AerCap Holdings N.V. Reports Second Quarter 2008 Financial Results

AMSTERDAM, Netherlands, Aug. 7 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the second quarter ended June 30, 2008.

Second Quarter 2008 Highlights

-- Second quarter 2008 net income was $68.6 million, compared with $34.2 million for the same period in 2007. Second quarter 2008 net income excluding the impact of mark-to-market of interest rate caps and share-based compensation was $58.2 million, compared with $28.7 million in second quarter 2007 on the same basis.

-- Second quarter 2008 basic and diluted earnings per share were $0.81. Second quarter 2008 basic and diluted earnings per share excluding the impact of mark-to-market of interest rate caps and share-based compensation were $0.68.

-- Net spread, 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, was $93.1 million in second quarter 2008 compared to $74.9 million in second quarter 2007, an increase of 24%. This measure reflects the increase in leasing income.

-- Sales revenue for the second quarter 2008 was $180.7 million, compared to $84.3 million for the same period in 2007, and was generated from the sale of ten aircraft, two engines and the sale of parts inventory.

-- Total revenue for the second quarter 2008 was $333.4 million, compared to $246.6 million for the same period in 2007.

-- Total assets were $5.2 billion at June 30, 2008, an increase of 18% over total assets of $4.4 billion at June 30, 2007.

-- Committed purchases of aviation assets delivered or scheduled for delivery in 2008 are $1.3 billion, of which $933 million closed in the first half year of 2008.

-- AerCap acquired a 19-aircraft portfolio from TUI Travel in a joint venture with Deucalion Aviation Funds. This portfolio contains eleven Next Generation Boeing 737-800s, six Boeing B757-200s and two Boeing B767-300ERs. The portfolio was financed through a $425.7 million debt facility and $62.8 million of subordinated debt.

-- AerCap closed a $1.0 billion aircraft securitization through Aircraft Lease Securitisation II Limited ("ALS II") that provides long-term, non-recourse funding for 30 new A320 family aircraft. The aircraft are part of a 70-aircraft order placed by AerVenture Limited, AerCap's consolidated joint venture.

-- In addition to the debt related to the TUI Travel acquisition and the securitization debt on ALS II, AerCap closed a $100 million engine acquisition facility and increased committed pre-delivery payment funding for forward purchase commitments by $337.6 million.

Klaus Heinemann, CEO of AerCap, commented: "While we are certainly observing areas of weakness in the aviation industry due to rising fuel costs and slowing economic growth, we see strength and growth in some markets and continuing demand for state of the art fuel efficient aircraft in those markets. Our aim to take advantage of counter-cyclical investment opportunities was evidenced by our purchase and leaseback of a 19-aircraft portfolio from TUI Travel during our second quarter 2008."

AerCap's CFO, Keith Helming, added: "During the second quarter of 2008, AerCap achieved all of its financial goals despite the challenging credit market conditions. In particular, AerCap was able to close several significant debt financing transactions which totalled nearly $2 billion, demonstrating that debt financing for recognized borrowers and quality aviation assets is still available. In addition, AerCap was able to sell all aircraft that were earmarked for disposal in second quarter. Of particular significance during the quarter was the closing of a $1 billion securitization facility which will provide financing for 30 of our A320-family aircraft in AerVenture. The financing transactions we closed in the second quarter of 2008 and our previously-existing committed facilities provide AerCap with over $3 billion of committed financing to support our contracted growth."

Summary of Financial Results

AerCap recorded second quarter 2008 net income of $68.6 million or $0.81 per basic and diluted share. Included in the second quarter 2008 net income amount were mark-to-market of interest rate caps and share-based compensation of $10.4 million or $0.12 per basic and diluted share, net of tax. The after-tax gain relating to the mark-to-market of our interest rate caps was $11.9 million and the after-tax charge from share-based compensation was $1.5 million.


    Detailed Financial Data
    ($ in Millions)

    Operating results


                     Three months ended                  Six months ended
                          June 30,                           June 30,
                                   % increase/                     % increase/
                     2008     2007   (decrease)       2008    2007  (decrease)

    Revenues      $ 333.4  $ 246.6      35%        $ 627.9   $ 556.1     13%
    Net income       68.6     34.2     101%          119.5      94.7     26%


Total revenue in second quarter 2008 increased 35% compared with second quarter 2007. This increase was largely driven by a higher amount of sales revenue in the second quarter 2008.



    Revenue breakdown


                     Three months ended               Six months ended
                          June 30,                         June 30,
                                     % increase/                  % increase/
                       2008     2007  (decrease)    2008     2007  (decrease)

    Lease Revenue
     Basic rents    $ 126.6  $ 124.5      2%     $ 253.1  $ 243.1      4%
     Maintenance
      rents            13.8      8.6     60%        23.0     20.5     12%
     End-of-lease
      compensation      4.0      7.6    -47%        12.1     16.8    -28%
    Lease revenue   $ 144.4  $ 140.7      3%     $ 288.2  $ 280.4      3%
    Sales revenue     180.7     84.3    114%       323.2    233.2     39%
    Management fees
     and interest
     income             7.9     12.5    -37%        15.9     22.8    -30%
    Other revenue       0.4      9.1    -96%         0.6     19.7    -97%
    Total revenue   $ 333.4  $ 246.6     35%     $ 627.9  $ 556.1     13%

Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. This increase is partially offset by the impact from decreasing interest rates on floating rate lease rentals between the periods. However, the decrease in basic rents on floating rate leases is completely offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the second quarter 2008 increased 2% compared to second quarter 2007 to $126.6 million, interest expense excluding the impact of mark-to-market of interest rate caps and non-recurring charges decreased 32% compared with second quarter 2007 to $33.5 million, as shown in the table below. The difference in these amounts of $93.1 million is referred to as net spread, and increased 24% in second quarter 2008 over the same period in 2007.



                        Three months ended                Six months ended
                             June 30,                          June 30,
                                       % increase/                 % increase/
                        2008     2007   (decrease)    2008    2007  (decrease)

    Basic rents      $ 126.6   $ 124.5       2%    $ 253.1  $ 243.1      4%

    Interest on debt $  19.6     $68.4     -71%    $  69.2  $ 118.8    -42%
    Plus:
     mark-to-market
     of interest rate
     caps               13.9       8.6      62%        5.3      4.0     33%
    Less: Non-recurring
     charges to interest
     expense from
     refinancing of
     securitized bonds     -     (27.4)   -100%          -    (27.4)  -100%

    Interest on debt
     excluding the
     impact of
     mark-to-market of
     interest rate caps
     and non-recurring
     charges to interest
     expense from refinancing
     of securitized
     bonds           $  33.5   $  49.6    -32%     $  74.5  $  95.4    -22%


    Net spread       $  93.1   $  74.9     24%     $ 178.6  $ 147.7     21%


    Effective tax rate
    AerCap's effective tax rate during the first half year of 2008 was 8.7%,
consisting of 7.6% for AerCap's aircraft business and 27.5% for AerCap's
engine and parts business.  The effective tax rate in 2007 was 11.8%.


    Financial position
                                                                  % Increase
                                                                     over
                              June 30, 2008    June 30, 2007     June 30, 2007

    Flight equipment held
     for lease                   $3,765.4        $3,030.2             24%
    Total assets                  5,217.7         4,411.3             18%
    Total liabilities             4,111.9         3,521.9             17%
    Total equity                  1,073.3           856.0             25%

As of June 30, 2008, AerCap's portfolio consisted of 314 aircraft and 76 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 the Company 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 month and six month periods ended June 30, 2008 and 2007:



                    Three months ended                  Six months ended
                        June 30,                             June 30,
                                    % increase/                    % increase/
                     2008    2007    (decrease)      2008     2007  (decrease)


    Net income      $68.6   $34.2 *     101%       $ 119.5    $94.7 *    26%
    Plus:
     mark-to-market
     of interest
     rate caps,
     net of tax     (11.9)   (7.5)      59%           (4.3)    (3.5)     23%
       share-based
       compensation,
       net of tax     1.5     2.0      -25%            2.9      4.2     -31%
    Net income
     excluding the
     impact of
     mark-to-market
     of interest rate
     caps and
     share-based
     compensation   $58.2   $28.7      103%        $ 118.1    $95.4     24%

    *- Includes a charge to interest expense from refinancing of securitized
    bonds of $24.0 million, net of tax.

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 for hedging purposes. The reconciliation of net spread to basic rents for the three months and six month periods ended June 30, 2008 and 2007 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, August 7, 2008 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 or (International) +1-706-634 5464 and referencing code 54829902 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 August 7, 2008 and continuing through September 7, 2008. To access the recording, call 800-642-1687 (U.S./Canada) or +1-706-645-9291 (International) and enter passcode 54829902. The 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 senior management today, Thursday, August 7, 2008, at 12:30 pm Eastern Time at The St. Regis Hotel. Doors will open at 12:00 pm.

To participate in either event, please register at: www.sharedvalue.net/aercap/q208results

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. AerCap also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations. 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.



                         Financial Statements Follow


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


                                           June 30,   December 31,  June 30,
                                             2008        2007        2007

      Assets
      Cash and cash equivalents            $175,870    $241,736    $250,124
      Restricted cash                       183,808      95,072     178,116
      Trade receivables, net of
       provisions                            40,642      35,591      29,470
      Flight equipment held for
       operating leases, net              3,765,378   3,050,160   3,030,170
      Flight equipment held for sale         48,390     136,135     157,981
      Notes receivables, net of
       provisions                           199,485     184,820     173,207
      Prepayments on flight equipment       328,172     247,839     186,179
      Investments                            11,678      11,678      16,091
      Goodwill                                6,776       6,776       6,776
      Intangibles, net                       54,788      41,855      46,100
      Inventory                              88,627      90,726      83,064
      Derivative assets                      59,677      21,763      20,355
      Deferred income taxes                  78,617      85,253      92,132
      Other assets                          175,818     144,823     141,522
      Total Assets                       $5,217,726  $4,394,227  $4,411,287


      Liabilities and Shareholders' equity

      Accounts payable                       $7,023     $16,376      $9,453
      Accrued expenses and other
       liabilities                          107,865      81,379      70,914
      Accrued maintenance liability         248,517     255,535     282,474
      Lessee deposit liability               89,566      83,628      78,747
      Debt*                               3,580,002   2,892,744   2,977,654
      Accrual for onerous contracts          28,472      46,411      68,376
      Deferred revenue                       40,042      33,574      31,460
      Derivative liabilities                  2,584           -           -
      Deferred income taxes                   7,779       3,425       2,843
      Total liabilities                   4,111,850   3,413,072   3,521,921

      Minority interest                      32,610      30,782      33,333

      Share capital                             699         699         699
      Additional paid-in capital            605,889     602,469     601,850
      Retained earnings                     466,678     347,205     253,484
      Total shareholders' equity          1,073,266     950,373     856,033

      Total Liabilities and
       Shareholders' equity              $5,217,726  $4,394,227  $4,411,287


      * Includes $62.8 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        Six months ended
                                       June 30,                 June 30,
                                   2008        2007        2008        2007

      Revenues
      Lease revenue              $144,346    $140,677    $288,202    $280,380
      Sales revenue               180,725      84,281     323,188     233,166
      Interest revenue              5,165       8,178      10,042      15,450
      Management fee revenue        2,731       4,323       5,905       7,348
      Other revenue                   386       9,157         549      19,744
      Total Revenues              333,353     246,616     627,886     556,088

      Expenses
      Depreciation                 39,527      37,223      78,002      71,155
      Asset impairment              7,689           -       7,689           -
      Cost of goods sold          140,847      58,579     250,866     176,582
      Interest on debt             19,628      68,362      69,224     118,846
      Operating lease in costs      3,315       4,623       6,955      10,860
      Leasing expenses             11,402       9,703      17,792      13,735
      Provision for doubtful
       notes and accounts
       receivable                     699         263       1,247         122
      Selling, general and
       administrative expenses     32,664      27,642      63,286      54,227
      Total Expenses              255,771     206,395     495,061     445,527

      Income from continuing
       operations before
       income taxes and
       minority interest           77,582      40,221     132,825     110,561

      Provision for income taxes   (6,955)     (5,657)    (11,525)    (15,683)

      Net income before
       minority interest           70,627      34,564     121,300      94,878

      Minority interest, net
       of taxes                    (2,031)       (398)     (1,828)       (146)

      Net Income                  $68,596     $34,166    $119,472     $94,732

      Basic and diluted
       earnings per share           $0.81       $0.40       $1.40       $1.11

      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      Six months ended
                                          June 30,              June 30,
                                      2008       2007       2008       2007

      Net income                     68,596      34,166   119,472      94,732
      Adjustments to reconcile net
       income to net cash provided
       by operating activities
      Minority interest               2,031         398     1,828         146
      Depreciation                   39,528      37,223    78,002      71,155
      Asset impairment                7,689         -       7,689         -
      Amortisation of debt
       issuance cost                  3,365      29,851     6,757      31,559
      Amortisation of intangibles     3,535       2,979     7,039       4,923
      Gain on elimination of fair
       value guarantee                    -           -         -     (10,736)
      Provision for doubtful notes
       and accounts receivable          699         263     1,247         122
      Capitalised interest on
       pre-delivery payments           (730)     (1,422)   (1,399)     (2,986)
      Gain on disposal of assets    (29,858)    (18,523)  (52,807)    (43,484)
      Mark-to-market of non-hedged
       derivatives                  (13,943)     (1,591)  (11,076)     (2,484)
      Deferred taxes                  6,556       2,640    10,990      12,656
      Share-based compensation        1,785       2,328     3,421       4,774
      Changes in assets and
       liabilities
         Trade receivables and
          notes receivable, net        (723)     (4,138)  (20,963)    (10,290)
         Inventories                  5,802     (22,705)   16,275     (11,926)
         Other assets and
          derivative assets         (23,944)    (12,020)  (25,490)    (19,518)
         Accounts payable and
          accrued expenses,
          including accrued
          maintenance liability,
          lessee deposits            11,534      24,969     7,813     (26,216)
         Deferred revenue             4,378       2,395     6,468       3,069
      Net cash provided by
       operating activities          86,300      76,813   155,266      95,496

      Purchase of flight equipment (642,647)   (165,592) (877,551)   (389,177)
      Proceeds from sale/disposal
       of assets                    164,405      58,277   247,892     185,182
      Prepayments on flight
       equipment                    (59,233)    (50,552) (131,678)    (69,202)
      Purchase of intangibles       (12,895)        -     (21,522)    (16,794)
      Movement in restricted cash   (56,658)    (78,657)  (88,736)    (65,839)
      Net cash used in investing
       activities                  (607,028)   (236,524) (871,595)   (355,830)

      Issuance of debt              662,565   1,807,061   940,646   2,053,564
      Repayment of debt            (127,025) (1,497,630) (253,388) (1,633,285)
      Debt issuance costs paid      (35,254)    (40,560)  (35,621)    (42,019)
      Capital contributions from
       minority interests                 -       1,250         -       1,250
      Net cash provided by
       financing activities         500,286     270,121   651,637     379,510

      Net (decrease) increase in
       cash and cash equivalents    (20,442)    110,410   (64,692)    119,176
      Effect of exchange rate
       changes                         (858)       (389)   (1,174)       (253)
      Cash and cash equivalents at
       beginning of period          197,170     140,103   241,736     131,201
      Cash and cash equivalents at
       end of period                175,870     250,124   175,870     250,124



     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

SOURCE AerCap Holdings N.V.

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