Value Creation and Growth . . . Diminishes PMA Industry Obstacles

PMA Obstacles to Growth

• Leasing Restrictions

• Misinterpretation of Regulations

• Customer Perception

• Scope and Coverage of PMA Parts

• Complex Internal Customer Approval Processes

What can the PMA Industry What can the PMA Industry Learn from the Airline Industry?Learn from the Airline Industry?

What can the PMA Industry What can the PMA Industry Learn from the Airline Industry?Learn from the Airline Industry?Learn from the Airline Industry?Learn from the Airline Industry?Learn from the Airline Industry?Learn from the Airline Industry?

Both Have Challenging Obstacles

Airlines Industry• International Regulations• Code Share Challenges• FAA Regulations

PMA Industry• Leasing Restrictions• Misinterpretation of

Regulations• FAA Regulations• Gate Restrictions• Union Restrictions• Fuel Prices• Customer Allegiance• Low Cost Carrier Competition

• Customer Perception• Scope and Coverage of

PMA Parts• Complex Internal

Customer Approval Processes

Airlines Create New Value To Be ‘Relevant and Essential’

Creating a New Passenger Standard of What Is Acceptable

Airlines Continue to Grow To Be ‘Relevant and Essential’

Organic Growth Improves Profitability and Increases Customer Options

28.1 29.2 30.2 31.1 32.1 33.1 34.1 35.035

40

Source: Airline Monitor, ICF, ACAS, Airbus, Boeing

19.7 20.6 21.5 22.5 23.5 24.8 26.0 27.1 28.1 29.2 30.2

0

5

10

15

20

25

30

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Airc

raft

(K)

To accommodate the rise in passenger demand, the global fleet is expected to grow at 3.9% per year to 2028

Airlines Continue to Grow To Be ‘Relevant and Essential’

Inorganic Growth Improves Profitability and Increases Customer Options

If The PMA Industry Continues to If The PMA Industry Continues to Focus on Creating Value and Growth, Focus on Creating Value and Growth, Many of the Obstacles Will Naturally, Many of the Obstacles Will Naturally,

If The PMA Industry Continues to If The PMA Industry Continues to Focus on Creating Value and Growth, Focus on Creating Value and Growth, Many of the Obstacles Will Naturally, Many of the Obstacles Will Naturally, Many of the Obstacles Will Naturally, Many of the Obstacles Will Naturally,

Eventually DiminishEventually DiminishMany of the Obstacles Will Naturally, Many of the Obstacles Will Naturally,

Eventually DiminishEventually Diminish

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

PMA GrowthWencor Group Qty

*2014 estimate includes acquisition of Flight Line Products PMA

3000

4000

5000

6000

• CAGR 2008 to 2013 : 10.2%

0

1000

2000

3000

2008 2009 2010 2011 2012 2013 2014*

PMA GrowthIndustry Forecast

Commercial Air Transport PMA Market Forecast by ICF SH&E

§ Today’s PMA market size is approximately $500M, increasing to $740M by 2023

§ Over the next 10 years, the PMA market will grow at an estimated 4% per annum

ICF SH&E: Forecast in 2013 USD, exclusive of inflationICF SH&E: Forecast in 2013 USD, exclusive of inflation

§ Engine PMA parts will continue to make up an ever decreasing share of overall PMA spend as OEM material strategies gain traction

PMA GrowthWencor Group Customers

As Wencor Group PMAs Have Grown, So Have The Number of Customers

PMA GrowthWencor Group Customers

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

ATA Chapter DiversityWencor Group

* 2014 Interior Acquisition will add 852 PMA’s

100

200

300

400

500

600

*

0

100

Up to 2008 2009 to 2013

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

ConsolidationM&A

One plus one makes three. The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies through valuable than two separate companies through greater efficiency & market share.

ConsolidationM&A

20

ConsolidationM&A

21

ConsolidationM&A

Large PMA Compete With OEM Strategic Programs

Small PMA Suppliers Provide Focus in Niche Products

Both Large and Small PMA Suppliers are Important

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

PMA Value Added Services

• Kits Kit applications include:

• Landing Gear• Component Overhaul• Engine Overhaul• Maintenance Checks• Modification• Modification

Custom kits can include PMA parts

• Point of Use Inventory A premier on-site delivery program utilizing proven technology designed to:

• Improve replenishment cycle time

• Reduce inventory investment• Reduce supply chain administration costs

24

PMA Value Added Services

• Integration of Multiple Suppliers• Overhead Cost Reduction

• One Point of Contact, One PO, One Invoice – ISA Functions as the Order, Invoice and Payment Facilitator

• Integration of PMAs, Hardware, Seals, Lighting, Bearings, Electronics, and Other Commodities

• Pricing Options• LTAs for Existing PMAs & Development

• PBH Agreements

25

Growth and Value Creation

• PMA Growth– NHA/System Coverage– ATA Chapter Diversity

• Consolidation – M&A• Consolidation – M&A• PMA Value Added Services • PMA Supplier Alliances

PMA Supplier Alliances

• Potential Hurdles– How to Split Common

Capabilities– Which Supplier Takes

Lead

• Potential Benefits– Increased PMA

Coverage When Competing With the OEM Lead

– Proprietary Information– Lower Costs for On Site Support

– Lower Costs for Inventory Management

– Increased Speed to Market on Development PMAs

PMA Supplier Alliances

OEMOEM

OEMOEM

An Alliance Could Provide Additional Scope & Coverage

So, If The PMA Industry Focuses So, If The PMA Industry Focuses on Creating Value and Growth, on Creating Value and Growth, How Will Customers Respond ?How Will Customers Respond ?

So, If The PMA Industry Focuses So, If The PMA Industry Focuses on Creating Value and Growth, on Creating Value and Growth, How Will Customers Respond ?How Will Customers Respond ?How Will Customers Respond ?How Will Customers Respond ?How Will Customers Respond ?How Will Customers Respond ?

Reasons For Using PMASurvey Results

Reasons For Using PMASurvey Results

SO, IF THE PMA INDUSTRY SO, IF THE PMA INDUSTRY FOCUSES ON CREATING VALUE FOCUSES ON CREATING VALUE AND GROWTH, WHAT ARE THE AND GROWTH, WHAT ARE THE

SO, IF THE PMA INDUSTRY SO, IF THE PMA INDUSTRY FOCUSES ON CREATING VALUE FOCUSES ON CREATING VALUE AND GROWTH, WHAT ARE THE AND GROWTH, WHAT ARE THE AND GROWTH, WHAT ARE THE AND GROWTH, WHAT ARE THE OBSTACLES THAT COULD BE OBSTACLES THAT COULD BE

ELIMINATED?ELIMINATED?

AND GROWTH, WHAT ARE THE AND GROWTH, WHAT ARE THE OBSTACLES THAT COULD BE OBSTACLES THAT COULD BE

ELIMINATED?ELIMINATED?

Top Barriers To PMA GrowthSurvey Results

Aircraft Leasing Issues Continue To Be the Top Driver

Top Barriers To PMA GrowthSurvey Results

More PMA Growth and Value Added Services Will Eliminate Many Barriers

Leasing Will Continue To Grow

LessorsUnited StatesTop PMA Customers

AABSAAFTAAR Aircraft Sales & LeasingAARIFS & Global Principal FinACS Aircraft Finance IrelandAerCapAerfunding 1 LtdAeroTurbine IncAFS InvestmentsAir Lease CorporationAirbus Leasing VI IncAircastle InvestmentAircraft Services CorporationAircraft SolutionsAirplanes GroupAIRSP 2007-1 ABS PortfolioAisling AirleaseAlary TrustALC LLCALF IncAmeritech Credit CorpAmsouth Leasing CorpApollo Aviation Capital LLCArchway Aviation (Ireland) LtdAT&T Credit Corporation

Castle LLCCentury Tokyo Leasing CorpChemlease WorldwideCIT Leasing CorpCitibank NACiticorp Leasing IncCrane Aviation PartnersDaimler Chrysler Capital ServiDaugherty AirDougherty Equipment FinanceEast Shore Aircraft LLCFemira Verwaltungs Gmbh & CoFINOVA Capital CorpFirst Greenwich KahalaFirst Hawaiian BankFirst Star Aviation LLCFirst Victoria LeasingFly Leasing LtdFly-Z/C Aircraft LtdFord Motor Credit CompanyGA Telesis LLCGAIF LLCGambit VerwaltungsgesellschaftGaucho-2 IncGE Capital Commercial Inc

Kahala US- 24623/24871 LLCKale Aircraft Leasing (Ire)KBWA Leasing CorporationLincoln National CorpMacquarie AirFinanceMandarin CorporationManufacturers Hanover LsgMerrill Lynch GENCO LLCMerx Aviation LLCMetLife Capital CorpMetropolitan Life Ins CoMission Funding EpsilonMitsui & Co (USA) IncMS Financing IncorporatedMUL Aviation Capital LtdNAS InvestmentsNational City Leasing CorpNationsbanc LeasingNationsBank NANCC Golf CompanyNcc Key CompanyNcc Solar CompanyNorlease IncNorthwestern Mutual Life InsNwa Aircraft Finance Inc

36

AT&T Credit CorporationAvationAvenue Capital AMRAviation Capital GroupAviator LLCAvolon AerospaceAvsa SarlAWASAZ Aviation Finance LLCBanc of America Lsg & CapitalBank of MontrealBank of New YorkBank of Utah TrusteeBatcl IncBBV Leasing Fonds GmbHBCI Aircraft Leasing IncBell Atlantic Tricon LeasingBNY Capital Funding LLCBOC AviationBoeing Capital CorpBot Financial & Leasing CorpBouton Ltd

GE Capital Commercial IncGECASGeneral Foods Credit CorpGenesis Lease LtdGerard VerwaltungsgesellschaftGIE Edith BailGIE UalGlobal Knafaim Leasing LtdGlobal Principal Finance CoGo LeaseHinode Aviation InvestmentsHNB Investment CorpHU LeaseIdaho VerwaltungsgesellschaftILFCInfinity AviationITW Aircraft Investments IncJackson Square AviationJaspis VerwaltungsgesllschaftJetscapeJohn Hancock Leasing CorpJP MorganJSA Aircraft

Nwa Aircraft Finance IncOH Aircraft LLCOHA Centre Street A/c HoldcoOHSP Aircraft 1 LLCOneFed Leasing CorpOrient Capital Co. LtdORIVA Airlease (No 3) LtdORIX AviationPacific Airfinance 3 LLCPacific Century LeasingPALS01Pitney Bowes Credit CorpPLC Leasing CorporationPMCC Leasing CorpPrime Aviation Capital LLCPSEG ResourcesPursuit N925DL LLCQ Aviation LLCR3 Capital Partners MasterRBS Asset FinanceRegional Equipment TrustRego Aviation LLCRising LeaseRPK Capital III LLC

SA CalifSAILES 2SASSASOF TR-61 LtdSecurity Pacific Equipment LsgSequa Capital CorpShawmut BankSilvermine River Finance TwoSIP Cayman I LtdSkyFunding MSN 31151 LimitedSLM CorpSMBC Aviation CapitalSociete GeneraleSolitair CorpSpirit of Maryland LLCStripes 2013 Aircraft 1 LtdStudent Loan Marketing AssocSumitomo Bank Capital MarketsSyndicate of various Loan Certificate hoTennenbaum Opportunities PrtnrTexas Aviation Group

Thayer Leasing CompanyTokyo Leasing Co LtdTop Flight Leasing LLCTransamerica Aviation LLCTyrolean AirwaysUICA Investment Holdings LLCUnionbanc Leasing CorporationUS Bank NAUsl CapitalUT Finance CorpVerizon Corporate Services GroVGS Aircraft Holding LtdWachovia Financial Services InWalt Disney World CompanyWC Aircraft Holding US II LLCWells Fargo Leasing CorpWestinghouse Credit CorpWexford Management LLCWilmington Trust CompanyYamasa Air Lease Co LtdZ/C Three OP Trust

LessorsAerCapAerDragon Aviation PartnersAerVentureAIRSP 2007-1 ABS PortfolioALAFCOALC LLCAlexandre Finance 2009 SNCALIP Co., LtdAlpiarca Aircraft LeasingAnatolia Aviation Leasing LtdAntares AGApollo Finance II SNCArchway AviationAustriaAvequisAviation Capital GroupAvolon Aerospace Leasing LtdAWASBanco Espirito Santo SABank of ChinaBBAM LLCBNP Paribas Lease SolutionsBOC AviationCastle LLC

GECASGeneva Triple Sept Leasing LtdGIEGY Aviation Lease Co. LimitedHope West Leasing Co. LtdHummingbird LtdILFCJackson Square AviationJPA Co., LtdKotoku Kaiun Co LtdKuwait Turk LtdLufthansa Leasing GmbH (LLG)Luke FSC LtdLusitano Aircraft LtdMacquarie AirFinanceMalta Aircraft LeasingManon Naticaly SASMarseille Aviation LtdMCAP Europe LtdMercury Aircraft LeasingMillennium BCP SAMilvi SASMistral Leasing Co LtdMondego LLC

EuropeTop PMA Customers

37

Castle LLCCelestial Aviation Trading LtdCelineCentury Tokyo Leasing CorpChishima Real EstateCIT AerospaceCitibank NACiticorp North America IncConstantine Sofia SASCredit Agricole CIBDaire Aviation LtdDB Export Leasing GmbHDS 139 Flugzeugfonds XIII GmbHDS-Rendite FondsE2R LLCEllis Park Leasing LtdFC Leasing LtdFI Leasing LtdFL Pegasus Leasing Co., LtdFly Leasing LtdFO Leasing Ltd

Mondego LLCNatixis Lease SANBB Lease Co LtdNicolas Finance 2009 SNCNomura Babcock & Brown Co LtdOrion LtdORIX AviationOsprey Aircraft Lsg (Twenty)Overseas Leasing Four Fsc LtdRomulus Leasing IncRooster LtdRouge Leasing LtdSAFE Pty LimitedSASOF II Aviation Ireland LtdSEBShowa Leasing Co LtdSierra Leasing LtdSJ Frankfurt Co LtdSL LtdSMBC Aviation CapitalSMFL Alphard

SNCStandard Chartered Avn FinanceSumisho Aircraft Asset MngmntSylvie BailTAF TokyoTakeoff LtdTNT-NL Eurolease II LtdTomar Aviation LtdTower FSC LtdULH Altair LtdVolito Aviation Services ABWard FSC LtdYamasa Co ltd

Summary

Focus on Creating Value and Focus on Creating Value and Growth, While Growth, While Maintaining Safety & ComplianceMaintaining Safety & Compliance

. . . And Good Things Will Happen. . . And Good Things Will Happen. . . And Good Things Will Happen. . . And Good Things Will Happen