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

AMSTERDAM, Aug. 6 /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, 2009.

Second Quarter 2009 Highlights

  • Second quarter 2009 net income was $56.6 million, compared with net income of $68.6 million for the same period in 2008. Second quarter 2009 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $39.1 million, compared with $58.2 million in second quarter 2008 on the same basis. The decrease in net income was largely due to lower income from the sale of assets in second quarter 2009 as compared to second quarter 2008.
  • Second quarter 2009 basic and diluted earnings per share were $0.67. Second 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.
  • Lease revenue for the second quarter 2009 was $169.8 million, compared to $144.4 million for the same period in 2008, an increase of 18%.
  • Net spread, the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps, was $112.6 million in second quarter 2009 compared to $93.1 million in second quarter 2008, an increase of 21%. This measure reflects the increase in leasing income.
  • Total revenue for the second quarter 2009 was $294.7 million, compared to $333.4 million for the same period in 2008. The decrease was mainly due to lower aircraft sales revenue partially offset by higher lease revenue and other revenue.
  • Sales revenue for the second quarter 2009 was $111.6 million, compared to $180.7 million for the same period in 2008, and was generated from the sale of aircraft, engines and parts inventory.
  • Total assets were $6.1 billion at June 30, 2009, an increase of 18% over total assets of $5.2 billion at June 30, 2008.
  • Committed purchases of aviation assets delivered or scheduled for delivery in 2009 are $1.8 billion, of which $0.8 billion closed in the first half year of 2009.

Second Quarter 2009 Financing Highlights - previously disclosed

  • $4.5 billion in financings completed since the second quarter of 2008.
  • Signed a joint-venture agreement with Waha Capital for a 50/50 joint investment in AerVenture.
  • Signed a facility agreement with a German bank for a $221 million pre-delivery financing of ten A330 aircraft.
  • Closed on the initial fundings for 16 A320 aircraft into the ALS II facility ($499.1 million). The ALS II facility has the capacity to fund a total of 30 A320 aircraft.

Klaus Heinemann, CEO of AerCap, commented: "Our net spread, which is our industry's key measure of lease rental income after interest expense, increased by 21 percent in second quarter 2009 as compared to the same period in 2008, while we were managing our portfolio through the worst recession since World War II. Our cash position reached nearly $350 million on June 30, 2009 representing over 50 percent of our current market capitalization." Klaus Heinemann added: "We achieved our key goal for the first half of 2009; all of our aircraft orders to be delivered in 2009 through 2011 are placed with airline clients with committed financing arranged. AerCap has strong growth prospects as one of the leading players in the global aircraft operating lease market with financial resources and a commitment to participate in the anticipated market recovery during 2010."

AerCap's CFO, Keith Helming, said: "We are pleased with our second quarter results, notwithstanding the difficult market conditions. The growth in our net spread highlights the increasing profitability of our core leasing portfolio which also demonstrates the continued improvement in the quality of our reported earnings. We are also committed to further growth in our total aircraft assets, as we strive to create profitable long-term value for our shareholders." Keith Helming added: "AerCap has now raised $4.5 billion in financing since the second quarter of 2008, during the peak of the credit crisis. The strength of our business model has been further validated by the significant investment by Waha Capital, who have become our joint partner/shareholder in AerVenture. We have also broadened and reinforced our lessee portfolio, adding Virgin Atlantic, one of the premier long haul carriers, to our sizeable list of reputable clients."

Summary of Financial Results

AerCap recorded a second quarter 2009 net income of $56.6 million or $0.67 earnings per basic and diluted share. Included in the second quarter 2009 net income amount were mark-to-market of interest rate caps and share-based compensation of $17.5 million or $0.21 per basic and diluted share, net of tax. The after-tax gain relating to the mark-to-market of our interest rate caps was $18.3 million and the after-tax charge from share-based compensation was $0.8 million.

Detailed Financial Data

($ in Millions)

Operating results

                             Three months ended        Six months ended
                                 June 30,                  June 30,
                                         %increase/                 %increase/
                           2009    2008  (decrease)   2009    2008  (decrease)
                           ----    ----  ---------    ----    ----  ---------

    Revenues             $294.7  $333.4    -12%     $503.2  $627.9     -20%
    Net income             56.6    68.6    -17%       86.6   119.5     -28%
    Net income excluding
     the impact of
     mark-to-market of
     interest rate caps
     and share-based
     compensation          39.1    58.2    -33%       70.7   118.1     -40%

Total revenue in second quarter 2009 decreased 12% compared with second quarter 2008. This decrease was largely driven by lower sales revenue in the second quarter 2009 partially offset by higher lease revenue and higher other revenue.

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 33%. This decrease was driven by lower income from the sale of assets ($28.6 million) and the costs relating to airline defaults which occurred in 2008 ($5.1 million), partially offset by an increase in net spread.

Revenue breakdown

                           Three months ended           Six months ended
                                June 30,                     June 30,
                                         %increase/                 %increase/
                         2009      2008  (decrease)   2009     2008 (decrease)
                         ----      ----  ---------    ----     ---- ---------

    Lease revenue:
     Basic lease rents $141.4    $126.6     12%     $282.8   $253.1     12%
     Maintenance rents   26.9      13.8     95%       39.5     23.0     72%
     End-of-lease
      compensation and
      other receipts      1.5       4.0    -63%        8.7     12.1    -28%
                          ---       ---    ----        ---     ----    ----
    Lease revenue      $169.8    $144.4     18%     $331.0   $288.2     15%
    Sales revenue       111.6     180.7    -38%      153.4    323.2    -53%
    Management fees and
     interest income      6.4       7.9    -19%       11.7     16.0    -27%
    Other revenue         6.9       0.4   1625%        7.1      0.5   1320%
                          ---       ---   -----        ---      ---   -----
    Total revenue      $294.7    $333.4    -12%     $503.2   $627.9    -20%
                       ======    ======    ====     ======   ======    ====

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 second quarter 2009 increased 12% compared to second quarter 2008 to $141.4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 14% compared with second quarter 2008 to $28.8 million, as shown in the table below. We refer to the difference in these amounts as net spread, which increased 21% in second quarter 2009 over the same period in 2008 to an amount of $112.6 million. Our average lease assets increased by 23% to $4.3 billion compared to second quarter 2008.

                        Three months ended            Six months ended
                             June 30,                     June 30,
                                       %increase/                   %increase/
                         2009   2008   (decrease)   2009     2008   (decrease)
                         ----   ----   ---------    ----     ----   ---------

    Basic lease rents  $141.4 $126.6       12%    $282.8   $253.1        12%

    Interest on debt     $6.0  $19.6      -69%     $35.5    $69.2       -49%
    Plus: mark-to-
     market of interest
     rate caps           22.8   13.9       64%      22.2      5.3       319%
                         ----   ----       --       ----      ---       ---
    Interest on debt
     excluding the impact
     of mark-to-market
     of interest rate
     caps               $28.8  $33.5      -14%     $57.7    $74.5       -23%
                       ------  -----       --     ------   ------        --
    Net Spread         $112.6  $93.1       21%    $225.1   $178.6        26%
                       ======  =====       ==     ======   ======        ==

Maintenance related revenues, including end-of-lease compensation, increased $10.6 million in second quarter 2009 to $28.4 million from $17.8 million in second quarter 2008. Of these amounts collected in the second quarter 2009, $13.7 million were payments made by lessees in order to fulfill the contractual return conditions of their leases relating to certain returned aircraft. However, the receipt of these payments triggered corresponding impairments on these aircraft of $13.7 million (refer to expense section of income statement).

Effective tax rate

AerCap's blended effective tax rate during the first half of 2009 was 2.7%, consisting of 1.2% for AerCap's aircraft business and 34.3% for AerCap's engine and parts business. The annual blended effective tax rate for 2008 was positive 0.3% (income).

Financial position

                                                           % Increase over
                              June 30, 2009 June 30, 2008    June 30, 2008
                              ------------- -------------  ----------------
    Flight equipment
     held for lease              $4,493.8      $3,765.4            19%
    Total assets                  6,130.8       5,217.7            18%
    Total liabilities             4,835.8       4,111.9            18%
    Total equity                  1,295.1       1,105.9            17%

As of June 30, 2009, AerCap's portfolio consisted of 290 aircraft and 83 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 six month periods ended June 30, 2009 and 2008:

                             Three months ended           Six months ended
                                  June 30,                     June 30,
                                         %increase/                 %increase/
                           2009   2008   (decrease)   2009   2008   (decrease)
                           ----   ----   ----------   ----   ----  ---------

    Net income            $56.6  $68.6     -17%      $86.6  $119.5     -28%
    Plus: mark-to-market
     of interest rate caps,
     net of tax           (18.3) (11.9)     54%      (17.5)   (4.3)    307%
     share-based
     compensation,
     net of tax             0.8    1.5     -47%        1.6     2.9     -45%
                            ---    ---     ---         ---     ---     ---
    Net income excluding
     the impact of
     mark-to-market of
     interest rate caps and
     share-based
     compensation         $39.1  $58.2     -33%      $70.7  $118.1     -40%
                          =====  =====     ===       =====  ======     === 

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 six month periods ended June 30, 2009 and 2008 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, August 6, 2009 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing 800-676-6978 (US/Canada - toll free) or +1-706-634-5464 (International) and referencing code 18445389 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 6, 2009 and continuing through September 6, 2009. To access the recording, call 800-642-1687 (US/Canada - toll free) or +1-706-645-9291 (International) and enter passcode 18445389. 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 AerCap's management today, Thursday, August 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/q209results

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.

    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)

                                         June 30,   December 31,   June 30,
                                           2009         2008        2008
                                         --------- -------------  ---------
    Assets
    Cash and cash equivalents             $218,423      $193,563   $175,870
    Restricted cash                        128,184       113,397    183,808
    Trade receivables, net of provisions    39,244        43,649     40,642
    Flight equipment held for operating
     leases, net                         4,493,793     3,989,629  3,765,378
    Flight equipment held for sale               -             -     48,390
    Net investment in direct finance
     leases                                 34,822        30,571          -
    Notes receivables, net of
     provisions                            136,084       134,067    199,485
    Prepayments on flight equipment        576,754       448,945    328,172
    Investments                             20,111        18,678     11,678
    Goodwill                                 6,776         6,776      6,776
    Intangibles, net                        37,893        47,099     54,788
    Inventory                              131,416       102,879     88,627
    Derivative assets                       40,035        19,352     59,677
    Deferred income taxes                   81,187        82,471     78,617
    Other assets                           186,105       179,750    175,818
                                           -------       -------    -------
    Total Assets                        $6,130,827    $5,410,826 $5,217,726
                                        ==========    ========== ==========

    Liabilities and Equity

    Accounts payable                       $28,290        $7,510     $7,023
    Accrued expenses and other
     liabilities                            76,559       104,750    107,865
    Accrued maintenance liability          206,873       202,834    248,517
    Lessee deposit liability               112,112        98,584     89,566
    Debt*                                4,336,966     3,790,487  3,580,002
    Accrual for onerous contracts           29,878        33,306     28,472
    Deferred revenue                        36,805        34,922     40,042
    Derivative liabilities                   8,285        12,378      2,584
    Deferred income taxes                        -             -      7,779
                                                --            --      -----
    Total liabilities                    4,835,768     4,284,771  4,111,850

    Share capital                              699           699        699
    Additional paid-in capital             591,623       609,327    605,889
    Retained earnings                      585,560       499,011    466,678
                                           -------       -------    -------
    Total AerCap Holdings N.V.
     shareholders' equity                1,177,882     1,109,037  1,073,266
    Non-controlling interest               117,177        17,018     32,610
                                           -------        ------     ------
    Total Equity                         1,295,059     1,126,055  1,105,876

                                        ----------    ---------- ----------
    Total Liabilities and Equity        $6,130,827    $5,410,826 $5,217,726
                                        ==========    ========== ==========

    * 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       Six months ended
                                         June 30,                 June 30,
                                     2009       2008         2009        2008
                                     ----       ----         ----        ----
    Revenues
    Lease revenue                $169,829   $144,346     $331,042    $288,202
    Sales revenue                 111,635    180,725      153,352     323,188
    Interest revenue                2,602      5,165        5,223      10,042
    Management fee revenue          3,732      2,731        6,473       5,905
    Other revenue                   6,897        386        7,107         549
                                    -----        ---        -----         ---
    Total Revenues                294,695    333,353      503,197     627,886

    Expenses
    Depreciation                   53,243     39,527      104,490      78,002
    Asset impairment               13,733      7,689       20,950       7,689
    Cost of goods sold            105,496    140,847      139,320     250,866
    Interest on debt                5,989     19,628       35,475      69,224
    Operating lease in costs        3,273      3,315        6,587       6,955
    Leasing expenses               22,076     11,402       41,237      17,792
    Provision for doubtful notes
     and accounts receivable         (879)       699          353       1,247
    Selling, general and
     administrative expenses       27,777     32,664       54,990      63,286
                                   ------     ------       ------      ------
    Total Expenses                230,708    255,771      403,402     495,061
                                  -------    -------      -------     -------
    Income from continuing
     operations before income
     taxes                         63,987     77,582       99,795     132,825

    Provision for income taxes       (827)    (6,955)      (2,687)    (11,525)

                                    ------    ------        ------     -------
    Net income                     63,160     70,627       97,108     121,300

    Net (income) loss attributable
     to non-controlling
     interest                      (6,564)    (2,031)     (10,558)     (1,828)
                                   ------     ------      -------      ------
    Net Income attributable to
     AerCap Holdings N.V.         $56,596    $68,596      $86,550    $119,472
                                  =======    =======      =======    ========

    Basic and diluted earnings
     per share                      $0.67      $0.81        $1.02       $1.40

    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,
                                       2009      2008       2009      2008
                                       ----      ----       ----      ----

    Net income                       63,160    70,627     97,108   121,300
    Adjustments to reconcile net
     income to net cash provided by
     operating activities
    Depreciation                     53,243    39,528    104,490    78,002
    Asset impairment                 13,733     7,689     20,950     7,689
    Amortisation of debt issuance
     cost                             4,054     3,365      7,888     6,757
    Amortisation of intangibles       4,415     3,535      9,205     7,039
    Provision for doubtful notes
     and accounts receivable           (879)      699        353     1,247
    Capitalised interest on pre-
     delivery payments                 (338)     (730)      (709)   (1,399)
    Gain on disposal of assets          570   (29,858)     1,018   (52,807)
    Mark-to-market of non-hedged
     derivatives                    (18,502)  (13,943)   (19,504)  (11,076)
    Deferred taxes                     (102)    6,556      1,139    10,990
    Share-based compensation            996     1,785      1,998     3,421
    Changes in assets and
     liabilities
       Trade receivables and notes
        receivable, net               1,244      (723)     5,528   (20,963)
       Inventories                  (17,205)    5,802     (2,721)   16,275
       Other assets and derivative
        assets                       (6,543)  (23,944)   (10,730)  (25,490)
       Accounts payable and accrued
        expenses, including accrued
        maintenance liability, lessee
        deposits                     13,977    11,534      2,047     7,813
       Deferred revenue              (3,328)    4,378      1,884     6,468
                                     ------     -----      -----     -----
    Net cash provided by operating
     activities                     108,495    86,300    219,944   155,266

    Purchase of flight equipment   (286,726) (642,647)  (574,814) (877,551)
    Proceeds from sale/disposal
     of assets                       76,560   164,405     78,352   247,892
    Prepayments on flight
     equipment                     (127,857)  (59,233)  (286,361) (131,678)
    Purchase of intangibles               -   (12,895)         -   (21,522)
    Movement in restricted cash      16,770   (56,658)   (14,787)  (88,736)
                                     ------   -------    -------   -------
    Net cash used in investing
     activities                    (321,253) (607,028)  (797,610) (871,595)

    Issuance of debt                835,278   662,565  1,280,978   940,646
    Repayment of debt              (671,944) (127,025)  (768,429) (253,388)
    Debt issuance costs paid        (10,743)  (35,254)   (14,113)  (35,621)
    Capital contributions from
     minority interests             104,200         -    104,200         -
                                    -------        --    -------        --
    Net cash provided by financing
     activities                     256,791   500,286    602,636   651,637

    Net increase (decrease) in
     cash and cash equivalents       44,033   (20,442)    24,970   (64,692)
    Effect of exchange rate
     changes                           (691)     (858)      (110)   (1,174)
    Cash and cash equivalents at
     beginning of period            175,081   197,170    193,563   241,736
                                    -------   -------    -------   -------
    Cash and cash equivalents at
     end of period                  218,423   175,870    218,423   175,870
                                    =======   =======    =======   =======

SOURCE AerCap Holdings N.V.

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