AerCap Holdings N.V. Reports Record $3.1 Billion 2023 Net Income and Announces New $500 Million Share Repurchase Authorization
- None.
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Insights
The reported financial achievements of AerCap Holdings N.V. indicate a robust performance within the aviation leasing industry. The net income figures, both on a GAAP and adjusted basis, suggest operational efficiency and a strong revenue generation mechanism. The per-share income metrics provide a clear view of profitability on a per-investor basis, which is critical for assessing shareholder value. The announcement of a new share repurchase program signals the management's confidence in the company's intrinsic value and future prospects, potentially leading to earnings per share accretion.
From a financial perspective, returning $2.6 billion to shareholders represents a significant capital return policy, which is often seen as a positive indicator of a company's liquidity and financial health. Investors typically view such distributions as a sign of a company's mature stage in its business cycle and its ability to generate excess cash flow. However, it is also important to consider the balance between shareholder returns and the need for reinvestment in growth opportunities.
The aviation industry is highly cyclical and sensitive to macroeconomic factors. AerCap's record results and optimistic outlook may reflect a broader recovery in the aviation sector post-pandemic, with increased demand for aircraft leasing as airlines expand capacity while managing capital expenditures. The collection of over $600 million in insurance settlements also suggests effective risk management strategies, which is crucial in an industry exposed to significant operational risks.
Furthermore, the mention of strong tailwinds for demand across aircraft, engines and helicopters provides insight into market dynamics. It indicates not only a recovery but also potential growth areas within the aviation leasing market. Such insights are valuable for stakeholders looking to understand the drivers of AerCap's performance and the industry's trajectory. The company's industry leadership position could imply competitive advantages that may enable it to capitalize on market opportunities more effectively than its peers.
AerCap's financial results can be seen as a microeconomic indicator of the health of the aviation industry and, by extension, global economic activity. The company's performance, particularly in leasing and sales, is likely influenced by broader economic trends such as trade volumes, business travel and tourism. The reported record income and positive outlook may suggest optimistic expectations for global economic growth and trade, which are essential factors for the aviation sector.
Additionally, the strategic financial decisions, such as share repurchases and shareholder distributions, must be analyzed in the context of the company's capital structure and the cost of capital. While these decisions reflect confidence, they also impact the company's leverage and financial flexibility. It is crucial to assess whether these strategies align with the company's long-term growth plan and the current economic climate.
- Record net income for the full year 2023 of
$3.1 billion $13.78 $1.1 billion $5.37 - Record adjusted net income for the full year 2023 of
$2.4 billion $10.73 $641 million $3.11 - Returned
$2.6 billion $500 million
Aengus Kelly, Chief Executive Officer of AerCap, said: "We are pleased to announce another record quarter for AerCap, completing a record year for our company across many fronts. These results reflect the continued strong operating environment across our businesses and the positive momentum for leasing and sales of aircraft, engines and helicopters. In addition, this quarter we collected over
Highlights:
- Return on equity of
27% and adjusted return on equity of16% for the fourth quarter of 2023. - Book value per share of
$83.81 25% from December 31, 2022. - Unlevered gain on sale margin of
18% for assets sold in the fourth quarter of 2023, or 1.62x book value on an equity basis. - Cash flow from operating activities of
$1.4 billion $5.3 billion - Recovered
$1.3 billion $609 million - Returned
$2.6 billion $59.09 - Following a successful secondary offering of 30.7 million shares in the fourth quarter of 2023, GE has now sold all of its AerCap shares.
- Adjusted debt/equity ratio of 2.47 to 1 as of December 31, 2023.
Revenue and Net Spread
Three months ended December 31, | Year ended December 31, | |||||||||||
2023 | 2022 | % increase/ | 2023 | 2022 | % increase/ | |||||||
( | ( | |||||||||||
Lease revenue: | ||||||||||||
Basic lease rents | 6 % | 4 % | ||||||||||
Maintenance rents and other receipts | 142 | 140 | 1 % | 611 | 549 | 11 % | ||||||
Total lease revenue | 1,718 | 1,634 | 5 % | 6,860 | 6,531 | 5 % | ||||||
Net gain on sale of assets | 94 | 121 | (22 %) | 490 | 229 | 114 % | ||||||
Other income | 86 | 74 | 17 % | 231 | 254 | (9 %) | ||||||
Total Revenues and other income | 4 % | 8 % | ||||||||||
Basic lease rents were
Maintenance rents and other receipts were
Net gain on sale of assets for the fourth quarter of 2023 was
Other income for the fourth quarter of 2023 was
Three months ended December 31, | Year ended December 31, | |||||||||||
2023 | 2022 | % increase/ | 2023 | 2022 | % increase/ | |||||||
( | ( | |||||||||||
Basic lease rents | 6 % | 4 % | ||||||||||
Adjusted for: | ||||||||||||
Amortization of lease premium/deficiency | 40 | 47 | (14 %) | 166 | 206 | (19 %) | ||||||
Basic lease rents excluding amortization of lease premium/deficiency | 5 % | 4 % | ||||||||||
Interest expense | 496 | 420 | 18 % | 1,806 | 1,592 | 13 % | ||||||
Adjusted for: | ||||||||||||
Mark-to-market of interest rate caps and swaps | (19) | 2 | NA | (37) | 69 | NA | ||||||
Interest expense excluding mark-to-market of interest rate caps and swaps | 477 | 423 | 13 % | 1,770 | 1,661 | 7 % | ||||||
Adjusted net interest margin (*) | 2 % | 3 % | ||||||||||
Depreciation and amortization | (631) | (594) | 6 % | (2,481) | (2,390) | 4 % | ||||||
Adjusted net interest margin, less depreciation and amortization | (3 %) | 1 % | ||||||||||
Average lease assets (*) | 2 % | — | ||||||||||
Annualized net spread (*) | 7.6 % | 7.6 % | 7.8 % | 7.6 % | ||||||||
Annualized net spread less depreciation and amortization (*) | 3.4 % | 3.6 % | 3.6 % | 3.6 % | ||||||||
(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures and metrics | ||||||||||||
Interest expense excluding mark-to-market of interest rate caps and swaps was
Recoveries Related to Ukraine Conflict
During the fourth quarter of 2023, we recognized recoveries related to the Ukraine Conflict of
Selling, General and Administrative Expenses
Three months ended December 31, | Year ended December 31, | |||||||||||
2023 | 2022 | % increase/ | 2023 | 2022 | % increase/ | |||||||
( | ( | |||||||||||
Selling, general and administrative expenses (excluding share- based compensation expenses) | 38 % | 24 % | ||||||||||
Share-based compensation expenses | 27 | 24 | 14 % | 97 | 103 | (6 %) | ||||||
Selling, general and administrative expenses | 32 % | 16 % | ||||||||||
Selling, general and administrative expenses were
Other Expenses
Leasing expenses were
Effective Tax Rate
AerCap's effective tax rate for the full year 2023 was
Book Value Per Share
December 31, 2023 | December 31, 2022 | |||
( | ||||
Total AerCap Holdings N.V. shareholders' equity | ||||
Ordinary shares outstanding | 202,493,168 | 245,931,275 | ||
Unvested restricted stock | (4,561,249) | (4,837,602) | ||
Ordinary shares outstanding (excl. unvested restricted stock) | 197,931,919 | 241,093,673 | ||
Book value per ordinary share outstanding (excl. unvested restricted stock) | ||||
Financial Position
December 31, | December 31, | % increase/ (decrease) over December 31, 2022 | ||||
( | ||||||
Total cash, cash equivalents and restricted cash | 4 % | |||||
Total assets | 71,275 | 69,727 | 2 % | |||
Debt | 46,484 | 46,533 | — | |||
Total liabilities | 54,686 | 53,532 | 2 % | |||
Total AerCap Holdings N.V. shareholders' equity | 16,589 | 16,118 | 3 % | |||
Total equity | 16,589 | 16,195 | 2 % | |||
Flight Equipment
As of December 31, 2023, AerCap's portfolio consisted of 3,452 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of December 31, 2023 was 7.3 years (4.5 years for new technology aircraft, 14.2 years for current technology aircraft) and the average remaining contracted lease term was 7.3 years.
Share Repurchase Program
In February 2024, our Board of Directors approved a new share repurchase program authorizing total repurchases of up to
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 and metrics used in this press release. We believe these measures and metrics may further assist investors in their understanding of our performance. These measures and metrics should not be viewed in isolation and should only be used in conjunction with and as a supplement to our
Adjusted net income / earnings per share and adjusted return on equity
Adjusted net income is calculated as net income excluding the after-tax impact of net recoveries related to the Ukraine Conflict and the amortization of maintenance rights and lease premium assets recognized under purchase accounting. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average of our ordinary shares outstanding. Adjusted return on equity is calculated by dividing adjusted net income by average shareholders' equity. Given the relative significance of these items during 2023, 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 December 31, 2023 | Year ended December 31, 2023 | |||||||
Net income | Earnings per share | Net income | Earnings per share | |||||
( | ||||||||
Net earnings / earnings per share | ||||||||
Adjusted for: | ||||||||
Net recoveries related to Ukraine Conflict | (614) | (2.98) | (1,288) | (5.66) | ||||
Amortization of maintenance rights and lease premium assets recognized under purchase accounting (*) | 83 | 0.40 | 495 | 2.17 | ||||
Income tax effect of the above adjustments | 66 | 0.32 | 99 | 0.43 | ||||
Adjusted net income / earnings per share | ||||||||
Average AerCap Holdings N.V. shareholders' equity | ||||||||
Return on equity | 27 % | 19 % | ||||||
Adjusted return on equity | 16 % | 15 % | ||||||
(*) Includes | ||||||||
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
December 31, | December 31, | |||
( | ||||
Debt | ||||
Adjusted for: | ||||
Cash and cash equivalents | (1,627) | (1,597) | ||
| (1,125) | (1,125) | ||
Adjusted debt | ||||
Equity | ||||
Adjusted for: | ||||
| 1,125 | 1,125 | ||
Adjusted equity | ||||
Adjusted debt/equity ratio | 2.47 to 1 | 2.53 to 1 | ||
Adjusted net interest margin, annualized net spread, annualized net spread less depreciation and amortization and average cost of debt
Adjusted 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 adjusted net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is adjusted 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.
Three months ended December 31, | ||||
2023 | 2022 | |||
( | ||||
Interest expense | ||||
Adjusted for: | ||||
Mark-to-market on interest rate caps and swaps | (19) | 2 | ||
Debt issuance costs, upfront fees and other impacts | (37) | (34) | ||
Interest expense, excluding mark-to-market on interest rate caps and swaps, debt issuance costs, upfront fees and other impacts | ||||
Average debt balance | ||||
Average cost of debt | 3.7 % | 3.3 % | ||
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.
Aviation assets
Aviation assets include aircraft, engines and helicopters.
Conference Call
In connection with its report of fourth quarter 2023 results, management will host a conference call with members of the investment community today, Friday, February 23, 2024, 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 (
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
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 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, including but not limited to the availability of capital to us and to our customers and changes in interest rates; the ability of our lessees and potential lessees to make lease payments to us; our ability to successfully negotiate flight equipment (which includes aircraft, engines and helicopters) purchases, sales and leases, to collect outstanding amounts due and to repossess flight equipment under defaulted leases, and to control costs and expenses; changes in the overall demand for commercial aviation leasing and aviation asset management services; the continued impacts of the Ukraine Conflict, including the resulting sanctions by
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.
AerCap Holdings N.V. | ||||||
Unaudited Consolidated Balance Sheets | ||||||
( | ||||||
December 31, | December 31, | |||||
Assets | ||||||
Cash and cash equivalents | ||||||
Restricted cash | 198,285 | 159,623 | ||||
Trade receivables | 73,667 | 132,202 | ||||
Flight equipment held for operating leases, net | 57,091,166 | 55,220,809 | ||||
Investment in finance leases, net | 1,254,451 | 1,356,072 | ||||
Flight equipment held for sale | 296,696 | 292,808 | ||||
Prepayments on flight equipment | 3,576,187 | 3,806,602 | ||||
Maintenance rights and lease premium, net | 2,729,962 | 3,364,453 | ||||
Other intangibles, net | 163,167 | 185,210 | ||||
Deferred tax assets | 275,756 | 210,334 | ||||
Associated companies | 971,517 | 811,219 | ||||
Other assets | 3,016,524 | 2,590,439 | ||||
Total Assets | ||||||
Liabilities and Equity | ||||||
Accounts payable, accrued expenses and other liabilities | ||||||
Accrued maintenance liability | 2,863,730 | 2,503,202 | ||||
Lessee deposit liability | 1,018,702 | 806,655 | ||||
Debt | 46,483,903 | 46,532,960 | ||||
Deferred tax liabilities | 2,526,120 | 2,194,098 | ||||
Total Liabilities | 54,685,513 | 53,531,868 | ||||
Ordinary share capital, | ||||||
215,543,739 and 250,347,345 ordinary shares issued and 202,493,168 and 245,931,275 | ||||||
ordinary shares outstanding (including 4,561,249 and 4,837,602 shares of unvested restricted stock) as of | ||||||
December 31, 2023 and 2022, respectively | 2,676 | 3,024 | ||||
Additional paid-in capital | 6,594,556 | 8,586,034 | ||||
Treasury shares, at cost (13,050,571 and 4,416,070 ordinary shares as of December 31, 2023 and 2022, respectively) | (819,305) | (254,699) | ||||
Accumulated other comprehensive income | 8,304 | 108,226 | ||||
Accumulated retained earnings | 10,802,599 | 7,674,922 | ||||
Total AerCap Holdings N.V. shareholders' equity | 16,588,830 | 16,117,507 | ||||
Non-controlling interest | 216 | 77,543 | ||||
Total Equity | 16,589,046 | 16,195,050 | ||||
Total Liabilities and Equity | ||||||
AerCap Holdings N.V. | ||||||||||
Unaudited Consolidated Income Statements | ||||||||||
( | ||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Revenues and other income | ||||||||||
Lease revenue: | ||||||||||
Basic lease rents | ||||||||||
Maintenance rents and other receipts | 141,941 | 140,499 | 611,326 | 548,734 | ||||||
Total lease revenue | 1,718,255 | 1,634,055 | 6,860,320 | 6,530,546 | ||||||
Net gain on sale of assets | 94,263 | 121,227 | 489,620 | 228,930 | ||||||
Other income | 86,130 | 73,515 | 230,478 | 254,074 | ||||||
Total Revenues and other income | 1,898,648 | 1,828,797 | 7,580,418 | 7,013,550 | ||||||
Expenses | ||||||||||
Depreciation and amortization | 631,445 | 593,715 | 2,480,578 | 2,389,807 | ||||||
Net (recoveries) charges related to Ukraine Conflict | (614,093) | (46,930) | (1,287,972) | 2,665,651 | ||||||
Asset impairment | 50,315 | 53,114 | 86,855 | 96,591 | ||||||
Interest expense | 495,867 | 420,282 | 1,806,442 | 1,591,870 | ||||||
(Gain) loss on debt extinguishment | — | (4,099) | 4,097 | (2,041) | ||||||
Leasing expenses | 135,205 | 260,898 | 756,438 | 823,600 | ||||||
Selling, general and administrative expenses | 121,879 | 91,864 | 464,128 | 399,530 | ||||||
Transaction and integration-related expenses | — | 3,088 | — | 33,286 | ||||||
Total Expenses | 820,618 | 1,371,932 | 4,310,566 | 7,998,294 | ||||||
Gain (loss) on investments at fair value | 8,925 | 2,466 | 2,334 | (17,676) | ||||||
Income (loss) before income taxes and income of investments | ||||||||||
accounted for under the equity method | 1,086,955 | 459,331 | 3,272,186 | (1,002,420) | ||||||
Income tax (expense) benefit | (39,038) | 141 | (291,056) | 164,097 | ||||||
Equity in net earnings of investments accounted for under the equity method | 58,778 | 38,141 | 166,715 | 117,165 | ||||||
Net income (loss) | ( | |||||||||
Net income attributable to non-controlling interest | (857) | (2,606) | (11,754) | (4,883) | ||||||
Net income (loss) attributable to AerCap Holdings N.V. | ( | |||||||||
Basic earnings (loss) per share | ( | |||||||||
Diluted earnings (loss) per share | ( | |||||||||
Weighted average shares outstanding - basic | 202,347,586 | 241,065,826 | 224,216,801 | 240,486,849 | ||||||
Weighted average shares outstanding - diluted | 205,969,098 | 242,857,553 | 227,656,343 | 240,486,849 | ||||||
AerCap Holdings N.V. | ||||||
Unaudited Consolidated Statements of Cash Flows | ||||||
( | ||||||
Year ended December 31, | ||||||
2023 | 2022 | |||||
Net income (loss) | ( | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Depreciation and amortization | 2,480,578 | 2,389,807 | ||||
Net (recoveries) charges related to Ukraine Conflict | (1,269,471) | 2,922,350 | ||||
Asset impairment | 86,855 | 96,591 | ||||
Amortization of debt issuance costs, debt discount, debt premium and lease premium | 253,003 | 338,032 | ||||
Maintenance rights write-off | 328,239 | 389,852 | ||||
Maintenance liability release to income | (203,440) | (203,490) | ||||
Net gain on sale of assets | (489,620) | (228,930) | ||||
Deferred tax expense (benefit) | 280,069 | (9,586) | ||||
Share-based compensation | 97,058 | 102,848 | ||||
Collections of finance leases | 407,204 | 630,427 | ||||
(Gain) loss on investments at fair value | (2,334) | 17,676 | ||||
Loss (gain) on debt extinguishment | 4,097 | (2,041) | ||||
Other | (7,392) | (161,933) | ||||
Changes in operating assets and liabilities: | ||||||
Trade receivables | 56,442 | 39,162 | ||||
Other assets | (128,459) | 113,374 | ||||
Accounts payable, accrued expenses and other liabilities | 220,761 | (542,019) | ||||
Net cash provided by operating activities | 5,261,435 | 5,170,962 | ||||
Purchase of flight equipment | (4,662,680) | (3,480,074) | ||||
Proceeds from sale or disposal of assets | 2,121,507 | 1,635,777 | ||||
Prepayments on flight equipment | (1,569,706) | (391,498) | ||||
Cash proceeds from insurance claim settlements | 1,254,400 | — | ||||
Net (disbursements) proceeds from loans receivable | (300,329) | 52,682 | ||||
Other | (26,160) | 22,614 | ||||
Net cash used in investing activities | (3,182,968) | (2,160,499) | ||||
Issuance of debt | 6,550,992 | 467,996 | ||||
Repayment of debt | (6,568,370) | (4,230,082) | ||||
Debt issuance and extinguishment costs paid, net of debt premium received | (85,408) | 379 | ||||
Maintenance payments received | 817,229 | 779,824 | ||||
Maintenance payments returned | (201,474) | (245,294) | ||||
Security deposits received | 480,950 | 332,822 | ||||
Security deposits returned | (256,015) | (245,084) | ||||
Redemption of non-controlling interest and dividends paid to non-controlling interest holders | (112,034) | (3,957) | ||||
Repurchase of shares and tax withholdings on share-based compensation | (2,637,589) | (17,419) | ||||
Net cash used in financing activities | (2,011,719) | (3,160,815) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 66,748 | (150,352) | ||||
Effect of exchange rate changes | 1,948 | (7,631) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 1,756,770 | 1,914,753 | ||||
Cash, cash equivalents and restricted cash at end of period | ||||||
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SOURCE AerCap Holdings N.V.
FAQ
What was AerCap's net income for the full year 2023?
How much did AerCap return to shareholders in 2023?
What was the new share repurchase authorization announced by AerCap?
