AerCap Holdings N.V. Reports Third Quarter 2009 Financial Results

AMSTERDAM, Nov. 6 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the third quarter ended September 30, 2009.

Third Quarter 2009 Highlights

  • Third quarter 2009 net income was $35.5 million, compared with net income of $51.3 million for the same period in 2008. Third quarter 2009 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $39.2 million, compared with $61.2 million in third quarter 2008 on the same basis. The decrease in net income was largely due to lower maintenance revenue and lower income from the sale of assets in third quarter 2009 as compared to third quarter 2008.
  • Third quarter 2009 basic and diluted earnings per share were $0.42. Third quarter 2009 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation were $0.46.
  • Net spread, the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps, was $114.6 million in third quarter 2009 compared to $93.3 million in third quarter 2008, an increase of 23%. This measure reflects the increase in leasing income.
  • Basic lease revenue for the third quarter 2009 was $142.4 million, compared to $132.9 million for the same period in 2008, an increase of 7%. Total lease revenue for the third quarter 2009 was $153.8 million, compared to $167.9 million for the same period in 2008, a decrease of 8%. The decrease in total lease revenue was due to lower maintenance rents in third quarter 2009 as compared to third quarter 2008.
  • Total revenue for the third quarter 2009 was $212.5 million, compared to $301.9 million for the same period in 2008. The decrease was mainly due to lower aircraft sales revenue and lower maintenance revenue, partially offset by higher basic lease revenue.
  • Sales revenue for the third quarter 2009 was $49.0 million, compared to $122.4 million for the same period in 2008, and was generated from the sale of one aircraft, three engines and parts inventory. In addition, on October 29, 2009, we executed agreements for the sale of three of our A330-300 forward order aircraft delivering in 2010 (the sales will be recorded at time of delivery).
  • Total assets were $6.4 billion at September 30, 2009, an increase of 22% over total assets of $5.3 billion at September 30, 2008.
  • Committed purchases of aviation assets delivered or scheduled for delivery in 2009 are $1.8 billion, of which $1.1 billion closed in the nine month period ended September 30, 2009.

Previously disclosed Third Quarter 2009 Highlights

  • In third quarter 2009, AerCap announced that the Boards of Directors of AerCap Holdings N.V. and Genesis Lease Limited had approved a definitive agreement under which AerCap and Genesis will merge in an all share-for-share transaction.

Klaus Heinemann, CEO of AerCap, commented: "AerCap continues to substantially grow its core leasing business as measured by the Company's net spread results. Additionally, we have expanded AerCap's overall market position through the share-for-share transaction with Genesis Lease. Both are clear evidence that AerCap is well positioned to take advantage of the prevailing market dislocation. The performance of emerging markets and low cost carriers has begun to improve. Resumed 2010 passenger growth along with fuel costs based on 75 to 100 dollars per barrel, will enable the market for modern, state of the art narrowbodies to rapidly rebalance."

AerCap's CFO, Keith Helming, said: "Our third quarter 2009 results highlight the consistent growth in the Company's leasing related earnings as demonstrated through the 23% increase in net spread. Additionally, the Company's margin of net spread divided by average lease assets has remained constant year-over-year. The Company's consistent performance is attributable to the decrease in interest rates coupled with the use of interest rate caps, plus relatively stable basic lease rents achieved on deliveries of new, fuel-efficient aircraft."

Summary of Financial Results

AerCap recorded a third quarter 2009 net income of $35.5 million or $0.42 earnings per basic and diluted share. Included in the third quarter 2009 net income amount were charges relating to mark-to-market of interest rate caps and share-based compensation of $3.7 million or $0.04 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $3.0 million and the after-tax charge from share-based compensation was $0.7 million.

Detailed Financial Data

($ in Millions)

Operating results:


                           Three months ended           Nine months ended
                              September 30,               September 30,
                         ----------------------      ----------------------
                                     % increase/                 % increase/
                         2009   2008  (decrease)     2009   2008  (decrease)
                         ----   ----   --------      ----   ----  ---------

    Revenues           $212.5 $301.9     -30%      $715.7 $929.8    -23%
    Net income           35.5   51.3     -31%       122.0  170.8    -29%
    Net income
     excluding the
     impact of mark-
     to-market of
     interest rate
     caps and share-
     based compensation  39.2   61.2     -36%       109.9  179.0    -39%

Total revenue in third quarter 2009 decreased 30% compared with third quarter 2008. This decrease was largely driven by lower sales revenue and lower maintenance revenue, partially offset by higher basic lease revenue.

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 36%. This decrease was also driven by lower maintenance revenue ($20.6 million) and lower income from the sale of assets ($5.8 million), partially offset by an increase in net spread.

Revenue breakdown


                           Three months ended          Nine months ended
                              September 30,              September 30,
                         ----------------------      ----------------------
                                     % increase/                 % increase/
                         2009   2008  (decrease)     2009   2008  (decrease)
                         ----   ----   --------      ----   ----  ---------

    Lease revenue:
       Basic lease
        rents          $142.4 $132.9      7%       $425.2 $386.0     10%
       Maintenance
        rents            10.4   34.6    -70%         49.9   57.6    -13%
       End-of-lease
        compensation
        and other
        receipts          1.0    0.4    150%          9.7   12.5    -22%
                         ----   ----   --------      ----   ----  ---------
    Lease
     revenue           $153.8 $167.9     -8%       $484.8 $456.1      6%
    Sales
     revenue             49.0  122.4    -60%        202.4  445.6    -55%
    Management fees
     and interest
     income               5.3    8.0    -34%         17.0   23.9    -29%
    Other
     revenue              4.4    3.6     22%         11.5    4.2    174%
                         ----   ----   --------      ----   ----  ---------
    Total
     revenue           $212.5 $301.9    -30%       $715.7 $929.8    -23%
                        =====  =====   ========     =====  =====  =========

Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. The increase in basic lease rents of 7% was less than the increase in average lease assets of 23%, as a result of decreasing interest rates. The impact of decreasing interest rates on basic lease rents was offset by lower interest expense. While basic lease rents for the third quarter 2009 increased 7% compared to third quarter 2008 to $142.4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 30% compared with third quarter 2008 to $27.8 million, as shown in the table below. We refer to the difference in these amounts as net spread, which increased 23% in third quarter 2009 over the same period in 2008 to an amount of $114.6 million. Our average lease assets increased by 23% to $4.6 billion compared to third quarter 2008.

Maintenance related revenues, including end-of-lease compensation, decreased $23.6 million in third quarter 2009 to $11.4 million from $35.0 million in third quarter 2008. The decrease was largely due to $21.2 million of non-recurring maintenance revenue in third quarter 2008. The non-recurring maintenance revenue related to a change in the estimate of the amount of maintenance rent expected to be reimbursed to lessees plus airline defaults. The change in estimate arose from the implementation of an improved model used to forecast future maintenance reimbursements, as disclosed in our previous filings. Since third quarter 2008 AerCap records as revenue all maintenance rent receipts not expected to be repaid to lessees. In third quarter 2008, $16.6 million was recorded as maintenance revenue as a result of the change in estimate. Of the $16.6 million, $12.9 million was collected from lessees during prior periods and was non-recurring. In addition, the termination of certain leases due to airline defaults triggered the recognition of $8.3 million of maintenance related revenues in third quarter 2008.


                            Three months ended          Nine months ended
                              September 30,                September 30,
                         ----------------------      ----------------------
                                     % increase/                 % increase/
                         2009   2008  (decrease)     2009   2008  (decrease)
                         ----   ----   --------      ----   ----  ---------

    Basic lease rents  $142.4 $132.9       7%      $425.2 $386.0     10%

    Interest on debt    $32.8  $51.0     -36%       $68.3 $120.2    -43%
    Plus: mark-to-market
     of interest rate
     caps                (5.0) (11.4)    -56%        17.2   (6.0)  -387%
                         ----   ----   --------      ----   ----  ---------
    Interest on debt
     excluding the
     impact of mark-
     to-market of
     interest rate caps $27.8  $39.6     -30%       $85.5 $114.2    -25%
                         ----   ----   --------      ----  -----  ---------
    Net Spread         $114.6  $93.3      23%      $339.7 $271.8     25%
                        =====   ====   ========     =====  =====  =========

Effective tax rate

AerCap's blended effective tax rate during the nine month period ended September 30, 2009 was 2.5%, consisting of 0.4% for AerCap's aircraft business and 36.4% for AerCap's engine and parts business. The annual blended effective tax rate for 2008 was positive 0.3% (income).

Financial position

                                                           % Increase over
                             September 30,  September 30,    September 30,
                                  2009           2008            2008
                             ------------   ------------   ---------------
    Flight equipment held
     for lease                 $4,761.9       $3,831.2            24%
    Total assets                6,417.6        5,269.5            22%
    Total liabilities           5,082.9        4,111.6            24%
    Total equity                1,334.8        1,157.9            15%

As of September 30, 2009, AerCap's portfolio consisted of 304 aircraft and 85 engines that were either owned, on order, under contract or letter of intent, or managed.

Notes Regarding Financial Information Presented In This Press Release

The financial information presented in this press release is not audited.

The following is a definition of non-GAAP measures used in this press release and a reconciliation of such measure to the most closely related GAAP measure:

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation. This measure is determined by adding the mark-to-market on our interest rate caps and share-based compensation during the applicable period, net of related tax benefits, to GAAP net income. AerCap believes this measure provides investors with a more meaningful view on AerCap's operational performance and allows investors to better understand its operational performance in relation to past and future reporting periods. AerCap uses interest rate caps to allow it to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on its floating rate debt. Management determines the appropriate level of caps in any period with reference to the mix of floating and fixed cash inflows from the Company's lease and other contracts. AerCap does not apply hedge accounting to its interest rate caps. As a result, AerCap is required to recognize the change in fair value of the interest rate caps in AerCap's income statement during each period. Following is a reconciliation of net income excluding the impact of mark-to-market of interest rate caps and share-based compensation to net income for the three and nine month periods ended September 30, 2009 and 2008:


                            Three months ended          Nine months ended
                              September 30,                September 30,
                         ----------------------      ----------------------
                                     % increase/                 % increase/
                         2009  2008   (decrease)     2009   2008  (decrease)
                         ----   ----   --------      ----   ----  ---------

    Net income          $35.5  $51.3     -31%      $122.0 $170.8    -29%
    Plus: mark-to-market
     of interest rate
     caps, net of tax     3.0    8.2     -63%       (14.5)   3.7   -492%
     share-based
     compensation,
     net of tax           0.7    1.7     -59%         2.4    4.5    -47%
                         ----   ----   --------      ----   ----  ---------
    Net income excluding
     the impact of
     mark-to-market of
     interest rate caps
     and share-based
     compensation       $39.2  $61.2     -36%      $109.9 $179.0    -39%
                         ====   ====   ========      ====   ====  =========

Earnings per share excluding the impact of mark-to-market of interest rate caps and share-based compensation are determined by dividing the amount of net income excluding such impact by the average number of shares outstanding for that period. The average number of shares is based on a daily average.

Net spread. This measure is the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps and non-recurring charges. AerCap believes this measure provides investors a better way to understand the changes and trends related to the earnings of its leasing activities. This measure reflects the impact from changes in the number of aircraft leased, lease rates, utilization rates, as well as the impact from the use of interest rate caps instead of swaps for hedging purposes. The reconciliation of net spread to basic lease rents for the three and nine month periods ended September 30, 2009 and 2008 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Friday, November 6, 2009 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-676-6978 toll free or +1-706-634-5464 (International) and referencing code 35504602 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations."

The presentation slides for the conference call will be posted on AerCap's website in advance of the call. A replay of the call will be available beginning at 10:30 am Eastern Time / 4:30 pm Central European Time on November 6, 2009 and continuing through December 6, 2009. To access the recording, call (U.S./Canada) 800-642-1687 toll free or +1-706-645-9291 (International) and enter passcode 35504602. The webcast replay will be archived in the "Investor Relations" section of the company's website for one year.

In addition, a New York Group Lunch Presentation for investors and analysts will be hosted by AerCap's management today, Friday, November 6, 2009, at 12:30 pm Eastern Time at The New York Palace (the Henry Room). Doors will open at 12:00 pm.

To participate in either event, please register at: www.sharedvalue.net/aercap/q309results

For further information, contact Peter Wortel: +31 20 655 9658 (pwortel@aercap.com)

or Mark Walter (Shared Value): +44 (0)20 7321 5039 (aercap@sharedvalue.net).

About AerCap Holdings N.V.

AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. The company also provides aircraft management services and performs aircraft maintenance, repair and overhaul services and aircraft disassemblies. AerCap is headquartered in The Netherlands and has offices in Ireland, the United States, Singapore, China and the United Kingdom.

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," "will," "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, 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. As a result, there can be no assurance 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. 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 http://www.aercap.com.

    For Investors:
    Keith Helming
    Chief Financial Officer
    +31 20 655 9670
    khelming@aercap.com

    Peter Wortel
    Investor Relations
    +31 20 655 9658
    pwortel@aercap.com

    For Media:
    Frauke Oberdieck
    Corporate Communications
    +31 20 655 9616
    foberdieck@aercap.com

Financial Statements Follow

    AerCap Holdings N.V.
    Consolidated Balance Sheets - Unaudited
    (In thousands of U.S. Dollars)


                                  September 30,  December 31,  September 30,
                                      2009           2008          2008
                                 -------------- ------------- --------------

    Assets
    Cash and cash equivalents          $203,377      $193,563       $176,444
    Restricted cash                     121,067       113,397        167,843
    Trade receivables, net of
     provisions                          49,037        43,649         38,694
    Flight equipment held for
     operating leases, net            4,761,918     3,989,629      3,831,200
    Flight equipment held for
     sale                                     -             -          6,139
    Net investment in direct
     finance leases                      34,069        30,571              -
    Notes receivables, net of
     provisions                         141,628       134,067        179,080
    Prepayments on flight
     equipment                          632,333       448,945        385,257
    Investments                          20,367        18,678         18,678
    Goodwill                              6,776         6,776          6,776
    Intangibles, net                     34,602        47,099         50,888
    Inventory                           108,444       102,879         89,746
    Derivative assets                    38,572        19,352         53,633
    Deferred income taxes                80,463        82,471         76,091
    Other assets                        184,975       179,750        189,038
                                        -------       -------        -------
    Total Assets                     $6,417,628    $5,410,826     $5,269,507
                                     ==========    ==========     ==========


    Liabilities and Equity

    Accounts payable                    $16,004        $7,510           $137
    Accrued expenses and other
     liabilities                         77,591       104,750        118,638
    Accrued maintenance
     liability                          216,345       202,834        208,064
    Lessee deposit liability            113,025        98,584         98,094
    Debt*                             4,593,268     3,790,487      3,603,013
    Accrual for onerous
     contracts                           24,378        33,306         31,053
    Deferred revenue                     33,479        34,922         38,516
    Derivative liabilities                8,783        12,378          5,325
    Deferred income taxes                     -             -          8,782
                                        -------       -------        -------
    Total liabilities                 5,082,873     4,284,771      4,111,622

    Share capital                           699           699            699
    Additional paid-in capital          592,133       609,327        607,852
    Retained earnings                   621,012       499,011        518,009
                                        -------       -------        -------
    Total AerCap Holdings N.V.
     shareholders' equity             1,213,844     1,109,037      1,126,560
    Non-controlling interest            120,911        17,018         31,325
                                        -------        ------         ------
    Total Equity                      1,334,755     1,126,055      1,157,885

                                     ----------    ----------     ----------
    Total Liabilities and Equity     $6,417,628    $5,410,826     $5,269,507
                                     ==========    ==========     ==========

    * Includes $63 million of subordinated debt received from our joint
      venture partner relating to the TUI portfolio acquisition



    AerCap Holdings N.V.
    Consolidated Income Statements - Unaudited
    (In thousands of U.S. Dollars, except share and per share data)

                               Three months ended       Nine months ended
                                   September 30,           September 30,
                                 2009        2008        2009        2008
                                 ----        ----        ----        ----
    Revenues
    Lease revenue            $153,890    $167,932    $484,932    $456,134
    Sales revenue              49,012     122,441     202,364     445,629
    Interest revenue            2,433       4,889       7,656      14,931
    Management fee revenue      2,821       3,065       9,294       8,970
    Other revenue               4,354       3,607      11,461       4,156
                                -----       -----      ------       -----
    Total Revenues            212,510     301,934     715,707     929,820

    Expenses
    Depreciation               55,663      45,329     160,153     123,331
    Asset impairment              382           -      21,332       7,689
    Cost of goods sold         39,973     108,850     179,293     359,716
    Interest on debt           32,844      50,958      68,319     120,182
    Operating lease
     in costs                   3,268       4,254       9,855      11,209
    Leasing expenses           10,648       5,421      51,885      23,213
    Provision for
     doubtful notes and
     accounts receivable           55        (186)        408       1,061
    Selling, general
     and
     administrative
     expenses                  27,806      33,366      82,796      96,652
    Other expenses              1,900           -       1,900           -
                               ------      ------     -------     -------
    Total Expenses            172,539     247,992     575,941     743,053

                               ------      ------     -------     -------
    Income from
     continuing
     operations before
     income taxes              39,971      53,942     139,766     186,767

    Provision for
     income taxes                (784)     (3,896)     (3,471)    (15,421)

                               ------      ------     -------     -------
    Net income                 39,187      50,046     136,295     171,346

    Net (income) loss
     attributable to non-
     controlling interest      (3,735)      1,285     (14,293)       (543)

                              -------     -------    --------    --------
    Net Income
     attributable to
     AerCap Holdings
     N.V.                     $35,452     $51,331    $122,002    $170,803
                              =======     =======    ========    ========

    Basic and diluted
     earnings per share         $0.42       $0.60       $1.43       $2.01

    Weighted average
     shares outstanding -
     basic and diluted     85,036,957  85,036,957  85,036,957  85,036,957



    AerCap Holdings N.V.
    Consolidated Statements of Cash Flows - Unaudited
    (In thousands of U.S. Dollars)

                                     Three months ended     Nine months ended
                                        September 30,         September 30,
                                       2009      2008        2009        2008
                                       ----      ----        ----        ----

    Net income                       39,187    50,046     136,295     171,346
    Adjustments to reconcile net
     income to net cash provided
     by operating activities
    Depreciation                     55,663    45,328     160,153     123,330
    Asset impairment                    382         -      21,332       7,689
    Amortisation of debt
     issuance cost                    3,901     5,154      11,789      11,911
    Amortisation of intangibles       3,294     3,788      12,499      10,827
    Gain on discounted
     purchase of securitized
     bonds                                -    (2,783)          -      (2,783)
    Provision for doubtful
     notes and accounts
     receivable                         587      (186)        940       1,061
    Capitalised interest
     on pre-delivery
     payments                          (225)     (909)       (934)     (2,308)
    Gain on disposal of assets           21   (12,461)      1,039     (65,268)
    Mark-to-market of
     non-hedged
     derivatives                      3,862    13,980     (15,642)      2,904
    Deferred taxes                      724     3,529       1,863      14,519
    Share-based compensation            912     1,962       2,910       5,383
    Changes in assets and
     liabilities
       Trade receivables and
        notes receivable, net       (11,378)   22,539      (5,850)      1,576
       Inventories                   35,867    (7,061)     33,146       9,214
       Other assets and derivative
        assets                       (3,791)  (22,160)    (14,521)    (47,652)
       Accounts payable and
        accrued expenses,
        including
           accrued maintenance
            liability, lessee
            deposits                 (6,965)  (26,269)     (4,918)    (18,454)
       Deferred revenue              (3,326)   (1,526)     (1,442)      4,942
                                     ------    ------      ------       -----
    Net cash provided by
     operating activities           118,715    72,971     338,659     228,237

    Purchase of flight equipment   (273,217) (137,091)   (848,031) (1,014,642)
    Proceeds from sale/disposal of
     assets                           1,891   104,535      80,243     352,427
    Prepayments on flight
     equipment                     (116,693)  (74,905)   (403,054)   (206,583)
    Purchase of investments               -   (10,000)          -     (10,000)
    Purchase of
     subsidiaries, net of
     cash acquired                        -         -           -           -
    Sale of investments                   -     6,234           -       6,234
    Purchase of intangibles               -       112           -     (21,410)
    Movement in restricted cash       7,117    15,965      (7,670)    (72,771)
                                      -----    ------      ------     -------
    Net cash used in investing
     activities                    (380,902)  (95,150) (1,178,512)   (966,745)

    Issuance of debt                562,464   207,692   1,843,442   1,148,338
    Repayment of debt              (313,149) (181,898) (1,081,578)   (435,286)
    Debt issuance costs paid         (6,212)   (2,998)    (20,325)    (38,619)
    Capital contributions
     from minority
     interests                            -         -     104,200           -
                                     ------    ------      ------       -----
    Net cash provided by
     financing activities           243,103    22,796     845,739     674,433
                                                    -
    Net increase (decrease) in
     cash and cash equivalents      (19,084)      617       5,886     (64,075)
    Effect of exchange rate
     changes                          4,038       (43)      3,928      (1,217)
    Cash and cash
     equivalents at
     beginning of period            218,423   175,870     193,563     241,736
                                    -------   -------     -------     -------
    Cash and cash
     equivalents at end
     of period                      203,377   176,444     203,377     176,444
                                    =======   =======     =======     =======

SOURCE AerCap Holdings N.V.

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