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

Rhea-AI Summary

AerCap Holdings N.V. (AER) reported Q2 2022 net income of $340 million ($1.40 per share), and adjusted net income of $464 million ($1.91 per share), representing strong growth due to increased air travel recovery. Total lease revenue surged to $1.564 billion, a 56% increase year-over-year. The company executed 184 transactions and had a cash flow from operating activities of approximately $1.2 billion. AerCap's adjusted debt/equity ratio stood at 2.8 to 1, with ample liquidity of $17 billion.

Positive

• 56% year-over-year increase in total lease revenue to $1.564 billion.
• Adjusted net income of $464 million, a significant rise from prior year.
• 184 transactions executed in Q2 2022, indicating robust operational activity.
• Cash flow from operating activities approximately $1.2 billion.

Negative

• Maintenance revenue decreased by 21% due to lease terminations.
• Other income fell 66% year-over-year, significantly impacting overall income.

• Net income for the second quarter of 2022 was $340 million, or $1.40 per share.
• Adjusted net income for the second quarter of 2022 was $464 million, or $1.91 per share.

DUBLIN, Aug. 11, 2022 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the second quarter of 2022 ended June 30, 2022.

"AerCap generated strong results in the second quarter, with a significant increase in activity across all of our businesses. The ongoing recovery in air travel continued to strengthen across all major regions, and was manifested in high levels of cash collections and greater utilization of our fleet during the quarter. The strength in passenger demand, coupled with supply constraints across the industry, is resulting in a favorable leasing environment," said Aengus Kelly, Chief Executive Officer of AerCap.

Highlights:

• Executed 184 transactions in the second quarter of 2022, including 125 lease agreements, 16 purchases and 43 sales.
• Significant deleveraging in the second quarter of 2022: adjusted debt/equity ratio of 2.8 to 1 at June 30, 2022.
• Cash flow from operating activities was approximately $1.2 billion in the second quarter of 2022.
• Strong cash collections, higher utilization and a decrease in deferral balances.
• 100% of new aircraft order book placed through 2023.
• 10% margin on gain on sale of assets sold in the second quarter of 2022.
• $17 billion in total sources of liquidity, representing next 12 months' sources-to-uses coverage ratio of 2.1x.
• Rating outlook revised to positive by Fitch.

Revenue and Net Spread

		Three months ended June 30,						Six months ended June 30,
		2022		2021		% increase/ (decrease)		2022		2021		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Lease revenue:
Basic lease rents		$1,462		$871		68 %		$3,015		$1,760		71 %
Maintenance rents and other receipts		103		131		(21 %)		289		314		(8 %)
Total lease revenue		1,564		1,002		56 %		3,304		2,074		59 %
Net gain on sale of assets		35		22		56 %		38		27		42 %
Other income		71		207		(66 %)		118		226		(48 %)
Total Revenues and other income		$1,671		$1,232		36 %		$3,461		$2,327		49 %

Basic lease rents were $1,462 million for the second quarter of 2022, compared with $871 million for the same period in 2021. The increase was primarily due to the impact of the GECAS acquisition. Basic lease rents were negatively impacted by the loss of revenues from Russian aircraft and were reduced by $52 million as a result of the amortization of lease premium assets.

Maintenance rents and other receipts were $103 million for the second quarter of 2022, compared with $131 million for the same period in 2021. The decrease was primarily due to lower maintenance revenue recognized as a result of lease terminations during the second quarter of 2022. Maintenance rents were reduced by $53 million as a result of maintenance rights assets that were amortized to revenue.

Net gain on sale of assets for the second quarter of 2022 was $35 million, relating to 29 assets sold for $386 million, compared with $22 million for the same period in 2021, relating to 12 aircraft sold for $139 million. The increase was primarily due to the volume and composition of asset sales.

Other income for the second quarter of 2022 was $71 million, compared with $207 million for the same period in 2021. The decrease was primarily driven by the amount of proceeds from unsecured claims. Other income in the second quarter of 2022 included $39 million of proceeds from unsecured claims, whereas other income in the second quarter of 2021 included $193 million of proceeds from unsecured claims.

		Three months ended June 30,						Six months ended June 30,
		2022		2021		% increase/ (decrease)		2022		2021		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Basic lease rents		$1,462		$871		68 %		$3,015		$1,760		71 %
Adjusted for:
Amortization of lease premium/deficiency		52		1		NA		109		2		NA
Basic lease rents excluding amortization of lease premium/deficiency		$1,514		$872		73 %		$3,124		$1,763		77 %
Interest expense		400		293		37 %		781		574		36 %
Adjusted for:
Mark-to-market of interest rate caps and swaps		3		—		NA		39		10		NA
Interest expense excluding mark-to-market of interest rate caps and swaps		403		293		38 %		820		584		41 %
Net interest margin (*)		$1,110		$580		92 %		$2,304		$1,179		95 %
Depreciation and amortization		(581)		(392)		48 %		(1,215)		(789)		54 %
Net interest margin, less depreciation and amortization		$530		$187		183 %		$1,089		$390		179 %
Average lease assets (*)		$59,064		$36,023		64 %		$60,601		$36,190		67 %
Annualized net spread (*)		7.5 %		6.4 %				7.6 %		6.5 %
Annualized net spread less depreciation and amortization (*)		3.6 %		2.1 %				3.6 %		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 $403 million for the second quarter of 2022, compared with $293 million for the same period in 2021. AerCap's average cost of debt was 3.0% for the second quarter of 2022 and 3.8% for the same period in 2021, excluding debt issuance costs, upfront fees and other impacts.

Selling, General and Administrative Expenses

		Three months ended June 30,						Six months ended June 30,
		2022		2021		% increase/ (decrease)		2022		2021		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Selling, general and administrative expenses		$78		$47		66 %		$148		$88		67 %
Share-based compensation expenses		27		26		3 %		54		42		30 %
Total selling, general and administrative expenses		$105		$73		44 %		$202		$130		55 %

Selling, general and administrative expenses increased to $105 million for the second quarter of 2022, compared with $73 million for the same period in 2021. The increase was primarily driven by higher expenses as a result of the GECAS acquisition.

Other Expenses

Asset impairment charges were $12 million for the second quarter of 2022, compared to $57 million for the same period in 2021. Asset impairment charges recorded in the second quarter of 2022 related to lease terminations and sales transactions and were largely offset by related maintenance revenue. Leasing expenses were $193 million for the second quarter of 2022, compared with $59 million for the same period in 2021. The increase was primarily due to higher transition costs, lessor maintenance contributions and other 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 14% for the second quarter of 2022 and the second quarter of 2021. 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

		June 30, 2022		June 30, 2021
		(U.S. Dollars in millions, except share and per share data)
Total AerCap Holdings N.V. shareholders' equity		$15,034		$9,384
Ordinary shares outstanding		245,848,357		133,378,888
Unvested restricted stock		(5,032,769)		(5,254,512)
Ordinary shares outstanding (excl. unvested restricted stock)		240,815,588		128,124,376
Book value per ordinary share outstanding (excl. unvested restricted stock)		$62.43		$73.24

Financial Position 

		June 30, 2022		December 31, 2021		% increase/ (decrease) over December 31, 2021
		(U.S. Dollars in millions)
Total cash, cash equivalents and restricted cash		$1,402		$1,915		(27 %)
Total assets		69,748		74,570		(6 %)
Debt		47,928		50,205		(5 %)
Total liabilities		54,636		57,922		(6 %)
Total AerCap Holdings N.V. shareholders' equity		15,034		16,571		(9 %)
Total equity		15,111		16,647		(9 %)

Flight Equipment Portfolio

As of June 30, 2022, AerCap's portfolio consisted of 3,599 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of June 30, 2022 was 7.2 years (3.8 years for new technology aircraft, 13.1 years for current technology aircraft) and the average remaining contracted lease term was 7.2 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 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 June 30, 2022				Six months ended June 30, 2022
		Net income		Earnings per share		Net (loss) income		(Loss) earnings per share
		(U.S. Dollars in millions,  except share and per share data)
Net loss / loss per share		$340		$1.40		($1,661)		($6.92)
Adjusted for:
Net charges related to Ukraine Conflict		—		—		2,729		11.33
Amortization of maintenance rights and lease premium assets recognized under purchase accounting		132		0.55		290		1.20
Transaction and integration-related expenses		9		0.04		27		0.11
Income tax effect of above adjustments		(18)		(0.07)		(381)		(1.57)
Adjusted net income / earnings per share*		$464		$1.91		$1,004		$4.14
* Denominator for adjusted earnings per share:
Weighted average shares outstanding - diluted								240,008,449
Potentially dilutive shares, whose effect would have been anti-dilutive								2,375,552
Adjusted weighted average shares outstanding - diluted								242,384,001
Adjusted earnings per share								$4.14

 

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.

		June 30, 2022		December 31, 2021
	(U.S. Dollars in millions, except debt/equity ratio)
Debt		$47,928		$50,205
Adjusted for:
Cash and cash equivalents		(1,229)		(1,729)
50% credit for long-term subordinated debt		(1,125)		(1,125)
Adjusted debt		$45,574		$47,351
Equity		$15,111		$16,647
Adjusted for:
50% credit for long-term subordinated debt		1,125		1,125
Adjusted equity		$16,236		$17,772
Adjusted debt/equity ratio		2.8 to 1		2.7 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, excluding the impact of the amortization of lease premium/deficiency recognized under purchase accounting, 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, 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 second quarter 2022 results, management will host a conference call with members of the investment community today, Thursday, August 11, 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) + 1 646 828 8073 or (International) +353 1 246 5682 and referencing code 3815376 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, Memphis, 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)
			June 30, 2022		December 31, 2021
	Assets
	Cash and cash equivalents		$1,229,008		$1,728,794
	Restricted cash		173,441		185,959
	Trade receivables		125,642		181,455
	Flight equipment held for operating leases, net		54,306,782		57,825,056
	Investment in finance leases, net		2,033,033		1,929,220
	Flight equipment held for sale		64,084		304,362
	Prepayments on flight equipment		4,628,946		4,586,848
	Maintenance rights and lease premium, net		3,777,875		4,444,520
	Other intangibles, net		196,238		208,879
	Deferred tax assets		109,662		121,571
	Associated companies		724,745		705,087
	Other assets		2,378,135		2,348,017
	Total Assets		$69,747,591		$74,569,768
	Liabilities and Equity
	Accounts payable, accrued expenses and other liabilities		$1,789,922		$1,958,096
	Accrued maintenance liability		2,315,468		2,900,651
	Lessee deposit liability		743,485		773,753
	Debt		47,927,887		50,204,678
	Deferred tax liabilities		1,859,478		2,085,230
	Total Liabilities		54,636,240		57,922,408
	Ordinary share capital €0.01 par value, 450,000,000 ordinary shares authorized as of June 30, 2022 and
	December 31, 2021; 250,347,345 and 250,347,345 ordinary shares issued and 245,848,357 and 245,395,448
	ordinary shares outstanding (including 5,032,769 and 5,822,811 unvested restricted stock) as of
	June 30, 2022 and December 31, 2021, respectively		3,024		3,024
	Additional paid-in capital		8,546,331		8,522,694
	Treasury shares, at cost (4,498,988 and 4,951,897 ordinary shares as of June 30, 2022 and
	December 31, 2021, respectively)		(259,646)		(285,901)
	Accumulated other comprehensive income (loss)		2,926		(79,335)
	Accumulated retained earnings		6,741,794		8,410,261
	Total AerCap Holdings N.V. shareholders' equity		15,034,429		16,570,743
	Non-controlling interest		76,922		76,617
	Total Equity		15,111,351		16,647,360
	Total Liabilities and Equity		$69,747,591		$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 June 30,				Six months ended June 30,
			2022		2021		2022		2021
	Revenues and other income
	Lease revenue:
	Basic lease rents		$1,461,526		$871,237		$3,015,172		$1,760,324
	Maintenance rents and other receipts		102,798		130,934		288,693		313,829
	Total lease revenue		1,564,324		1,002,171		3,303,865		2,074,153
	Net gain on sale of assets		35,200		22,453		38,485		27,248
	Other income		71,188		207,444		118,378		226,017
	Total Revenues and other income		1,670,712		1,232,068		3,460,728		2,327,418
	Expenses
	Depreciation and amortization		580,744		392,162		1,215,158		788,720
	Net charges related to Ukraine Conflict		—		—		2,728,718		—
	Asset impairment		11,803		57,054		14,228		73,386
	Interest expense		399,994		292,887		780,779		573,704
	Loss on debt extinguishment		901		—		2,041		6,061
	Leasing expenses		193,231		59,010		401,286		103,542
	Selling, general and administrative expenses		104,872		73,071		202,347		130,422
	Transaction and integration-related expenses		9,245		69,197		26,633		94,675
	Total Expenses		1,300,790		943,381		5,371,190		1,770,510
	Loss on investment at fair value		(12,464)		—		(12,351)		(2,463)
	Income (loss) before income taxes and income of investments
	accounted for under the equity method		357,458		288,687		(1,922,813)		554,445
	Income tax (expense) benefit		(50,044)		(40,531)		228,263		(80,395)
	Equity in net earnings of investments accounted for under the equity method		33,148		1,703		34,431		3,855
	Net income (loss)		$340,562		$249,859		($1,660,119)		$477,905
	Net income attributable to non-controlling interest		(736)		(108)		(885)		(129)
	Net income (loss) attributable to AerCap Holdings N.V.		$339,826		$249,751		($1,661,004)		$477,776
	Basic earnings (loss) per share		$1.41		$1.95		($6.92)		$3.73
	Diluted earnings (loss) per share		$1.40		$1.92		($6.92)		$3.68
	Weighted average shares outstanding - basic		240,367,450		128,243,450		240,008,449		128,064,564
	Weighted average shares outstanding - diluted		242,264,561		129,896,210		240,008,449		129,690,334

 

 

	AerCap Holdings N.V.
	Unaudited Consolidated Statements of Cash Flows
	(U.S. Dollars in thousands)
			Six months ended June 30,
			2022		2021
	Net (loss) income		($1,660,119)		$477,905
	Adjustments to reconcile net (loss) income to net cash provided by operating activities:
	Depreciation and amortization		1,215,158		788,720
	Net charges related to Ukraine Conflict		2,938,487		—
	Asset impairment		14,228		73,386
	Amortization of debt issuance costs, debt discount, debt premium and lease premium		161,633		33,932
	Amortization of fair value adjustment on debt		(4,017)		(8,254)
	Maintenance rights write-off		179,667		30,211
	Maintenance liability release to income		(131,427)		(140,047)
	Net gain on sale of assets		(38,485)		(27,248)
	Deferred tax (benefit) expense		(225,819)		82,388
	Share-based compensation		54,381		41,986
	Collections of finance leases		140,140		42,344
	Loss on investment at fair value		12,351		2,463
	Loss on debt extinguishment		2,041		6,061
	Transaction and integration-related expenses		—		74,601
	Other		(90,383)		2,863
	Changes in operating assets and liabilities:
	Trade receivables		44,327		21,394
	Other assets		48,132		(198,019)
	Accounts payable, accrued expenses and other liabilities		(151,845)		(133,183)
	Net cash provided by operating activities		2,508,450		1,171,503
	Purchase of flight equipment		(1,328,669)		(470,584)
	Proceeds from sale or disposal of assets		796,373		267,779
	Prepayments on flight equipment		(415,070)		(30,537)
	Other		84,683		—
	Net cash used in investing activities		(862,683)		(233,342)
	Issuance of debt		84,996		1,320,537
	Repayment of debt		(2,413,244)		(1,945,210)
	Debt issuance and extinguishment costs paid, net of debt premium received		(9,135)		(221,037)
	Maintenance payments received		353,522		163,280
	Maintenance payments returned		(172,570)		(91,957)
	Security deposits received		148,781		108,057
	Security deposits returned		(140,441)		(156,314)
	Dividend paid to non-controlling interest holders and others		(580)		(183)
	Repurchase of shares and tax withholdings on share-based compensation		(8,140)		(16,503)
	Net cash used in financing activities		(2,156,811)		(839,330)
	Net (decrease) increase in cash, cash equivalents and restricted cash		(511,044)		98,831
	Effect of exchange rate changes on cash, cash equivalents and restricted cash		(1,260)		(756)
	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		$1,402,449		$1,593,365

 

 

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SOURCE AerCap Holdings N.V.

FAQ

What were the financial results of AerCap for Q2 2022?

AerCap reported a net income of $340 million and adjusted net income of $464 million for Q2 2022.

How did AerCap's lease revenue change in Q2 2022?

AerCap's lease revenue increased by 56% year-over-year, reaching $1.564 billion.

What is AerCap's adjusted debt/equity ratio as of June 30, 2022?

As of June 30, 2022, AerCap's adjusted debt/equity ratio was 2.8 to 1.

How many transactions did AerCap execute in Q2 2022?

AerCap executed a total of 184 transactions in the second quarter of 2022.

What impact did the GECAS acquisition have on AerCap's financials?

The GECAS acquisition significantly contributed to a 68% increase in basic lease rents in Q2 2022.