Jason Caldwell EVP Global Sales and Marketing March 31, 2011 PMA Parts & Leasing in International Markets With a Focus on Latin America

Why Use PMAs? Cost Savings Availability Product Improvements Bottom Line: – More choice, more savings, better efficiency Wencor Group Confidential2

Objections to PMA Use “I don’t have the engineering staff to approve PMAs” “The OEM says my warranty will be voided and my aircraft will fall out of the sky” “My lease does not allow the use of PMAs” Wencor Group Confidential3

The Lessor Argument The use of PMA Parts ‘Devalues’ the A/C or Engine  The available lease market is diminished due to the quantity of airlines who do not want to utilize PMA  PMA parts have a lower cost, therefore, they reduce the value of the commodity Regulatory authorities are unclear on PMA legitimacy PMA parts impact aircraft reliability Standard contract language cannot change 4Wencor Group Confidential

Objections to PMA Use “My lease does not allow the use of PMAs” Impact to the operators – Must weigh the higher cost of OEM replacement parts – Higher cost and inefficiencies of a dual stocking strategy – Possible monetary consequence of ignoring the prohibitive terms of the lease Wencor Group Confidential5

Pushing PMAs in Leased Aircraft Level I– Change the contract: Use purchase leverage to assure lowest total cost of ownership, not just lowest lease rate. Use groups or alliances to add negotiating power. Level II– Know the real terms: What are the restrictions? All PMAs? Critical parts? LLPs? Components? Airframe? Interiors? License PMAs? Educate the decision makers! Level III– Use PMAs for the interim, until lease expires. When lease is up, go to level I. Wencor Group Confidential6

PMA Users With Leased Aircraft A Few Examples 7Wencor Group Confidential

PMA Users With Leased Aircraft A Few Examples 8Wencor Group Confidential

AAR Aircraft Sales & LeasingGECAS AWASMacquarie AirFinance Babcock & Brown Aircraft Management LLCORIX Aircraft Corp Banc of America Leasing & Capital LLCORIX Aviation Systems CIT AerospacePembroke Group First Greenwich Kahala LtdQ Aviation LLC United Airlines Banc of America Leasing & Capital LLCILFC CIT AerospaceJet Trading And Leasing GECASPacific AirFinance Global Knafaim Leasing LtdSky Holding LLC Global Principal Finance Company LLCSkyWorks Leasing LLC Guggenheim Aviation PartnersVx Capital Partners Delta Air Lines AerCapMacquarie AirFinance AWASPacific AirFinance Banc One Capital CorpPembroke Group Boeing Capital CorpRBS Aviation Capital RPK Capital Management Group LLCGECAS Global Knafaim Leasing LtdVolito Aviation AB Jetscape Inc American Airlines Lessors Allowing PMA Use A Few Examples 9Wencor Group Confidential

ECONOMIC CLIMATE AND AIR TRAVEL LATIN AMERICAN AIRLINE FLEET STRATEGY FOR LEASING COMPANIES Latin America & Caribbean vs World 10Wencor Group Confidential

Size Comparison WorldLatam & Carib.% Passengers2.4 billion148 million6.1% Fleet25,0001,2545.0% Revenues480 billion21 billion4.3% Airlines 1, % Population6.9 billion589 million 8.5% GDP60,587 billon 4,247 billion 7.0% Source: World Bank, ALTA airlines 11 Wencor Group Confidential

Regional Comparisons Source: IMF, ALTA, U.S. DOT, AEA 12 Wencor Group Confidential

Latin America Growth Outpaced US and Europe Source: ALTA, U.S. DOT, AEA RPK CAGR Wencor Group Confidential

2010 Industry Growth Source: IATA (except LatAm (ALTA) data point) 14 Wencor Group Confidential

Consolidation Years Ago vs. Today Wencor Group Confidential

Latin American Airline Fleets 16Wencor Group Confidential

Latin American Airline Fleets 17Wencor Group Confidential

Top Leasing Companies for Latin American Fleets 18Wencor Group Confidential

Latin American Market 19Wencor Group Confidential

Meet with Lessors to discuss the importance of PMA use New Agreements Existing Agreements Utilize the arguments provided PMA suppliers would be glad to also participate in discussions Engage the assistance of alliance partners Use existing agreements as leverage Meet with Lessors together as a group 20Wencor Group Confidential

21 Engage The Leverage of Alliances Wencor Group Confidential

Leveraging the Alliance Wencor Group Confidential22

Conclusion Airlines view cost savings to be a major driver of PMA usage Other benefits include: Improved part performance or reliability Just in time delivery Airlines agree that safety, reliability, or ‘bogus parts’ are not an issue Most don’t have safety/technical concerns, but also don’t want to be early adopters of engine hot section PMA parts OEM/MRO and Lessor contract restrictions are cited to be major factors limiting PMA use Airlines and PMA community can focus on three levels of PMA acceptance on leased Aircraft: 1.Change lease contracts to accept PMA– use leverage of new lease, and of alliances 2.Use PMA where contract restrictions allow (non-critical, components and airframe, license) 3.Use PMA until leases expire Latin America case study shows some success Wencor Group Confidential23

APPENDIX Wencor Group Confidential24

Lessor Top Concerns with Use of PMA Parts Wencor Group Confidential25 Source: SH&E Survey

Exceptions Nearly every lessor’s default policy is to not allow permit PMA parts; however, exceptions are made, depending upon: – Lessee Credit Quality and Lease Return Conditions – Fleet Size (bargaining power) – Desired PMA Penetration Other exceptions are made if the transaction makes financial sense, and are more inclined to include: – Sale/leasebacks – Long-term leases – Older aircraft – Instances where the next lessee is known to accept the alternate parts Some lessors perceive lessees to have increasing leverage to utilize PMA parts due to: – Increased acceptance of the safety and testing standards of PMA parts – Shift in the supply/demand dynamic for aircraft (operators have more negotiating strength) 26Wencor Group Confidential