FTAI Aviation Ltd. Common Stock Morgan Stanley's 14th Annual Laguna Conference

Sure. Thanks very much, Kristine, and thanks for having me be back again this year. I think I've been coming here almost 10 years now to this conference. It's a great get-together, great conference, great investors. I really enjoy catching up with everyone. I think we met probably about four or five years ago, I think, when you had your little radio broadcast at Morgan Stanley, and we were talking about, I think it was the first time we started talking about aerospace products. We thought we could grow it from a business that we just began, which we called The Module Factory, which was doing about $50 million of EBITDA to $500 million of EBITDA. I don't remember if you actually said no way, but I sensed that you were thinking no way.

As we've grown that business this year, we're looking at doing $3.5 billion of revenues, over $1 billion of EBITDA, and next year growing further to $4.7 billion of revenue and $1.4 billion of EBITDA. The market acceptance and the market opportunity for that has been much bigger than we expected, and it still has an enormous potential. Essentially, what I think of it as is a better way to do aftermarket engine maintenance. It's a model where we combine the ownership of the engine with the ownership and management of the maintenance facilities, and that gives us a different way of thinking about it, a more efficient way. When you're an owner, you think about maintenance differently. We've designed an extremely efficient production process. We optimize. We call ourselves the zero-waste people. We don't waste hours and cycles.

We have scale so we can buy material, which is a big part of it, flexibly and at very attractive prices. We combine really the opportunity to use every available tool to reduce the cost of maintenance for the owners and the airlines. What that means is then we can go to the airlines and the owners and say, "We have a better value proposition. We can actually save you real money, time and time savings." We can demonstrate a demonstrable benefit to the product, and that's what has really allowed us to grow significantly. We started with the best engines in the world, which I think are the CFM56 and the V2500, and we will expand from there. There are other engines that the same business model will work.

We think of this as a very sustainable and durable way to do engine maintenance. The other part of it is a couple of years ago, we realized that these benefits of owning engines and maintaining yourselves also would allow an owner, like a lessor, to create better returns. We realized that we had the opportunity to set up our own asset management business where we could show the investor, we could demonstrate better returns, do all the engine maintenance through engine exchanges, and allow us to increase our footprint in the industry, which means we look bigger to the customer, we look bigger to the industry. We control a lot of maintenance, and it has huge benefits, and it allowed us to do it using other people's money. It's not a capital-intensive activity for FTAI Aviation.

We think that that combination further propels us, and it gives us extraordinary leverage to continue to grow in multiple directions. Lastly, as you know, we didn't plan on power in the beginning because we didn't know the opportunity would exist in this scale. But when we realized that there's a shortage of blades and vanes for manufacture and people can't produce them fast enough, we started thinking, well, how could you solve that problem? The answer to us was, well, then don't make new blades and vanes. Why don't you take an existing asset and convert it? We looked around and said, what asset is big enough to make a difference to produce gigawatts of power in the aviation industry? There's only one. It's really the CFM56. It happened to be our focus engine.

We owned 1,000 of them, and we said, "This is something we really can do and should do." That became really the third part, and it also has the potential to extend the life of this platform for 20 years and gives us an alternative use for run-out engines. It has also tremendous benefits. All three of these activities really feed each other in a positive way.