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

AMSTERDAM, May 7 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the first quarter ended March 31, 2009.

First Quarter 2009 Highlights

  • First quarter 2009 net income was $30.0 million, compared with net income of $50.9 million for the same period in 2008. First quarter 2009 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $31.5 million, compared with $59.9 million in first quarter 2008 on the same basis. The decrease in net income was largely due to lower income from the sale of assets in first quarter 2009 as compared to first quarter 2008.
  • First quarter 2009 basic and diluted earnings per share were $0.35. First 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 $0.37.
  • Net spread, the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps, was $112.5 million in first quarter 2009 compared to $85.6 million in first quarter 2008, an increase of 31%. This measure reflects the increase in leasing income.
  • Total revenue for the first quarter 2009 was $208.5 million, compared to $294.5 million for the same period in 2008. The decrease was mainly due to lower aircraft sales revenue.
  • Sales revenue for the first quarter 2009 was $41.7 million, compared to $142.5 million for the same period in 2008, and was generated from the sale of four engines and parts inventory.
  • Total assets were $5.8 billion at March 31, 2009, an increase of 26% over total assets of $4.6 billion at March 31, 2008.
  • Committed purchases of aviation assets delivered or scheduled for delivery in 2009 are $1.8 billion, of which $0.3 billion closed in first quarter 2009.

First Quarter 2009 Financing Highlights

  • In first quarter 2009, AerCap closed debt facilities for $106 million with two European financial institutions to finance the pre-delivery payments in connection with the delivery of four A330 aircraft pursuant to a purchase agreement signed with Airbus in December 2006.
  • In March 2009, AerVenture signed a $846 million export credit facility with a syndicate of commercial banks led by Calyon S.A. to finance up to 20 Airbus A320 aircraft. Repayment under the credit facility is guaranteed by the European Export Credit Agencies.

Klaus Heinemann, CEO of AerCap, commented: "The first quarter of 2009 has been the most challenging environment the Company has encountered since the post 9/11 recession and the impact of the SARS epidemic early this decade. Against this background, we are highly satisfied that we closed the first quarter with a solid profit and a record increase of our leasing net spread, the core measure for our lease portfolio performance. The business activities for both our new leases and our aircraft sales have picked up materially since late March. We are confident that we will be able to show renewed aircraft trading activity during the remaining quarters of 2009 based on existing contracts and ongoing sales activities."

Klaus Heinemann added: "Through our own cash reserves we successfully bridged the inability of our AerVenture joint venture partner to make required equity contributions in March. We are currently in advanced discussions with several parties to find a permanent solution during the second quarter."

AerCap's CFO, Keith Helming, said: "We are very pleased with our first quarter results, notwithstanding lower asset sale income and the charges incurred in the first quarter related to 2008 lease defaults. Our net spread income increased more than the growth in lease assets, which indicates continued improvement in the quality of our reported earnings. Also during the quarter, we secured $952 million of new funding facilities, part of which completed the financing requirement for the AerVenture A320 aircraft order. These successful financings demonstrate our ongoing ability to tap diverse financing sources to meet our capital needs, despite challenging market conditions throughout the world."

Summary of Financial Results

AerCap recorded a first quarter 2009 net income of $30.0 million or $0.35 earnings per basic and diluted share. Included in the first quarter 2009 net income amount were charges relating to the mark-to-market of interest rate caps and share-based compensation of $1.5 million or $0.02 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $0.7 million and the after-tax charge from share-based compensation was $0.8 million.

Detailed Financial Data

($ in Millions)

Operating results


                                                  Three months ended
                                                       March 31,
                                                              % increase/
                                               2009    2008    (decrease)

    Revenues                                 $208.5  $294.5       -29%
    Net income                                 30.0    50.9       -41%
    Net income excluding the impact of
     mark-to-market of interest rate
     caps and share-based compensation         31.5    59.9       -47%

Total revenue in first quarter 2009 decreased 29% compared with first quarter 2008. This decrease was largely driven by lower sales revenue in the first quarter 2009.

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 47%. This decrease was driven by lower income from the sale of assets ($22.3 million), plus certain aircraft impairments ($6.8 million), and the costs relating to airline defaults which occurred in 2008 ($6.4 million).

Revenue breakdown


                                                Three months ended
                                                     March 31,
                                                           % increase/
                                             2009    2008   (decrease)

    Lease revenue:
      Basic lease rents                    $141.4  $126.5       12%
      Maintenance rents                      12.6    $9.2       37%
      End-of-lease compensation and other
       receipts                               7.2    $8.2      -12%
    Lease revenue                          $161.2  $143.9       12%
    Sales revenue                            41.7   142.5      -71%
    Management fees and interest income       5.4     8.0      -33%
    Other revenue                             0.2     0.1      100%
    Total revenue                          $208.5  $294.5      -29%

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 was reduced by the impact from decreasing interest rates on floating rate lease rentals between the periods. However, the decrease in basic lease rents on floating rate leases was offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the first quarter 2009 increased 12% compared to first quarter 2008 to $141.4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 29% compared with first quarter 2008 to $28.9 million, as shown in the table below. We refer to the difference in these amounts of $112.5 million as net spread, which increased 31% in first quarter 2009 over the same period in 2008. Our average lease assets increased by 26% to $4.1 billion compared to first quarter 2008.


                                                 Three months ended
                                                    December 31,
                                                            % increase/
                                              2009    2008   (decrease)

    Basic lease rents                       $141.4  $126.5       12%

    Interest on debt                         $29.5   $49.6      -41%
    Plus: mark-to-market of interest
     rate caps                                (0.6)   (8.7)     -93%
    Interest on debt excluding the
     impact of mark-to-market of
     interest rate caps                      $28.9   $40.9      -29%

    Net Spread                              $112.5   $85.6       31%

Maintenance related revenues including end-of-lease compensation increased $2.4 million in first quarter 2009 to $19.8 million from $17.4 million in first quarter 2008. Of these amounts collected in the first quarter 2009, $7.2 million were payments made by lessees in order to fulfill the contractual return conditions of the lease on certain returned aircraft. However, the receipt of these payments triggered corresponding impairments on these aircraft of $7.2 million (refer to expense section of income statement).

Effective tax rate

AerCap's blended effective tax rate during the first quarter 2009 was 5.2%, consisting of 2.3% for AerCap's aircraft business and 34.8% for AerCap's engine and parts business. The blended effective tax rate in 2008 was positive 0.3% (income).

Financial position


                                                             % Increase
                                                                over
                                      March 31,   March 31,   March 31,
                                        2009        2008        2008

    Flight equipment held for lease   $4,204.7    $3,279.2       28%
    Total assets                       5,790.1     4,594.7       26%
    Total liabilities                  4,629.1     3,561.2       30%
    Total equity                       1,161.0     1,033.5       12%

As of March 31, 2009, AerCap's portfolio consisted of 295 aircraft and 78 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 month periods ended March 31, 2009 and 2008:


                                                   Three months ended
                                                        March 31,
                                                              % increase/
                                                 2009   2008   (decrease)

    Net income                                  $30.0  $50.9      -41%
    Plus: mark-to-market of interest rate
           caps, net of tax                       0.7    7.6      -91%
          share-based compensation, net of
           tax                                    0.8    1.4      -43%
    Net income excluding the impact of
     mark-to-market of interest rate caps
     and share-based compensation               $31.5  $59.9      -47%

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 month periods ended March 31, 2009 and 2008 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, May 7, 2009 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing 888-935-4577 (US/Canada - toll free) or +1-718-354-1390 (International) 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 May 7, 2009 and continuing through June 3, 2009. To access the recording, call 866-239-0765 (US/Canada - toll free) or +1-718-354-1112 (International) and enter passcode 1285154. The replay will be archived in the "Investor Relations" section of the Company's website for one year.

To participate in this event, please register at: www.sharedvalue.net/aercap/q1_2009

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 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.

Financial Statements Follow


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

                                      March 31,  December 31,   March 31,
                                        2009         2008         2008

    Assets
    Cash and cash equivalents         $175,081      $193,563    $197,170
    Restricted cash                    144,954       113,397     127,150
    Trade receivables, net of
     provisions                         46,657        43,649      64,969
    Flight equipment held for
     operating leases, net           4,204,749     3,989,629   3,279,244
    Flight equipment held for sale      76,566             -      51,857
    Net investment in direct finance
     leases                             30,152        30,571           -
    Notes receivables, net of
     provisions                        127,440       134,067     199,037
    Prepayments on flight equipment    539,572       448,945     284,368
    Investments                         18,678        18,678      11,678
    Goodwill                             6,776         6,776       6,776
    Intangibles, net                    42,309        47,099      45,427
    Inventory                           94,148       102,879      83,469
    Derivative assets                   19,631        19,352      18,896
    Deferred income taxes               81,231        82,471      82,392
    Other assets                       182,134       179,750     142,217
    Total Assets                    $5,790,078    $5,410,826  $4,594,650


    Liabilities and Equity

    Accounts payable                   $24,246        $7,510      $9,246
    Accrued expenses and other
     liabilities                        81,213       104,750      87,294
    Accrued maintenance liability      207,042       202,834     261,948
    Lessee deposit liability           102,397        98,584      89,197
    Debt                             4,133,991*    3,790,487   3,044,462
    Accrual for onerous contracts       28,496        33,306      28,378
    Deferred revenue                    40,133        34,922      35,663
    Derivative liabilities              11,557        12,378           -
    Deferred income taxes                    -             -       4,997
    Total liabilities                4,629,075     4,284,771   3,561,185

    Share capital                          699           699         699
    Additional paid-in capital         635,406       609,327     604,105
    Retained earnings                  528,964       499,011     398,082
    Total AerCap Holdings N.V.
     shareholders' equity            1,165,069     1,109,037   1,002,886
    Noncontrolling interest             (4,066)       17,018      30,579
    Total Equity                     1,161,003     1,126,055   1,033,465

    Total Liabilities and Equity    $5,790,078    $5,410,826  $4,594,650

    * Includes $63.1 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 March 31,
                                                 2009        2008

    Revenues
    Lease revenue                             $161,213    $143,856
    Sales revenue                               41,717     142,463
    Interest revenue                             2,621       4,877
    Management fee revenue                       2,741       3,174
    Other revenue                                  210         163
    Total Revenues                             208,502     294,533

    Expenses
    Depreciation                                51,247      38,475
    Asset impairment                             7,217           -
    Cost of goods sold                          33,824     110,019
    Interest on debt                            29,486      49,596
    Operating lease in costs                     3,314       3,640
    Leasing expenses                            19,161       6,390
    Provision for doubtful notes and accounts
     receivable                                  1,232         548
    Selling, general and administrative
     expenses                                   27,213      30,622
    Total Expenses                             172,694     239,290

    Income from continuing operations before
     income taxes                               35,808      55,243

    Provision for income taxes                  (1,860)     (4,570)

    Net income                                  33,948      50,673

    Net (income) loss attributable to
     noncontrolling interest                    (3,994)        203

    Net Income attributable to AerCap
     Holdings N.V.                             $29,954     $50,876

    Basic and diluted earnings per share          0.35        0.60

    Weighted average shares outstanding -
     basic and diluted                      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
                                                              March 31,
                                                           2009       2008

    Net income                                           33,948     50,673
    Adjustments to reconcile net income to net cash
     provided by operating activities
    Depreciation                                         51,247     38,474
    Asset impairment                                      7,217          -
    Amortisation of debt issuance cost                    3,834      3,392
    Amortisation of intangibles                           4,790      3,504
    Provision for doubtful notes and accounts
     receivable                                           1,232        548
    Capitalised interest on pre-delivery payments          (371)      (669)
    Gain on disposal of assets                              448    (22,949)
    Change in fair value of derivative instruments       (1,002)     2,867
    Deferred taxes                                        1,241      4,434
    Share-based compensation                              1,002      1,636
    Changes in assets and liabilities
      Trade receivables and notes receivable, net         4,284    (20,240)
      Inventories                                        14,484     10,473
      Other assets                                       (4,188)    (1,546)
      Accounts payable and accrued expenses,
       including accrued maintenance liability,
       lessee deposits                                  (11,930)    (3,721)
      Deferred revenue                                    5,212      2,090
    Net cash provided by operating activities           111,448     68,966

    Purchase of flight equipment                       (288,087)  (234,904)
    Proceeds from sale/disposal of assets                 1,792     83,487
    Prepayments on flight equipment                    (158,504)   (72,445)
    Purchase of intangibles                                   -     (8,627)
    Movement in restricted cash                         (31,557)   (32,078)
    Net cash used in investing activities              (476,356)  (264,567)

    Issuance of debt                                    445,700    278,081
    Repayment of debt                                   (96,485)  (126,363)
    Debt issuance costs paid                             (3,370)      (367)
    Net cash provided by financing activities           345,845    151,351

    Net (decrease) increase in cash and cash
     equivalents                                        (19,063)   (44,250)
    Effect of exchange rate changes                         581       (316)
    Cash and cash equivalents at beginning of period    193,563    241,736
    Cash and cash equivalents at end of period          175,081    197,170




    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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