FTAI Aviation (FTAI) Morgan Stanley’s 13th Annual Laguna Conference summary

Business model evolution and strategy

• Transitioned from aircraft and engine leasing to a vertically integrated aftermarket engine maintenance provider, focusing on CFM56 and V2500 engines.

• Achieved significant market share growth, from 0% four years ago to 9% currently, with a target of 25% in the next three to five years.

• Vertically integrated by acquiring MRO facilities in Miami, Montreal, and Rome, enabling control over the entire maintenance chain.

• Adopted a unique approach by servicing only owned engines, not third-party engines, to maximize efficiency and control.

• Plans to expand capacity to 1,000 modules next year, with a 33% production growth rate and potential for a fourth facility.

Strategic Capital Initiative (SEI) and asset-light model

• Launched SEI to access private capital, enabling off-balance sheet asset management and reducing capital intensity.

• SEI allows management of partnerships, investment decisions, and guarantees MRO business for internal facilities.

• On track to acquire 250 aircraft with 500 engines this year, with ambitions to repeat or expand the initiative annually.

• SEI structure delivers higher returns and lower risk by optimizing engine exchanges and reducing cash outlay.

• Envisions managing up to $20 billion in assets, with a $4 billion annual investment target and potential for multiple SEI funds.

PMA parts and cost savings

• Partnership with Chromalloy targets high-cost hot section parts for CFM56, offering up to 75% discount to OEM prices.

• Anticipates imminent FAA approval for a key PMA part, which could drive significant industry adoption and savings.

• PMA adoption is facilitated by control over MRO and SEI assets, with proven performance and growing acceptance among operators.

• Chromalloy has invested heavily in production capacity, consolidating operations in Tampa to support PMA growth.