AerCap Holdings N.V. Reports Record EPS for Full Year 2019 and Announces New Share Repurchase Program

Editor -

DUBLIN – February 13, 2020

Net income of $309.8 million for the fourth quarter of 2019 and $1,145.7 million for the full year 2019

Diluted earnings per share of $2.34 for the fourth quarter of 2019 and $8.43 for the full year 2019

Highlights

44% increase in diluted EPS for the fourth quarter of 2019 year over year.

New technology aircraft now comprise 58% of our owned fleet.

Approximately $40 billion of contracted future lease rents.

Approximately 97% of lease rents through 2022 already contracted.

Average current lease expires in the third quarter of 2027.

99.8% fleet utilization rate for the fourth quarter of 2019 (99.6% for full year 2019).

Adjusted debt/equity ratio of 2.6 to 1.

22% secured debt to total assets ratio.

6.1 years average age of owned fleet.

$1.4 billion increase in average lease assets over the fourth quarter of 2018.

15% increase in book value per share since December 31, 2018.

Upgraded to BBB rating by S&P Global Ratings.

Repurchased 3.4 million shares in the fourth quarter of 2019 for $197 million.

New $250 million share repurchase program authorized, which will run through June 30, 2020.

Aengus Kelly, CEO of AerCap, said: “I am very pleased to report a record year of financial results with earnings per share of $8.43. New technology aircraft now represent 58% of our aircraft fleet, the highest percentage of any major lessor, positioning AerCap well for success in the years ahead and continued leadership in providing the most fuel-efficient aircraft to airlines around the world.”

Fourth Quarter 2019 Financial Results

  • Net income increased by 33% to $309.8 million, from $232.6 million for the same period in 2018. Diluted earnings per share was $2.34, compared with $1.62 for the same period in 2018.
  • The increase in net income was primarily driven by higher maintenance revenue and lower leasing expenses.
  • Diluted earnings per share increased by 44%, driven by the repurchase of 16.6 million shares from October 2018 through December 2019 and the same factors as net income.

Full Year 2019 Financial Results

  • Net income was $1,145.7 million, compared with $1,015.6 million for 2018. Diluted earnings per share was $8.43, compared with $6.83 for 2018.
  • The increase in net income was primarily driven by higher lease rents resulting from an increase in average lease assets due to the delivery of new technology aircraft in 2018 and 2019.
  • Diluted earnings per share increased by 23%, driven by the repurchase of 25.9 million shares during 2018 and 2019 and the same factors as net income.

Revenue and Net Spread

Basic lease rents were $1,062.3 million for the fourth quarter of 2019, compared with $1,051.0 million for the same period in 2018. The increase was primarily due to an increase in average lease assets.

Maintenance rents and other receipts were $132.5 million for the fourth quarter of 2019, compared with $102.3 million for the same period in 2018. The increase was primarily the result of higher end of lease compensation recognized during the fourth quarter of 2019.

Net gain on sale of assets for the fourth quarter of 2019 was $48.6 million, relating to 28 aircraft sold for $729 million, compared with $40.8 million for the same period in 2018, relating to 27 aircraft sold for $515 million. The increase was primarily due to the volume and composition of asset sales.

Other income for the fourth quarter of 2019 was $13.5 million, compared with $25.5 million for the same period in 2018. The decrease was primarily due to higher inventory sales in the fourth quarter of 2018.

Interest expense excluding mark-to-market of interest rate caps of $0.6 million was $315.5 million for the fourth quarter of 2019, compared with $301.9 million for the same period in 2018. Our average cost of debt was 4.2% for the fourth quarter of 2019, compared with 4.1% for the same period in 2018. Our average cost of debt includes debt issuance costs, upfront fees and other impacts of approximately 0.4%.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by 12% to $267.5 million for the full year 2019, compared with $305.2 million for the full year 2018, and were approximately 5.4% of total revenues.

Other Expenses

Leasing expenses were $86.9 million for the fourth quarter of 2019, compared with $125.9 million for the same period in 2018. The decrease was primarily due to a decrease in leasing expenses as a result of lease terminations, 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. Asset impairment charges were $16.1 million for the fourth quarter of 2019, compared to $15.3 million recorded for the same period in 2018. Asset impairment charges recorded in the fourth quarter of 2019 related to lease terminations and sales transactions and were more than offset by maintenance revenue.

Effective Tax Rate

Our effective tax rate for the full year 2019 was 12.5%, the same as for the full year 2018. The effective tax rate is impacted by the source and amount of earnings among our various tax jurisdictions.

Portfolio

As of December 31, 2019, AerCap’s portfolio consisted of 1,334 aircraft that were owned, on order or managed. The average age of our owned fleet as of December 31, 2019 was 6.1 years (2.3 years for new technology aircraft, 11.3 years for current technology aircraft) and the average remaining contracted lease term was 7.5 years.

Boeing 737 MAX Delays

On March 13, 2019, the Federal Aviation Administration issued an order to suspend operations of all Boeing 737 MAX aircraft in the U.S. and by U.S. aircraft operators following two recent fatal accidents involving Boeing 737 MAX aircraft. Non-U.S. civil aviation authorities have also issued directives to similar effect. Boeing has suspended deliveries of the Boeing 737 MAX until clearance is granted by the appropriate regulatory authorities. Prior to the grounding, we had delivered five Boeing 737 MAX aircraft that are currently on lease to an airline customer, and we currently have 95 Boeing 737 MAX aircraft on order. Boeing currently estimates that the Boeing 737 MAX will begin to return to service in mid-2020. However, it is uncertain when and under what conditions our Boeing 737 MAX aircraft will return to service and when Boeing will resume making deliveries of our Boeing 737 MAX aircraft on order. As a result, we have incurred delays and expect to incur future delays on our Boeing 737 MAX deliveries, and any such future delays are likely to have an impact on our financial results.

Share Repurchase Program

In January 2020, our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $250 million of AerCap ordinary shares through June 30, 2020. Repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable U.S. federal securities laws. The timing of repurchases and the exact number of ordinary shares to be purchased will be determined by the Company’s management, in its discretion, and will depend upon market conditions and other factors. The program will be funded using the Company’s cash on hand and cash generated from operations. The program may be suspended or discontinued at any time.

Airbus A320neo Family Option Exercise

In February 2020, we exercised an option to purchase an additional 50 Airbus A320neo Family aircraft from Airbus, with deliveries starting in 2024.