AerCap Holdings N.V. Reports Financial Results for the First Quarter 2022

Rhea-AI Summary

AerCap Holdings N.V. (NYSE: AER) reported a challenging first quarter of 2022, with a net loss of $2.0 billion or $8.35 per share, primarily due to charges related to the Ukraine Conflict. However, adjusted net income stood at $540 million or $2.23 per share. The company executed 157 transactions, with lease revenue increasing by 62% year-over-year to $1.7 billion, mostly attributed to the GECAS acquisition. Cash flow from operating activities reached $1.3 billion. AerCap's strong liquidity position includes $17 billion for the next 12 months.

Positive

• Lease revenue increased 62% year-over-year to $1.7 billion.
• Executed 157 transactions, including 102 lease agreements.
• Cash flow from operating activities was $1.3 billion, over three times higher than Q1 2021.
• Strong liquidity with $17 billion available for the next 12 months.

Negative

• Net loss of $2.0 billion, or $8.35 per share, driven by charges related to the Ukraine Conflict.
• Recognized a pre-tax charge of $2.7 billion associated with the Ukraine Conflict.
• Book value per share decreased from $71.32 to $61.11.

• Net loss for the first quarter of 2022, including net charges related to the Ukraine Conflict, was $2.0 billion, or $8.35 per share.
• Net income for the first quarter of 2022 was $540 million, or $2.23 per share, after adjustments for net charges related to the Ukraine Conflict and other items.

DUBLIN, May 17, 2022 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the first quarter of 2022 ended March 31, 2022.

"During the first quarter, we continued to see a broad-based recovery in travel around the world as governments lifted travel restrictions and demand for travel continued to increase. We expect to see demand for travel continue to grow as the recovery progresses," said Aengus Kelly, Chief Executive Officer of AerCap.

"During the first quarter, we ceased all of our leasing activity to Russian airlines and took a charge primarily related to our aircraft and engines that remain in Russia. We have filed insurance claims related to these assets and will vigorously pursue all available remedies to recover our losses," Mr. Kelly added.

Highlights:

• Executed 157 transactions in the first quarter of 2022, including 102 lease agreements, 25 purchases and 30 sales.
• First quarter cash flow from operating activities was $1.3 billion, more than three times higher than the first quarter of 2021.
• Continued to see significant improvements in cash collections, trade receivables and deferral requests.
• Adjusted debt/equity ratio of 2.9 to 1 at March 31, 2022.
• 92% of new aircraft order book placed through 2023.
• $17 billion in total sources of liquidity, representing next 12 months' sources-to-uses coverage ratio of 2.1x.

Revenue and Net Spread

		Three months ended March 31,
		2022		2021		% increase/   (decrease)
		(U.S. Dollars in millions)
Lease revenue:
Basic lease rents		$1,554		$889		75%
Maintenance rents and other receipts		186		183		2%
Total lease revenue		1,740		1,072		62%
Net gain on sale of assets		3		5		(31%)
Other income		47		19		154%
Total Revenues and other income		$1,790		$1,095		63%

Basic lease rents were $1,554 million for the first quarter of 2022, compared with $889 million for the same period in 2021. The increase was primarily due to the impact of the GECAS acquisition. Basic lease rents were reduced by $57 million in the first quarter of 2022 as a result of the amortization of lease premium assets.

Maintenance rents and other receipts were $186 million for the first quarter of 2022, compared with $183 million for the same period in 2021.

Net gain on sale of assets for the first quarter of 2022 was $3 million, relating to 23 assets sold for $452 million, compared with $5 million for the same period in 2021, relating to nine aircraft sold for $184 million. The decrease was primarily due to the composition of asset sales.

Other income for the first quarter of 2022 was $47 million, compared with $19 million for the same period in 2021. The increase was primarily due to higher management fee income, interest income and other income as a result of the GECAS acquisition.

		Three months ended March 31,
		2022		2021		% increase/   (decrease)
		(U.S. Dollars in millions)
Basic lease rents		$1,554		$889		75%
Interest expense		381		281		36%
Adjusted for:
Mark-to-market of interest rate caps and swaps		36		10		261%
Interest expense excluding mark-to-market of interest rate caps and swaps		417		291		43%
Net interest margin (*)		$1,137		$598		90%
Depreciation and amortization, including maintenance rights expense		(684)		(401)		71%
Net interest margin, less depreciation and amortization		$453		$197		129%
Average lease assets (*)		$62,137		$36,362		71%
Annualized net spread (*)		7.3%		6.6%
Annualized net spread less depreciation and amortization (*)		2.9%		2.2%

(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures

Interest expense excluding mark-to-market of interest rate caps and swaps was $417 million for the first quarter of 2022, compared with $291 million for the same period in 2021. AerCap's average cost of debt was 3.0% for the first quarter of 2022, and 3.7% for the same period in 2021, excluding debt issuance costs, upfront fees and other impacts.

Net Charges Related to Ukraine Conflict

In response to the Russian invasion of Ukraine and sanctions imposed by the United States, the European Union, the United Kingdom and other countries, we terminated the leasing of all our aircraft and engines with Russian airlines. Prior to the Russian invasion, we had 135 aircraft and 14 engines on lease with Russian airlines, which represented approximately 5% of AerCap's fleet by net book value as of December 31, 2021. We have removed 22 aircraft and 3 engines outside of Russia, and 113 aircraft and 11 engines remain in Russia.

During the first quarter of 2022, we recognized a pre-tax charge of $2.7 billion ($2.4 billion after-tax) to our earnings, comprised of flight equipment write-offs and impairments, which were partially offset by the derecognition of lease-related assets and liabilities. We recognized a total loss on our assets that remain in Russia and Ukraine and impairment losses on the assets we have recovered from Russian and Ukrainian airlines.

		Three Months Ended March 31, 2022
		(U.S. Dollars in millions)
Write-offs and impairments of flight equipment		$3,176
Derecognition of lease-related assets and liabilities		(237)
Letters of credit receipts		(210)
Net charges related to Ukraine Conflict (pre-tax)		$2,729
Income tax effect		(341)
Net charges related to Ukraine Conflict (after-tax)		$2,388

We had letters of credit related to our aircraft and engines leased to Russian airlines as of February 24, 2022 of approximately $260 million, confirmed by nine financial institutions in Western Europe. We have presented requests for payment to all these institutions. To date, we have received payments of $210 million related to these letters of credit. We have initiated legal proceedings against one financial institution which rejected our payment demands in respect of certain letters of credit.

Our lessees are required to provide insurance coverage with respect to leased aircraft and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our flight equipment are not subject to a lease or where a lessee's policy fails to indemnify us. We have submitted an insurance claim for approximately $3.5 billion with respect to all aircraft and engines remaining in Russia and intend to pursue all of our claims under these policies with respect to our assets leased to Russian airlines as of February 24, 2022. However, the timing and amount of any recoveries under these policies are uncertain and we have not recognized any claim receivables as of March 31, 2022.

Selling, General and Administrative Expenses

		Three months ended March 31,
		2022		2021		% increase/   (decrease)
		(U.S. Dollars in millions)
Selling, general and administrative expenses		$70		$41		69%
Share-based compensation expenses		28		16		73%
Total selling, general and administrative expenses		$97		$57		70%

Selling, general and administrative expenses increased to $97 million for the first quarter of 2022, compared with $57 million for the same period in 2021. The increase was primarily driven by higher expenses as a result of the GECAS acquisition and is consistent with our $150 million annual expense savings target from the GECAS acquisition.

Other Expenses

Asset impairment charges were $2 million for the first quarter of 2022, compared to $16 million for the same period in 2021. Asset impairment charges recorded in the first quarter of 2022 related to lease terminations and were offset by related maintenance revenue. Leasing expenses were $208 million for the first quarter of 2022, compared with $45 million for the same period in 2021. The increase was primarily due to higher leasing expenses and an increase in maintenance rights expense as a result of the GECAS acquisition.

Effective Tax Rate

AerCap's effective tax rate was 12.2% for the first quarter of 2022, compared to 15% for the first quarter of 2021. During the first quarter of 2022, we recorded an income tax benefit due to the recognition of net charges related to the Ukraine Conflict. Excluding these charges, our effective tax rate was 14%. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions as well as the amount of permanent tax differences relative to pre-tax income or loss, and certain other discrete items.

Book Value Per Share

		March 31, 2022		March 31, 2021
		(U.S. Dollars in millions, except share and per share data)
Total AerCap Holdings N.V. shareholders' equity		$14,653		$9,139
Ordinary shares outstanding		245,618,872		130,734,441
Unvested restricted stock		(5,845,011)		(2,591,959)
Ordinary shares outstanding (excl. unvested restricted stock)		239,773,861		128,142,482
Book value per ordinary share outstanding (excl. unvested restricted stock)		$61.11		$71.32

Financial Position

		March 31, 2022		December 31, 2021		% increase/ (decrease) over December 31, 2021
		(U.S. Dollars in millions)
Total cash, cash equivalents and restricted cash		$1,346		$1,915		(30%)
Total assets		70,208		74,570		(6%)
Debt		48,913		50,205		(3%)
Total liabilities		55,478		57,922		(4%)
Total AerCap Holdings N.V. shareholders' equity		14,653		16,571		(12%)
Total equity		14,730		16,647		(12%)

Flight Equipment Portfolio

As of March 31, 2022, AerCap's portfolio consisted of 3,615 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of March 31, 2022 was 7.0 years (3.6 years for new technology aircraft, 12.9 years for current technology aircraft) and the average remaining contracted lease term was 7.3 years.

Notes Regarding Financial Information Presented in This Press Release

The financial information presented in this press release is not audited.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The following are definitions of non-GAAP measures used in this press release. We believe these measures may further assist investors in their understanding of our operational performance.

Adjusted net income / earnings per share

Adjusted net income is calculated as net loss excluding the after-tax impact of net charges related to the Ukraine Conflict, the amortization of maintenance rights and lease premium assets recognized under purchase accounting, and GECAS transaction and integration-related expenses. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average of our ordinary shares outstanding. Given the relative significance of these items during the first quarter of 2022, we have chosen to present this measure in order to assist investors in their understanding of the changes and trends related to our earnings.

		Three months ended March 31, 2022
		Net (loss) income		(Loss) earnings per share
		(U.S. Dollars in millions,  except share and per share data)
Net loss / loss per share		($2,001)		($8.35)
Adjusted for:
Net charges related to Ukraine Conflict		2,729		11.35
Amortization of maintenance rights and lease premium assets recognized under purchase accounting		158		0.65
Transaction and integration-related expenses		17		0.07
Income tax effect of above adjustments		(363)		(1.50)
Adjusted net income / earnings per share*		$540		$2.23
* Denominator for adjusted earnings per share:
Weighted average shares outstanding - diluted				239,645,460
Potentially dilutive shares, whose effect would have been anti-dilutive				2,815,813
Adjusted weighted average shares outstanding - diluted				242,461,273
Adjusted earnings per share				$2.23

 

Adjusted debt/equity ratio

This measure is the ratio obtained by dividing adjusted debt by adjusted equity.

• Adjusted debt means consolidated total debt less cash and cash equivalents, and less a 50% equity credit with respect to certain long-term subordinated debt.
• Adjusted equity means total equity, plus the 50% equity credit relating to the long-term subordinated debt.

Adjusted debt and adjusted equity are adjusted by the 50% equity credit to reflect the equity nature of those financing arrangements and to provide information that is consistent with definitions under certain of our debt covenants. We believe this measure may further assist investors in their understanding of our capital structure and leverage.

		March 31, 2022		December 31, 2021
Debt		$48,913		$50,205
Adjusted for:
Cash and cash equivalents		(1,186)		(1,729)
50% credit for long-term subordinated debt		(1,125)		(1,125)
Adjusted debt		$46,602		$47,351
Equity		$14,730		$16,647
Adjusted for:
50% credit for long-term subordinated debt		1,125		1,125
Adjusted equity		$15,855		$17,772
Adjusted debt/equity ratio		2.94 to 1		2.66 to 1

 

Net interest margin, annualized net spread, annualized net spread less depreciation and amortization and average cost of debt

Net interest margin is calculated as the difference between basic lease rents and interest expense, excluding the impact of the mark-to-market of interest rate caps and swaps. Annualized net spread is net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is net interest margin less depreciation and amortization, including maintenance rights expense, expressed as a percentage of average lease assets. Average cost of debt is calculated as interest expense, excluding mark-to-market on interest rate caps and swaps, debt issuance costs, upfront fees and other impacts, divided by average debt balance. We believe these measures may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. These measures reflect the impact from changes in the number of aircraft leased, lease rates and utilization rates, as well as the impact from changes in the amount of debt and interest rates.

Lease assets

Lease assets include flight equipment held for operating leases, flight equipment held for sale, net investment in finance leases and maintenance rights assets.

Conference Call

In connection with its report of first quarter 2022 results, management will host a conference call with members of the investment community today, Tuesday, May 17, 2022, at 8:30 am Eastern Time. The call can be accessed live via webcast by AerCap's website at www.aercap.com under "Investors", or by dialing (U.S./Canada) +1 929 477 0448 or (International) +353 1 246 5638 and referencing code 5103066 at least 5 minutes before start time.

The webcast replay will be archived in the "Investors" section of the company's website for one year.

For further information, contact Joseph McGinley: +353 1 418 0428 (jmcginley@aercap.com).

About AerCap

AerCap is the global leader in aviation leasing with one of the most attractive order books in the industry. AerCap serves approximately 300 customers around the world with comprehensive fleet solutions. AerCap is listed on the New York Stock Exchange (AER) and is based in Dublin with offices in Shannon, Miami, Singapore, Amsterdam, Shanghai, Abu Dhabi, Seattle, Toulouse and other locations around the world.

Forward-Looking Statements

This press release contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are "forward-looking statements". In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as "may," "might," "should," "expect," "plan," "intend," "will," "aim," "estimate," "anticipate," "believe," "predict," "potential" or "continue" or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this press release are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors, including the impacts of, and associated responses to: the Ukraine Conflict; the Covid-19 pandemic; our ability to successfully integrate GECAS' operations and employees and realize anticipated synergies and cost savings; and the potential impact of the consummation of the GECAS transaction on relationships, including with employees, suppliers, customers and competitors, that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements. As a result, we cannot assure you that the forward-looking statements included in this press release will prove to be accurate or correct. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this press release might not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. Except as required by applicable law, we do not undertake any obligation to, and will not, update any forward-looking statements, whether as a result of new information, future events or otherwise.

For more information regarding AerCap and to be added to our email distribution list, please visit www.aercap.com and follow us on Twitter www.twitter.com/aercapnv.

 

	AerCap Holdings N.V.
	Unaudited Consolidated Balance Sheets
	(U.S. Dollars in thousands, except share data)
			March 31, 2022		December 31, 2021
	Assets
	Cash and cash equivalents		$1,185,702		$1,728,794
	Restricted cash		160,532		185,959
	Trade receivables		128,204		181,455
	Flight equipment held for operating leases, net		54,568,482		57,825,056
	Investment in finance leases, net		2,112,421		1,929,220
	Flight equipment held for sale		165,482		304,362
	Prepayments on flight equipment		4,539,807		4,586,848
	Maintenance rights and lease premium, net		3,916,453		4,444,520
	Other intangibles, net		201,834		208,879
	Deferred tax assets		113,766		121,571
	Associated companies		708,631		705,087
	Other assets		2,406,871		2,348,017
	Total Assets		$70,208,185		$74,569,768
	Liabilities and Equity
	Accounts payable, accrued expenses and other liabilities		$1,774,761		$1,958,096
	Accrued maintenance liability		2,241,084		2,900,651
	Lessee deposit liability		742,076		773,753
	Debt		48,912,874		50,204,678
	Deferred tax liabilities		1,807,612		2,085,230
	Total liabilities		55,478,407		57,922,408
	Ordinary share capital €0.01 par value, 450,000,000 ordinary shares authorized as of March 31, 2022 and
	December 31, 2021; 250,347,345 and 250,347,345 ordinary shares issued and 245,618,872 and 245,395,448
	ordinary shares outstanding (including 5,845,011 and 5,822,811 unvested restricted stock) as of
	March 31, 2022 and December 31, 2021, respectively		3,024		3,024
	Additional paid-in capital		8,541,022		8,522,694
	Treasury shares, at cost (4,728,473 and 4,951,897 ordinary shares as of March 31, 2022 and
	December 31, 2021)		(273,320)		(285,901)
	Accumulated other comprehensive loss		(25,687)		(79,335)
	Accumulated retained earnings		6,408,091		8,410,261
	Total AerCap Holdings N.V. shareholders' equity		14,653,130		16,570,743
	Non-controlling interest		76,648		76,617
	Total Equity		14,729,778		16,647,360
	Total Liabilities and Equity		$70,208,185		$74,569,768

 

 

	AerCap Holdings N.V.
	Unaudited Consolidated Income Statements
	(U.S. Dollars in thousands, except share and per share data)
			Three Months Ended March 31,
			2022		2021
	Revenues and other income
	Lease revenue:
	Basic lease rents		$1,553,646		$889,087
	Maintenance rents and other receipts		185,895		182,895
	Total lease revenue		1,739,541		1,071,982
	Net gain on sale of assets		3,285		4,795
	Other income		47,190		18,573
	Total Revenues and other income		1,790,016		1,095,350
	Expenses
	Depreciation and amortization		634,414		396,558
	Net charges related to Ukraine Conflict		2,728,718		—
	Asset impairment		2,425		16,332
	Interest expense		380,785		280,817
	Loss on debt extinguishment		1,140		6,061
	Leasing expenses		208,055		44,532
	Selling, general and administrative expenses		97,475		57,351
	Transaction and integration-related expenses		17,388		25,478
	Total Expenses		4,070,400		827,129
	Gain (loss) on investment at fair value		113		(2,463)
	Loss (income) before income taxes and income of investments
	accounted for under the equity method		(2,280,271)		265,758
	Income tax benefit (expense)		278,307		(39,864)
	Equity in net earnings of investments accounted for under the equity method		1,283		2,152
	Net (loss) income		($2,000,681)		$228,046
	Net income attributable to non-controlling interest		(149)		(21)
	Net (loss) income attributable to AerCap Holdings N.V.		($2,000,830)		$228,025
	Basic (loss) earnings per share		($8.35)		$1.78
	Diluted (loss) earnings per share		($8.35)		$1.76
	Weighted average shares outstanding - basic		239,645,460		127,883,690
	Weighted average shares outstanding - diluted		239,645,460		129,484,250

 

 

	AerCap Holdings N.V.
	Unaudited Consolidated Statements of Cash Flows
	(U.S. Dollars in thousands)
			Three months ended March 31,
			2022		2021
	Net (loss) income		($2,000,681)		$228,046
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		634,414		396,558
	Net charges related to Ukraine Conflict		2,938,487		—
	Asset impairment		2,425		16,332
	Amortization of debt issuance costs, debt discount, debt premium and lease premium		83,210		15,944
	Amortization of fair value adjustment on debt		(1,991)		(4,119)
	Maintenance rights write-off		101,114		15,209
	Maintenance liability release to income		(101,162)		(68,472)
	Net gain on sale of assets		(3,285)		(4,795)
	Deferred tax (benefit) expense		(277,674)		40,382
	Share-based compensation		27,503		15,926
	Collections of finance leases		61,009		25,763
	(Gain) loss on investment at fair value		(113)		2,463
	Loss on debt extinguishment		1,140		6,061
	Transaction and integration-related expenses		—		14,595
	Other		(77,370)		10,984
	Changes in operating assets and liabilities:
	Trade receivables		39,590		(45,496)
	Other assets		10,778		(90,206)
	Accounts payable, accrued expenses and other liabilities		(100,838)		(174,823)
	Net cash provided by operating activities		1,336,556		400,352
	Purchase of flight equipment		(881,608)		(11,039)
	Proceeds from sale or disposal of assets		405,107		160,198
	Prepayments on flight equipment		(177,176)		(79,879)
	Other		7,125		—
	Net cash (used in) provided by investing activities		(646,552)		69,280
	Issuance of debt		84,996		1,188,357
	Repayment of debt		(1,412,038)		(1,357,263)
	Debt issuance and extinguishment costs paid, net of debt premium received		(8,684)		(170,002)
	Maintenance payments received		202,541		75,917
	Maintenance payments returned		(127,541)		(30,237)
	Security deposits received		98,132		56,382
	Security deposits returned		(92,826)		(49,869)
	Dividend paid to non-controlling interest holders and others		(118)		(128)
	Repurchase of shares and tax withholdings on share-based compensation		(3,517)		(1,841)
	Net cash used in financing activities		(1,259,055)		(288,684)
	Net (decrease) increase in cash, cash equivalents and restricted cash		(569,051)		180,948
	Effect of exchange rate changes on cash, cash equivalents and restricted cash		532		(782)
	Cash, cash equivalents and restricted cash at beginning of period		1,914,753		1,495,290
	Cash, cash equivalents and restricted cash at end of period		$1,346,234		$1,675,456

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/aercap-holdings-nv-reports-financial-results-for-the-first-quarter-2022-301548666.html

SOURCE AerCap Holdings N.V.

FAQ

What were AerCap's financial results for Q1 2022?

AerCap reported a net loss of $2.0 billion and adjusted net income of $540 million for Q1 2022.

How did the Ukraine Conflict impact AerCap's earnings?

The Ukraine Conflict resulted in a pre-tax charge of $2.7 billion affecting AerCap's financial performance.

What is AerCap's current liquidity position?

AerCap has a strong liquidity position with $17 billion available for the next 12 months.

How much did AerCap's lease revenue grow in Q1 2022?

AerCap's lease revenue increased by 62% year-over-year to $1.7 billion.

How many transactions did AerCap execute in Q1 2022?

AerCap executed 157 transactions, including 102 lease agreements in Q1 2022.