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

Rhea-AI Summary

AerCap Holdings N.V. (NYSE: AER) reported strong Q3 2021 earnings, achieving a net income of $434 million or $3.35 per share. The company completed the GECAS acquisition on November 1, enhancing its position in aviation leasing. Although lease revenue decreased by 3% to $958 million, total revenues surged 42% to $1.454 billion, supported by $459 million in other income. The adjusted debt/equity ratio stood at 2.3 to 1 as of September 30, marking a record low. The conference call for further insights is scheduled for today.

Positive

• Net income increased to $434 million or $3.35 per share.
• Completed GECAS acquisition on November 1, positioning as industry leader.
• Significant revenue growth of 42% driven by other income.

Negative

• Lease revenue declined by 3% compared to the previous year.
• Adjusted debt/equity ratio increased to 2.8 to 1 pro forma for GECAS acquisition.

DUBLIN, Nov. 10, 2021 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the third quarter of 2021 ended September 30, 2021.

Aengus Kelly, Chief Executive Officer of AerCap, said, "I am pleased to report a strong quarter of earnings, with net income of $434 million, or $3.35 per share. This quarter was an important inflection point for the company. Our business continues to recover from the effects of the Covid-19 pandemic, with leasing demand and cash collections remaining strong. The GECAS transaction adds a portfolio of well-priced assets and a deeply experienced team of people that will further enhance AerCap's position as the lessor of choice for airlines around the world."

Highlights:

• Completed the GECAS acquisition on November 1, 2021, making AerCap the worldwide industry leader across all areas of aviation leasing: aircraft, engines and helicopters.
• Completed the offering of $21 billion of senior unsecured notes in October 2021 and a $2 billion secured institutional term loan in November 2021 to finance the GECAS acquisition with an average coupon of approximately 2.6% and an average tenor of 7.1 years.
• Adjusted debt/equity ratio of 2.3 to 1 at September 30, 2021, which was a record low for the company. Pro forma for the GECAS acquisition, our adjusted debt/equity ratio was 2.8 to 1 as of September 30, 2021.
• Continued to see significant improvements in cash collections, trade receivables and deferral requests.
• Special items in the third quarter of 2021 included $442 million ($387 million after-tax) of other income related to proceeds from unsecured claims and $101 million ($88 million after-tax) of expenses related to the GECAS transaction.
• Signed lease agreements for 42 aircraft in the third quarter of 2021.
• 100% of new aircraft order book placed through 2022.

Revenue and Net Spread

		Three months ended September 30,						Nine months ended September 30,
		2021		2020		% increase/  (decrease)		2021		2020		% increase/   (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Lease revenue:
Basic lease rents		$848		$897		(6%)		$2,608		$2,876		(9%)
Maintenance rents and other receipts		110		91		22%		424		449		(6%)
Total lease revenue		958		988		(3%)		3,032		3,326		(9%)
Net gain on sale of assets		38		7		422%		65		76		(14%)
Other income		459		31		1,365%		685		61		1,022%
Total Revenues and other income		$1,454		$1,027		42%		$3,782		$3,462		9%

Basic lease rents were $848 million for the third quarter of 2021, compared with $897 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 $110 million for the third quarter of 2021, compared with $91 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 third quarter of 2021.

Net gain on sale of assets for the third quarter of 2021 was $38 million, relating to 11 aircraft sold for $101 million, compared with $7 million for the same period in 2020, relating to seven aircraft sold for $63 million. The increase was primarily due to the higher volume and composition of asset sales.

Other income for the third quarter of 2021 was $459 million, compared with $31 million for the same period in 2020. The increase was primarily driven by proceeds from unsecured claims in the third quarter of 2021.

		Three months ended September 30,						Nine months ended September 30,
		2021		2020		% increase/  (decrease)		2021		2020		% increase/  (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Basic lease rents		$848		$897		(6%)		$2,608		$2,876		(9%)
Interest expense		287		307		(7%)		861		938		(8%)
Adjusted for:
Mark-to-market of interest rate caps and swaps		1		—		NA		11		(15)		NA
Interest expense excluding mark-to-market of interest rate caps and swaps		288		307		(6%)		872		924		(6%)
Net interest margin (*)		$559		$590		(5%)		$1,736		$1,952		(11%)
Depreciation and amortization, including maintenance rights expense		(393)		(428)		(8%)		(1,188)		(1,283)		(7%)
Net interest margin, less depreciation and amortization		$166		$164		2%		$548		$670		(18%)
Average lease assets (*)		$36,095		$36,926		(2%)		$36,158		$37,313		(3%)
Annualized net spread (*)		6.2%		6.4%				6.4%		7.0%
Annualized net spread less depreciation and amortization (*)		1.8%		1.8%				2.0%		2.4%

(*) 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 $288 million for the third quarter of 2021, compared with $307 million for the same period in 2020. AerCap's average cost of debt was 3.8% for the third quarter of 2021, and 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 September 30,						Nine months ended September 30,
		2021		2020		% increase/  (decrease)		2021		2020		% increase/  (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Selling, general and administrative expenses		$46		$44		5%		$127		$129		(1%)
Share-based compensation expenses		22		17		29%		71		50		44%
Total selling, general and administrative expenses		$68		$61		12%		$199		$178		11%

Total selling, general and administrative expenses increased primarily due to the timing of compensation-related expenses.

Other Expenses

Asset impairment charges were $49 million for the third quarter of 2021, compared to $973 million for the same period in 2020. Asset impairment charges recorded in the third quarter of 2021 related to lease terminations and were largely offset by maintenance releases. Asset impairment charges recorded in the third quarter of 2020 included $915 million of impairment of flight equipment, related primarily to current technology widebody aircraft, in particular Airbus A330 and Boeing 777 aircraft, as well as the write-off of $58 million of goodwill.

Leasing expenses were $54 million for the third quarter of 2021, compared with $51 million for the same period in 2020. The increase was primarily due to higher leasing expenses as a result of lease terminations, partially offset by 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

AerCap's effective tax rate for the full year 2021 is expected to be 13.5%, compared to an effective tax rate of 5.5% for the full year 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.

The company's effective tax rate was 12.4% for the third quarter of 2021, compared to 11.1% for the third quarter of 2020. Our effective tax rate in any quarter can be impacted by revisions to the estimated full-year rate.

Other Assets

Other assets increased from $1,229 million as of December 31, 2020 to $1,670 million as of September 30, 2021, primarily due to receivables related to proceeds from unsecured claims that were received in October 2021 and unamortized debt issuance costs related to the bridge financing for the GECAS transaction.

Book Value Per Share

		September 30, 2021			September 30, 2020
		(U.S. Dollars in millions, except share and per share data)
Total AerCap Holdings N.V. shareholders' equity		$9,855			$8,811
Ordinary shares outstanding		133,379,789			129,756,613
Unvested restricted stock		(5,244,285)			(2,163,670)
Ordinary shares outstanding (excl. unvested restricted stock)		128,135,504			127,592,943
Book value per ordinary share outstanding (excl. unvested restricted stock)		$76.91			$69.06

Financial Position 

		September 30, 2021			December 31, 2020			% increase/ (decrease) over December 31, 2020
		(U.S. Dollars in millions)
Total cash, cash equivalents and restricted cash		$1,535			$1,495			3%
Total lease assets (*)		35,962			36,642			(2%)
Total assets		41,499			42,048			(1%)
Debt		27,540			28,742			(4%)
Total liabilities		31,569			33,116			(5%)
Total AerCap Holdings N.V. shareholders' equity		9,855			8,864			11%
Total equity		9,930			8,932			11%
(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to this non-GAAP measure

Aircraft Portfolio

As of September 30, 2021, AerCap's portfolio consisted of 1,304 aircraft that were owned, on order or managed. The average age of the company's owned fleet as of September 30, 2021 was 6.7 years (3.6 years for new technology aircraft, 12.7 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. 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 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 September 30, 2021					Nine months ended September 30, 2021
		Net income			Earnings per share		Net income			Earnings per share
		(U.S. Dollars in millions, except per share data)
Net income / earnings per share		$434			$3.35		$912			$7.04
Transaction-related expenses		101			0.78		196			1.51
Income tax benefit		(13)			(0.10)		(24)			(0.19)
Net income / earnings per share excluding GECAS transaction-related expenses		$522			$4.04		$1,083			$8.36

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.

	Pro Forma for GECAS acquisition			AerCap stand-alone
	September 30, 2021			September 30, 2021			December 31, 2020
	(U.S. Dollars in millions, except debt/equity ratio)
Debt	$51,477			$27,540			$28,742
Adjusted for:
Cash and cash equivalents	(1,651)			(1,311)			(1,249)
50% credit for long-term subordinated debt	(1,125)			(1,125)			(1,125)
Adjusted debt	$48,701			$25,104			$26,368
Equity	$16,513			$9,930			$8,932
Adjusted for:
50% credit for long-term subordinated debt	1,125			1,125			1,125
Adjusted equity	$17,638			$11,055			$10,057
Adjusted debt/equity ratio	2.8 to 1			2.3 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 third quarter 2021 results, management will host a conference call with members of the investment community today, Wednesday, November 10, 2021, at 8:30 am Eastern Time. The call can be accessed live by dialing (U.S./Canada) +1 929 477 0324 or (International) +353 1 246 5638 and referencing code 6980765 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 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, Los Angeles, 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," "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, 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)
			September 30, 2021			December 31, 2020
	Assets
	Cash and cash equivalents		$1,311,234			$1,248,772
	Restricted cash		223,271			246,518
	Trade receivables		79,504			170,675
	Flight equipment held for operating leases, net		34,411,391			35,156,450
	Investment in finance and sales-type leases, net		814,989			878,451
	Flight equipment held for sale		192,403			—
	Prepayments on flight equipment		1,872,387			2,111,659
	Maintenance rights and lease premium, net		594,685			649,914
	Other intangibles, net		207,569			224,634
	Deferred income tax assets		121,812			131,532
	Other assets		1,670,083			1,229,434
	Total Assets		$41,499,328			$42,048,039
	Liabilities and Equity
	Accounts payable, accrued expenses and other liabilities		$881,173			$1,109,325
	Accrued maintenance liability		1,596,414			1,750,395
	Lessee deposit liability		497,178			600,321
	Debt		27,539,694			28,742,081
	Deferred income tax liabilities		1,054,915			913,431
	Total liabilities		31,569,374			33,115,553
	Ordinary share capital €0.01 par value, 450,000,000 and 350,000,000 ordinary shares authorized as of September 30, 2021 and  December 31, 2020, respectively; 138,847,345 and 138,847,345 ordinary shares issued and 133,379,789 and 130,398,538 ordinary shares outstanding (including 5,244,285 and 2,552,346 unvested restricted stock) as of September 30, 2021 and December 31, 2020, respectively		1,721			1,721
	Additional paid-in capital		1,946,529			2,078,125
	Treasury shares, at cost (5,467,556 and 8,448,807 ordinary shares as of September 30, 2021 and December 31, 2020, respectively)		(313,907)			(459,994)
	Accumulated other comprehensive loss		(101,972)			(155,085)
	Accumulated retained earnings		8,322,581			7,399,703
	Total AerCap Holdings N.V. shareholders' equity		9,854,952			8,864,470
	Non-controlling interest		75,002			68,016
	Total Equity		9,929,954			8,932,486
	Total Liabilities and Equity		$41,499,328			$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 September 30,						Nine months ended September 30,
			2021			2020			2021			2020
	Revenues and other income
	Lease revenue:
	Basic lease rents		$847,650			$897,358			$2,607,974			$2,876,278
	Maintenance rents and other receipts		110,423			90,743			424,252			449,252
	Total lease revenue		958,073			988,101			3,032,226			3,325,530
	Net gain on sale of assets		37,633			7,151			64,881			75,519
	Other income		458,700			31,304			684,717			60,963
	Total Revenues and other income		1,454,406			1,026,556			3,781,824			3,462,012
	Expenses
	Depreciation and amortization		393,366			415,970			1,182,086			1,243,586
	Asset impairment		49,201			972,921			122,587			1,060,289
	Interest expense		287,213			307,316			860,917			937,691
	Loss on debt extinguishment		2,894			42,835			8,955			42,835
	Leasing expenses		53,519			51,211			157,061			232,082
	Selling, general and administrative expenses		68,197			60,918			198,619			178,415
	Transaction-related expenses		100,859			—			195,534			—
	Total Expenses		955,249			1,851,171			2,725,759			3,694,898
	Gain (loss) on investment at fair value		2,156			(128,363)			(307)			(114,421)
	Income before income taxes and income of investments
	accounted for under the equity method		501,313			(952,978)			1,055,758			(347,307)
	Income tax (expense) benefit		(62,132)			106,077			(142,527)			24,311
	Equity in net earnings of investments accounted for under the equity method		1,848			(3,901)			5,703			(397)
	Net income (loss)		$441,029			($850,802)			$918,934			($323,393)
	Net (income) loss attributable to non-controlling interest		(7,108)			873			(7,237)			(3,651)
	Net income (loss) attributable to AerCap Holdings N.V.		$433,921			($849,929)			$911,697			($327,044)
	Basic earnings (loss) per share		$3.39			($6.66)			$7.12			($2.56)
	Diluted earnings (loss) per share		$3.35			($6.66)			$7.04			($2.56)
	Weighted average shares outstanding - basic		128,131,157			127,589,905			128,087,006			127,771,182
	Weighted average shares outstanding - diluted		129,378,791			127,589,905			129,585,420			127,771,182

 

	AerCap Holdings N.V
	Unaudited Consolidated Statements of Cash Flows
	(U.S. Dollars in thousands)
			Nine months ended September 30,
			2021			2020
	Net income (loss)		$918,934			($323,393)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation and amortization		1,182,086			1,243,586
	Asset impairment		122,587			1,060,289
	Amortization of debt issuance costs, debt discount, debt premium and lease premium		50,305			45,802
	Amortization of fair value adjustment on debt		(12,452)			(41,418)
	Maintenance rights write-off		48,480			101,791
	Maintenance liability release to income		(206,085)			(297,815)
	Net gain on sale of assets		(64,881)			(75,519)
	Deferred income taxes		143,222			(21,737)
	Share-based compensation		63,956			49,513
	Collections of finance and sales-type leases		94,626			47,117
	Loss on investment at fair value		307			114,421
	Loss on debt extinguishment		8,955			42,835
	Transaction-related expenses		158,746			—
	Other		22,780			150,937
	Changes in operating assets and liabilities:
	Trade receivables		87,855			(148,184)
	Other assets		(413,811)			(382,914)
	Accounts payable, accrued expenses and other liabilities		(246,296)			(87,468)
	Net cash provided by operating activities		1,959,314			1,477,843
	Purchase of flight equipment		(738,090)			(306,048)
	Proceeds from sale or disposal of assets		393,373			379,518
	Prepayments on flight equipment		(75,930)			(564,927)
	Net cash used in investing activities		(420,647)			(491,457)
	Issuance of debt		1,486,567			10,165,837
	Repayment of debt		(2,678,134)			(8,451,299)
	Debt issuance and extinguishment costs paid, net of debt premium received		(227,472)			(145,260)
	Maintenance payments received		267,925			266,654
	Maintenance payments returned		(172,035)			(312,136)
	Security deposits received		155,794			53,915
	Security deposits returned		(264,674)			(216,975)
	Dividend paid to non-controlling interest holders and others		(251)			(2,843)
	Repurchase of shares and tax withholdings on share-based compensation		(67,453)			(119,779)
	Net cash (used in) provided by financing activities		(1,499,733)			1,238,114
	Net increase in cash, cash equivalents and restricted cash		38,934			2,224,500
	Effect of exchange rate changes on cash, cash equivalents and restricted cash		281			939
	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		$1,534,505			$3,525,786

 

 

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SOURCE AerCap Holdings N.V.