a very cautious approach just like we do with Asset Management. We want to make sure that anything that we do is accretive overall. It has the synergies to the rest of the business.

So again, we’ll take a cautious approach. But absolutely, we think there’s good capital opportunities for us to deploy. Now one of the benefits that we have is we do have that strong inventory position. We are going to be recycling that overall capital. So that’s going to allow us to continue to grow the company and not have to take on additional debt.

So I think we’re in a pretty good overall position there.

Unidentified speaker: Yes. Got it. And can you talk about sort of the competitive landscape little bit? I mean you guys have sort of a unique business model where you buy an asset, you could lease it out, you could part it out, you could sell it as a whole asset.

Martin Garmindia, CFO, AirSale: And just sort

Unidentified speaker: of how you compete with others and how you think air sales can differentiate it?

Martin Garmindia, CFO, AirSale: Yes. We definitely think that our multidimensional extraction process is key and gives us a competitive advantage. So when I’m looking at an asset overall, I’m not just looking at, okay, that’s going to be the USM value. I know that if I have cycles remaining, could which is pretty much cycles remaining of the engine can fly, that I can have a revenue stream there and operate that overall engine, get that leasing revenue, and at the end of that lease, part out the engine. So because that gives me an opportunity to be able to pay more because I can extract more overall value overall.

Also, as I mentioned in the overall market, when I’m looking at assets that are unserviceable, but I’m buying multiple assets, I have the opportunity to put things together and make flyable assets and I’m able to create overall value. So that is definitely important when it comes to operators, especially smaller operators, having one person that can help them move all their overall inventory and definitely working with a counterparty that they have confidence is going to close, it definitely gives us a key in the overall market.

Unidentified speaker: Yes, got it. And when you think about that model of we’ve got this asset, we’re deciding what we’re going to do with it. I mean, is there a key driver, whether it’s like interest rates or fuel prices where like things go one way, we’re just going to do this? Or is it really just each asset is unique?

Martin Garmindia, CFO, AirSale: Every asset that we look at, we run it through our proprietary models. Again, we’re trying to target a 25% IR. So we’re looking what is the most advantageous way of doing of extracting that value. And it really will depend on the condition of the overall asset. On anything related to aircraft, it’s all about the records.

It’s back to cradle, record keeping. So we have all of that information. We can do borrow scopes on the engines. We can do inspections on the airframe. So we have a pretty good handle on as we’re doing due diligence on the condition of that overall aircraft.

Then we’re working with our U. S. And Irish lease counterparts on what is the leasing market for this overall asset. I go our engineering team or our power plant engineering team on what is the condition of the engine. Do you think you could repair the engine?

Do we have other components of other engines that we could potentially economically build an overall engine. So we’ll factor all of that in. And then the last part of that equation is, if we can’t, what is the value of those overall parts, What is the demand out there? There’s an inventory listing system that we look at. So we know kind of what is out there.

We obviously know what catalog list price is. So we obviously want to make sure that we’re below that overall. But we’re working with operators on, okay, what are your needs? What are you looking for both on from an operator standpoint working with leasing companies and our own MROs? So we’re using all of that dynamic to kind of make sure that, okay, we know we definitely have an out.

For the most part, we’ll try to go not go down in one way street. We’re looking at an overall asset and we say, look, I think there’s a leasing opportunity here, we’ll always make sure that we can still make an overall profit if we were to part it out, which would be the lowest kind of revenue extraction process.

Unidentified speaker: Yes. And is there as the assets are going through that process, how long did that take from when you get it to when you monetize it? And is there any sort of inventory value risk or anything? Or is it pretty well set? No.

So from a timing perspective, again, it depends on

Martin Garmindia, CFO, AirSale: the overall asset. We’ve been fortunate to buy some engines, again, not that many at this time around that are ready to go. So you pretty much can market it out. We’ve had deals where we bought a series of assets, aircraft and engines, and we’ve been able to sell those engines within days, if not within hours. I go, there’s other assets that we’ve been able to grab and immediately we need to send them out for repair.

So then they need to go out to the repair process. We need to get all the overall inventory that could take two to three months and then we’ll bring back the asset out and we’ll start marketing the asset at that point. If we’re going to break it down into USM, again, you’re refurbishing a lot of that overall material, whether within our facilities or with other facilities. So again, that process takes about probably two to three months to start getting that inventory on the shelves. As far as pricing risk overall, as I mentioned, we’re looking at overall market.

We’re working on very stable markets. So we don’t anticipate any of that overall risk. In fact, catalog list price goes up every year. So if anything, that inventory continues to be worth more. Again, the key is dealing with in demand platforms.

That’s what we stay in the midlife space or into the end of cycle market, so we can start exiting those spaces. And again, we’ll refocus our efforts now on the newer assets that are starting to get into that midlife cycle. So that helps us hedge a little bit of that price volatility and price risk.

Unidentified speaker: Yes. Got it. Got it. Could you talk about used serviceable materials, used parts, kind of what the demand is and how that sort of trended over time? I think years and years ago, we didn’t use a lot of it and it’s sort of grown and kind of have you seen any increased demand for it given that the industry overall is pretty tight in terms supply?

Martin Garmindia, CFO, AirSale: Yes. I mean, think USM, at least over the last few years, has enjoyed pretty good acceptance level, definitely more than PMA parts or product manufactured parts overall. So we haven’t seen that overall. Absolutely, after COVID, when there was no OEM production, USM was heavily favored because that was their only option.

And even PMA parts got additional favor in that ever tightening market. Our position has always been is that the only limitation on USM sales is having the availability of well priced USM parts that you can put into the overall market. You’re giving the market assets that are pretty much the same OEM quality because they are OEM material, remanufactured up to the overall specs at a significant 20% to 30% discount. So the market will continue to use USM if it’s available. And obviously, if only the only thing we had was USM, we could not service all the overall engines.

So we believe the market will continue to be strong. Again, key that you have assets and platforms that are in demand. So we expect that market to continue to be strong overall. We are seeing, obviously, much better production of new OEM material overall. But again, I think it’s that cost savings aspect that still is going to make USM attractive now and going forward.

Unidentified speaker: Got it. And you mentioned PMA, which are essentially kind of party manufactured alternatives for the OEM part. And is that something that you’ve seen more adoption of? And would that be something that could be a bigger part of your business at any point in the future?

Martin Garmindia, CFO, AirSale: We look at it. So we have a product manufacturing authority. We primarily use it for our supplemental type certificates. So we use that for to certify the foam on the air safe kit or kind of certify the overall antennas that are used in the AirTrak system overall. So that’s where we’ve limited.

We brought an executive that does have PMA experience. So that’s something that we’re always looking to potentially expand. And I wouldn’t do PMA parts of trying to kind of come up with a $5 bolt and coming up with an overall solution. We would look at something that’s more higher dollars and better profit items. But that’s definitely something we have capabilities to do that we’re looking to potentially expand.

Unidentified speaker: Yes. Got it. Got it.

Unidentified speaker: Could you talk a little bit about the freighter conversion market? And you guys had some 757s. I think you’re doing passenger to freighter conversions. What kind of demand are you seeing there on the front?

Martin Garmindia, CFO, AirSale: Yes. So obviously, during COVID, cargo was pretty much on fire. I mean, everybody was getting everything shipped. Overall, then we had kind of probably eighteen months ago, kind of the shift in consumer sentiment, all of a sudden, people didn’t want to buy goods. They wanted to have experiences.

And we saw kind of a decline in the overall demand for freighter aircraft. Thus we have at this point six 757s that are pretty much fully converted that are being marketed for sale or lease. Fortunate for us, we have seen an uptick in demand for those assets over the last six months. So we’re working with multiple operators to potentially sell and but the majority of those opportunities will be to lease those overall assets. So we feel good.

The seven fifty seven is a very unique aircraft. It has a large payload for a narrow body aircraft, wide range. It’s also these are the newest of the 757s. These are the last to be converted. They have the latest technology, winglets, glass cockpits.

So they’re definitely a very attractive addition to any freight operator, and that’s what we’re starting to see kind of that pickup in demand overall. So we feel pretty confident we’ll be able to deploy those six assets.

Unidentified speaker: Got it. This And are there more left beyond that that

Martin Garmindia, CFO, AirSale: are still in the works or that The overall, we have the ability to potentially convert to additional assets, but we’ll do probably those more on a spec basis. If somebody has a demand, then we’ll do

Unidentified speaker: this And then use other customer types, I mean, the defense side, comment on demand there and how big your part of your business is?

Martin Garmindia, CFO, AirSale: The military part is a small part of our business. It’s been less than 5%. I think last year, might have been less than 2% overall. There’s an opportunity there that we’re definitely seeking. Obviously, our MROs can work on components that would serve military aircraft.

On the asset management side, there are definitely some platforms that are commercial derivatives. The P-eight, Poseidon, is a derivative of seven thirty seven-eight hundred. So that is a market that we can definitely continue to grow. We are one of the companies to sell USM sales to the U. S.

Government overall because the U. S. Government used to have a stigma on USM. So that’s definitely something that we are definitely pursuing. We have the support of a board member who’s a former military officer to tap into that overall market and grow it.

Unidentified speaker: Yeah. Yeah. Got it.

Unidentified speaker: Cool. And then if anyone in the audience has one? Yes, sorry.

Martin Garmindia, CFO, AirSale: Yes. As I mentioned, we started seeing the increase before the overall tariff situation overall. So I think it’s been overall markets normalizing a little bit more and there being some increased overall demand. That’s I think where we’re attributing it right now. The tariff situation is a little bit interested in it.

Again, these the 757s or narrow body aircraft aren’t very they don’t do transatlantic. They do more kind of intercontinent. And definitely, there would be opportunities if all of a sudden you’re not serving necessarily from China, The U. S, but you’re moving more of that inventory within Asia or into Europe, that these narrow body aircraft could potentially be in greater demand. We actually had sold a lot of these 757s to YTO and SF Express that service Alibaba in China to serve kind of that overall market.

So that potentially could actually go our way, but we’re definitely seeing with other overall demand opportunities that we’re getting those assets to see that there’s definitely interest in those assets.

Unidentified speaker: Got it.

Martin Garmindia, CFO, AirSale: I think from a fleet management perspective, you want to see probably at least six months of repetitive production demand. You want to make sure that on the Airbus side, the gear turbofan issue has been repaired so that you’re getting pretty good reliability on the engines that are servicing the new platforms overall. I think once you have that, again, an airline, the most important thing is to have seats filled and have that capacity to meet that overall demand. So they’ll take a very cautious approach to make sure that they’ll keep the assets to make sure they can service that customer need because that is the revenue flow. Again, when that does start to feel a little bit better, the fleet is definitely older.

So you’ll start seeing some of those opportunities for them to transition some of those aircraft out. What’s good is that when aircraft start getting transitioned and get retired, they don’t ever fully retire. When they’re leaving the majors, they’re starting to transition to what we call Tier two, Tier three operators. Operators are flying in Latin America or Southeast Asia or the ultra low cost carriers overall. So those assets will continue to live a life, some as passenger aircraft, some as cargo aircraft.

So you’ll continue to see that overall demand that will obviously displace older assets that those operators use. So again, I think it’s an exciting time. We’re hopeful and we’re seeing some good numbers being posted by Boeing that they finally will have gotten over some of this issue. We were in the Boeing camp. We had bet that they were going to get this resolved a lot sooner than now.

I think we were in the months and obviously at this point it’s been years. But we’re starting to see some positive momentum there. And I think if the market can start seeing that, there’ll be some deployment for new OEM production and that will start benefiting us on retirements.

Unidentified speaker: Great. So I had one question left and you asked it. So maybe that’s a good place to wrap it up. Thanks again for coming.

Martin Garmindia, CFO, AirSale: Perfect. Thanks for the invite again.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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