In Conversation: Paul Meijers – Airbus EVP Aircraft Leasing, Trading & Financing

Paul Meijers recently re-joined Airbus after nearly 18 years in the aircraft leasing business. His return provides Airbus with a formidable resource to ensure the company wins more frequently. AirInsight sat with Meijers at the IATA Annual General Meeting in Boston. AirInsight: Financing, obviously, is a key lever in the toolbox for you. Finance is crucial coming out of the pandemic. How do you decide which way you support and, how do you support a customer coming out of the pandemic? Meijers: "On the financial side, you know, we work with all the different sources of financing. So the key for us is diversification. So we saw during the pandemic that you know the airlines were very keen on leasing aircraft and going through sales and leasebacks because that was a way for them to have first of all 100 percent financing and reduce their cash out." "We saw a lot of demand for leasing, but we didn't ignore the older sources, we got the export credit agencies back on track. It's very important because in the last crisis they were very active. This crisis was a bit different so it's been why because there's not really a financial crisis." "We got new players coming in the markets, you know, private equity firms that are coming in, so we're working with them also, very actively with these new sources of funding from insurance markets as well. So there's plenty of capital available. We try to work with all the parties because we think that diversification is key. Right now it's more geared towards the leasing companies but leasing companies rely on the capital markets as well to a large extent. And, as you know, those markets have been extremely liquid, especially since November last year, when the vaccines rolled out. We saw really an uptick in liquidity by other capital markets." "And we saw that has been funneled back to our customers, our airlines by other leasing customers. So working very closely with our last few customers, working with the banks, the bank commercial banks have retrenched a little bit. Compare what to do before because they were quite busy in restructurings, and they're also subject to higher regulation than the non-regulated financiers so a little bit of pressure on commercial banks but we see a lot of upticks, and other sources of financing, and we see wide open capital markets. So we work with all of them because we need everybody and different financing structures for different customers." AirInsight: Backstop financing is good it's good when your balance sheet is strong. How do you think this has impacted your primary competitor? Meijers: "I mean, during the crisis, everybody suffered, right? We ourselves burnt through a lot of cash and we were very constrained on our balance sheet. Now we are repairing our balance sheet, rebuilding the cash cushion that we have before the crisis. But that, you know, so we were very vigilant, still, with our cash where we're very careful mindful, extra financing is a tool that we can use, but it's not been the tool that has been critical in decision making over likely because there's so much capital available." "There's so much capital, they see all this appetite from the lessors. So we've had some discussions on financing and commitments, but more as a safeguard. Some airlines want it as a financier of last resort, as we typically are if we step in, but it's not been a huge concern and it's not been driving a lot of the campaign decisions that we've recently seen. So far this year, we've only stepped in into four aircraft. In terms of financing helping someone, and it was with minor portions, you know Junior tranches. So it was only four planes when we stepped in to help and support the reason, you know, and we are right now, you know, over 400 aircraft delivered so far. So, so it's a small portion it's less than one percent." "And it's a short term you can get out of that. Yeah, so do the three of those airplanes are just a bridge for 18 months. So we'll get out next year, and one is maybe a longer-term but we think we can sell down next year and get out. So, in fact, our overall exposure we've been reducing more exposure than adding on this year so far, we've been selling more assets than adding more financing so the fact that we're lightening up the balance sheet, which, which is good. Our CFO is still very, you know, very vigilant and wants to ensure we put our cash to good use." AirInsight: Paul when you look at your background with GECAS. what can you bring from that experience to Airbus? Meijers: "I think, if I take my experience from GECAS it's the agility of the company and the way to adapt to an ever-evolving aviation market. And I think what I'm really impressed and Airbus, a big company, industrial company, and was very impressed in the crisis, how quickly we adapted. Our rates, first of all, you know, when we hit were hit by COVID in March, 2020 we adapted our production rates. In April, we cut the single-aisle rates, we cut the widebody rates, 40 and 50 percent. We were very quick to adapt very, very agile, we restructured our contract." "So I'm actually impressed with how agile Arbus is to adapt to the markets. And I thought this was something where, you know, GE was really good at that but I think, Airbus is equally good at it. I think the other thing was very, very important which I took my kind of what I learned in my GE days was basically the ability to deliver and commit. And I think, likewise, I think taking that back to Airbus, I think it's very important for us also to be able to, you know, do what we say and say what we do." AirInsight: What would you say there's any kind of transformation we can expect from your role? Meijers: "As I said before we started the interview, you know, we've brought some of the finance activity, customer finance, and structured finance into commercial. So, this is in order to be more solution-oriented to our customers so we bring in this together with our leasing activity and an asset activity, and you're basically a very kind of solution-oriented team, what are we trying to engineer all kinds of solutions for our customers. So, constantly seeing how we can help put together structures. You know with the crisis we did some very interesting things, innovative things in terms of financing. We put some structures together to help our customers and they've proven to be very successful." AirInsight: Okay. My last question is, what would be the focus areas for 2021/2022 as we come out of the pandemic? Meijers: "Working very closely with the leasing companies, that's a big focus, you know they're major customers. The market is picking up. And, you know, and they've got the order book, we are sold out actually, for quite a number of years on our single aisles, so we need to work as partners with the leasing companies to, basically, you know work together on sales campaigns and a very recent example you are probably seen as the ITA announcement, where, you know, there was very joint kind of working together with a major lessor and Airbus to bring together a solution to the airlines so that's going to be our focus is to pivot back to the commercial activity taking over financing partners into account and how we can build solutions for customers."

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