AerCap Holdings N.V. Reports Financial Results for the First Quarter 2021

Rhea-AI Summary

AerCap Holdings N.V. (NYSE: AER) reported Q1 2021 net income of $228 million, or $1.76 per share, impacted by $100 million in cash accounting and $25 million in transaction-related expenses. This marks a decline from $277 million or $2.14 per share in Q1 2020. The company signed 60 lease agreements, the highest in 18 months, reflecting increased airline confidence. AerCap's liquidity reached $8.6 billion, with an adjusted debt/equity ratio of 2.5 to 1.

Positive

• Increased leasing activity with 60 lease agreements signed in Q1 2021.
• Completion of $1 billion 5-year senior unsecured notes offering.
• Secured $19 billion bridge facility alongside $5 billion term loan for GECAS acquisition.

Negative

• Net income decreased by 18% compared to Q1 2020.
• Total lease revenue fell 8% to $1.072 billion from $1.165 billion in Q1 2020.
• 92% drop in net gain on sale of assets, from $58 million to $5 million year-over-year.

DUBLIN, April 28, 2021 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aircraft leasing, today reported financial results for the first quarter of 2021 ended March 31, 2021.

• Net income for the first quarter of 2021 was $228 million, or $1.76 per share. This was primarily impacted by $100 million of cash accounting and $25 million of GECAS transaction-related expenses, pre-tax. This compares to net income of $277 million, or earnings per share of $2.14, for the same period in 2020.
  
  
• Excluding GECAS transaction-related expenses, net income for the first quarter of 2021 was $250 million, or $1.93 per share.

Aengus Kelly, Chief Executive Officer of AerCap, said, "The first quarter of 2021 was an exceptional one for AerCap, as we announced plans to acquire GECAS from GE, a transaction that we believe will create significant long-term value for our shareholders. At the same time, we continued to focus on our business and we are pleased to report a significant increase in our leasing activity. During the quarter, AerCap signed 60 lease agreements with airlines in 15 countries, the highest demand we have seen in 18 months. We believe this progress reflects the growing confidence of our airline customers as they plan for the future. While parts of the world remain under governmental restrictions, it is clear that there is significant pent-up consumer demand for air travel. As the vaccine rollout progresses, AerCap's global fleet of in-demand new technology aircraft will enable us to support our customers as the recovery in air travel continues." 

Highlights:

• Signed lease agreements for 60 aircraft, including 28 widebody aircraft, in the first quarter of 2021.
• Completed the offering of $1 billion of 5-year senior unsecured notes with a 1.75% coupon.
• Announced entry into a definitive agreement to acquire GE Capital Aviation Services.
• Closed a $19 billion bridge facility and $5 billion term loan agreement associated with the GECAS transaction with a consortium of 20 banks.
• Entered into a new $4.35 billion revolving credit facility subject to the closing of the GECAS transaction, increasing our total revolving credit facilities to $9 billion post-closing.

Attractive Aircraft Fleet:

• AerCap has placed 100% of its new aircraft deliveries from its order book through 2022.
• New technology aircraft comprise 63% of AerCap's fleet. The average age of the company's owned fleet was 6.6 years as of March 31, 2021 and the average remaining contracted lease term was 7.3 years.
• The fleet utilization rate for the first quarter of 2021 was 96%, and only 7% of the company's aircraft by book value are scheduled to come off lease through the end of 2022.

Strong Balance Sheet:

• AerCap ended the first quarter with $8.6 billion in total sources of liquidity, representing next 12 months' sources-to-uses coverage ratio of 1.7x.
• Adjusted debt/equity ratio of 2.5 to 1, below the company's target of 2.7x to 1.
• Secured debt-to-total assets ratio of 24%.

 

Revenue and Net Spread

		Three months ended March 31,
		2021		2020		% increase/ (decrease)
		(U.S. Dollars in millions)
Lease revenue:
Basic lease rents		$889		$1,031		(14%)
Maintenance rents and other receipts		183		134		36%
Total lease revenue		1,072		1,165		(8%)
Net gain on sale of assets		5		58		(92%)
Other income		19		15		27%
Total Revenues and other income		$1,095		$1,238		(12%)

 

Basic lease rents were $889 million for the first quarter of 2021, compared with $1,031 million for the same period in 2020. The decrease was primarily due to lease restructurings, transitions and the impact of airline bankruptcies.

Maintenance rents and other receipts were $183 million for the first quarter of 2021, compared with $134 million for the same period in 2020. The increase was primarily due to higher maintenance revenue recognized as a result of lease terminations during the first quarter of 2021.

Net gain on sale of assets for the first quarter of 2021 was $5 million, relating to nine aircraft sold for $184 million, compared with $58 million for the same period in 2020, relating to 12 aircraft sold for $265 million. The decrease was primarily due to the lower volume and composition of asset sales.

Other income for the first quarter of 2021 was $19 million, compared with $15 million for the same period in 2020. The increase was primarily driven by higher interest income.

 

		Three months ended March 31,
		2021		2020		% increase/ (decrease)
		(U.S. Dollars in millions)
Basic lease rents		$889		$1,031		(14%)
Interest expense		281		319		(12%)
Adjusted for:
Mark-to-market of interest rate caps and swaps		10		(13)		NA
Interest expense excluding mark-to-market of interest rate caps and swaps		291		306		(5%)
Net interest margin (*)		$598		$725		(17%)
Depreciation and amortization, including maintenance rights expense		(401)		(432)		(7%)
Net interest margin, less depreciation and amortization		$197		$293		(33%)
Average lease assets (*)		$36,362		$37,671		(3%)
Annualized net spread (*)		6.6%		7.7%
Annualized net spread less depreciation and amortization (*)		2.2%		3.1%
(*) 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 $291 million for the first quarter of 2021, compared with $306 million for the same period in 2020. AerCap's average cost of debt was 3.7% for the first quarter of 2021, compared with 3.8% for the same period in 2020, excluding debt issuance costs, upfront fees and other impacts.

 

Selling, General and Administrative Expenses

		Three months ended March 31,
		2021		2020		% increase/  (decrease)
		(U.S. Dollars in millions)
Selling, general and administrative expenses		$41		$47		(11%)
Share-based compensation expenses		16		18		(11%)
Total selling, general and administrative expenses		$57		$65		(11%)

 

Other Expenses

Asset impairment charges were $16 million for the first quarter of 2021, compared to $14 million for the same period in 2020. Asset impairment charges recorded in the first quarter of 2021 related to lease terminations and sales transactions and were offset by related maintenance revenue. Leasing expenses were $45 million for the first quarter of 2021, compared with $103 million for the same period in 2020. The decrease was primarily due to a decrease in leasing expenses as a result of lower lessor maintenance contributions, as well as a decrease in maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights asset balance.

Effective Tax Rate

The company's effective tax rate was 15% for the first quarter of 2021, compared to 13.5% for the first quarter of 2020. 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.

 

Book Value Per Share

		March 31, 2021			March 31, 2020
		(U.S. Dollars in millions, except share and per share data)
Total AerCap Holdings N.V. shareholders' equity		$9,139			$9,383
Ordinary shares outstanding		130,734,441			129,637,008
Unvested restricted stock		(2,591,959)			(2,300,595)
Ordinary shares outstanding (excl. unvested restricted stock)		128,142,482			127,336,413
Book value per ordinary share outstanding (excl. unvested restricted stock)		$71.32			$73.69

 

Financial Position 

		March 31, 2021			December 31, 2020			% increase/ (decrease) over December 31, 2020
		(U.S. Dollars in millions)
Total cash, cash equivalents and restricted cash		$1,675			$1,495			12%
Total lease assets (*)		36,076			36,642			(2%)
Total assets		42,065			42,048			0%
Debt		28,553			28,742			(1%)
Total liabilities		32,858			33,116			(1%)
Total AerCap Holdings N.V. shareholders' equity		9,139			8,864			3%
Total equity		9,207			8,932			3%
(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to this non-GAAP measure

 

Aircraft Portfolio

As of March 31, 2021, AerCap's portfolio consisted of 1,321 aircraft that were owned, on order or managed. The average age of the company's owned fleet as of March 31, 2021 was 6.6 years (3.2 years for new technology aircraft, 12.3 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.

Net income / earnings per share excluding GECAS transaction-related expenses

Net income excluding GECAS transaction-related expenses is calculated as net income excluding the after-tax impact of transaction-related expenses of $25 million. Earnings per share excluding GECAS transaction-related expenses is calculated by dividing net income excluding GECAS transaction-related expenses by the weighted average of our ordinary shares outstanding. Given the relative significance of this item during the first quarter of 2021, 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, 2021
		Net income		Earnings per share
		(U.S. Dollars in millions, except per share data)
Net income / earnings per share		$228		$1.76
Transaction-related expenses		25		0.20
Income tax effect		(3)		(0.02)
Net income / earnings per share excluding GECAS transaction-related expenses		$250		$1.93

 

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, 2021			December 31, 2020
		(U.S. Dollars in millions, except debt/equity ratio)
Debt		$28,553			$28,742
Adjusted for:
Cash and cash equivalents		(1,448)			(1,249)
50% credit for long-term subordinated debt		(1,125)			(1,125)
Adjusted debt		$25,980			$26,368
Equity		$9,207			$8,932
Adjusted for:
50% credit for long-term subordinated debt		1,125			1,125
Adjusted equity		$10,332			$10,057
Adjusted debt/equity ratio		2.5 to 1			2.6 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 and sales-type leases and maintenance rights assets.

Conference Call

In connection with its report of first quarter 2021 results, management will host a conference call with members of the investment community today, Wednesday, April 28, 2021, at 8:30 am Eastern Time. The call can be accessed live by dialing (U.S./Canada) +1 929 477 0448 or (International) +353 1 246 5638 and referencing code 1398377 at least 5 minutes before start time, or by visiting AerCap's website at www.aercap.com under "Investors".

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 aircraft leasing. AerCap serves approximately 200 customers in approximately 80 countries with comprehensive fleet solutions. AerCap is listed on the New York Stock Exchange (AER) and has its headquarters in Dublin with offices in Shannon, Los Angeles, Singapore, Amsterdam, Shanghai, Abu Dhabi, Seattle and Toulouse.

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," "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 Covid-19 pandemic, 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)
			March 31, 2021		December 31, 2020
	Assets
	Cash and cash equivalents		$1,447,514		$1,248,772
	Restricted cash		227,942		246,518
	Trade receivables		215,030		170,675
	Flight equipment held for operating leases, net		34,568,148		35,156,450
	Investment in finance and sales-type leases, net		881,148		878,451
	Flight equipment held for sale		43,513		—
	Prepayments on flight equipment		2,246,329		2,111,659
	Maintenance rights and lease premium, net		630,633		649,914
	Other intangibles, net		219,340		224,634
	Deferred income tax assets		128,485		131,532
	Other assets		1,456,881		1,229,434
	Total Assets		$42,064,963		$42,048,039
	Liabilities and Equity
	Accounts payable, accrued expenses and other liabilities		$1,003,335		$1,109,325
	Accrued maintenance liability		1,717,688		1,750,395
	Lessee deposit liability		629,629		600,321
	Debt		28,553,115		28,742,081
	Deferred income tax liabilities		953,962		913,431
	Total liabilities		32,857,729		33,115,553
	Ordinary share capital €0.01 par value, 350,000,000 ordinary shares authorized as of March 31, 2021 and December 31, 2020;
	138,847,345 and 138,847,345 ordinary shares issued and 130,734,441 and 130,398,538 ordinary shares outstanding
	(including 2,591,959 and 2,552,346 unvested restricted stock) as of March 31, 2021 and December 31, 2020, respectively		1,721		1,721
	Additional paid-in capital		2,088,760		2,078,125
	Treasury shares, at cost (8,112,904 and 8,448,807 ordinary shares
	as of March 31, 2021 and December 31, 2020, respectively)		(443,228)		(459,994)
	Accumulated other comprehensive loss		(133,633)		(155,085)
	Accumulated retained earnings		7,625,705		7,399,703
	Total AerCap Holdings N.V. shareholders' equity		9,139,325		8,864,470
	Non-controlling interest		67,909		68,016
	Total Equity		9,207,234		8,932,486
	Total Liabilities and Equity		$42,064,963		$42,048,039

 

 

	AerCap Holdings N.V
	Unaudited Consolidated Income Statements
	(U.S. Dollars in thousands, except share and per share data)
			Three months ended March 31,
			2021		2020
	Revenues and other income
	Lease revenue:
	Basic lease rents		$889,087		$1,030,794
	Maintenance rents and other receipts		182,895		134,285
	Total lease revenue		1,071,982		1,165,079
	Net gain on sale of assets		4,795		58,366
	Other income		18,573		14,732
	Total Revenues and other income		1,095,350		1,238,177
	Expenses
	Depreciation and amortization		396,558		415,798
	Asset impairment		16,332		13,947
	Interest expense		280,817		318,617
	Loss on debt extinguishment		6,061		—
	Leasing expenses		44,532		103,297
	Selling, general and administrative expenses		57,351		64,584
	Transaction-related expenses		25,478		—
	Total Expenses		827,129		916,243
	Loss on investment at fair value		(2,463)		—
	Income before income taxes and income of investments accounted for under the equity method		265,758		321,934
	Income tax expense		(39,864)		(43,461)
	Equity in net earnings of investments accounted for under the equity method		2,152		1,331
	Net income		$228,046		$279,804
	Net income attributable to non-controlling interest		(21)		(2,980)
	Net income attributable to AerCap Holdings N.V.		$228,025		$276,824
	Basic earnings per share		$1.78		$2.16
	Diluted earnings per share		$1.76		$2.14
	Weighted average shares outstanding - basic		127,883,690		128,299,745
	Weighted average shares outstanding - diluted		129,484,250		129,340,501

 

	AerCap Holdings N.V
	Unaudited Consolidated Statements of Cash Flows
	(U.S. Dollars in thousands)
			Three months ended March 31,
			2021		2020
	Net income		$228,046		$279,804
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		396,558		415,798
	Asset impairment		16,332		13,947
	Amortization of debt issuance costs, debt discount, debt premium and lease premium		15,944		16,298
	Amortization of fair value adjustment on debt		(4,119)		(16,267)
	Maintenance rights write-off		15,209		33,393
	Maintenance liability release to income		(68,472)		(63,422)
	Share-based compensation		15,926		17,757
	Net gain on sale of assets		(4,795)		(58,366)
	Deferred income taxes		40,382		44,616
	Collections of finance and sales-type leases		25,763		19,115
	Loss on investment at fair value		2,463		—
	Loss on debt extinguishment		6,061		—
	Transaction-related expenses		14,595		—
	Other		10,984		57,638
	Changes in operating assets and liabilities:
	Trade receivables		(45,496)		(49,342)
	Other assets		(90,206)		(96,013)
	Accounts payable, accrued expenses and other liabilities		(174,823)		13,962
	Net cash provided by operating activities		400,352		628,918
	Purchase of flight equipment		(11,039)		(61,326)
	Proceeds from sale or disposal of assets		160,198		176,961
	Prepayments on flight equipment		(79,879)		(350,836)
	Net cash provided by (used in) investing activities		69,280		(235,201)
	Issuance of debt		1,188,357		4,200,000
	Repayment of debt		(1,357,263)		(918,422)
	Debt issuance and extinguishment costs paid, net of debt premium received		(170,002)		(1,739)
	Maintenance payments received		75,917		144,876
	Maintenance payments returned		(30,237)		(95,189)
	Security deposits received		56,382		28,392
	Security deposits returned		(49,869)		(48,608)
	Dividend paid to non-controlling interest holders and others		(128)		(1,228)
	Repurchase of shares and tax withholdings on share-based compensation		(1,841)		(118,571)
	Net cash (used in) provided by financing activities		(288,684)		3,189,511
	Net increase in cash, cash equivalents and restricted cash		180,948		3,583,228
	Effect of exchange rate changes on cash, cash equivalents and restricted cash		(782)		(1,032)
	Cash, cash equivalents and restricted cash at beginning of period		1,495,290		1,300,347
	Cash, cash equivalents and restricted cash at end of period		$1,675,456		$4,882,543

 

 

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SOURCE AerCap Holdings N.V.

FAQ

What were AerCap's earnings for Q1 2021?

AerCap reported a net income of $228 million, or $1.76 per share.

How did AerCap's revenue change in Q1 2021 compared to 2020?

Total lease revenue decreased by 8%, from $1.165 billion in Q1 2020 to $1.072 billion in Q1 2021.

What were the key positive highlights in AerCap's Q1 2021 results?

AerCap signed 60 lease agreements, completed a $1 billion notes offering, and secured $19 billion in financing for the GECAS acquisition.

What is AerCap's debt/equity ratio as of Q1 2021?

AerCap's adjusted debt/equity ratio is 2.5 to 1.

What impact did airline bankruptcies have on AerCap's revenues?

Lease revenue decline of 14% to $889 million was primarily due to lease restructurings and airline bankruptcies.