Thursday, 4 March 2021

AerCap's fourth quarter 2020 results

  • Net income for the fourth quarter of 2020 was $28 million, or $0.22 per share. This was impacted by cash accounting and debt extinguishment costs of $117 million and $76 million, pre-tax, respectively.
  • Cash flow from operating activities was $653 million, an increase of 21% from the third quarter of 2020.

Aengus Kelly, Chief Executive Officer of AerCap, said: "I am pleased to report further positive progress for the company in the fourth quarter. Our operating cash flows increased significantly, we ran a number of successful aircraft placement campaigns and we see a renewed enthusiasm from our customers. As the pace of vaccinations accelerates around the world, allowing governments to ease restrictions, we believe the strength of consumer demand will become more evident, driving further confidence in the sector."


Highlights

Strong Balance Sheet:

  • AerCap ended the fourth quarter with over $9 billion in total sources of liquidity, representing next 12 months' sources-to-uses coverage ratio of 2.3x.
  • Adjusted debt/equity ratio of 2.6 to 1, below the company's target of 2.7x to 1.
  • Secured debt-to-total assets ratio of 26%.
  • Approximately $26 billion of unencumbered assets, providing a high degree of flexibility.
  • In January 2021, AerCap completed the offering of $1 billion of 5-year senior unsecured notes with a 1.75% coupon.

Attractive Aircraft Fleet:

  • AerCap's average current lease expires in 2028, and only 7% of the company's aircraft by book value are scheduled to come off lease through the end of 2022.
  • AerCap has already placed all of its new aircraft deliveries from its order book for 2021 and is 98% placed through 2022.
  • New technology aircraft comprise 63% of AerCap's fleet. The average age of the company's owned fleet as of December 31, 2020 was 6.4 years and the average remaining contracted lease term was 7.3 years. The fleet utilization rate for the fourth quarter of 2020 was 97%.

Revenue and Net Spread



Three months ended December 31,



Year ended December 31,



2020



2019



% increase/

(decrease)



2020



2019



% increase/

(decrease)



(U.S. Dollars in millions)



(U.S. Dollars in millions)

























Lease revenue:























   Basic lease rents

$ 885



$ 1,062



(17%)



$ 3,762



$ 4,281



(12%)

   Maintenance rents and other receipts

110



133



(17%)



559



401



39%

Lease revenue

995



1,195



(17%)



4,321



4,682



(8%)

Net gain on sale of assets

14



49



(71%)



90



189



(53%)

Other income

22



14



63%



83



66



25%

Total Revenues and other income

$ 1,032



$ 1,257



(18%)



$ 4,494



$ 4,937



(9%)

Basic lease rents were $885 million for the fourth quarter of 2020, compared with $1,062 million for the same period in 2019. The decrease was primarily due to lease restructurings, transitions and the impact of airline bankruptcies.

Maintenance rents and other receipts were $110 million for the fourth quarter of 2020, compared with $133 million for the same period in 2019. The decrease was primarily due to lower end of lease compensation recognized during the fourth quarter of 2020.

Net gain on sale of assets for the fourth quarter of 2020 was $14 million, relating to 12 aircraft sold for $97 million, compared with $49 million for the same period in 2019, relating to 28 aircraft sold for $729 million. The decrease was primarily due to the lower volume and composition of asset sales.

Other income for the fourth quarter of 2020 was $22 million, compared with $14 million for the same period in 2019. The increase was primarily driven by higher interest income.



Three months ended December 31,



Year ended December 31,



2020



2019



% increase/

(decrease)



2020



2019



% increase/

(decrease)



(U.S. Dollars in millions)



(U.S. Dollars in millions)

























Basic lease rents

$ 885



$ 1,062



(17%)



$ 3,762



$ 4,281



(12%)

























Interest expense

311



316



(2%)



1,248



1,295



(4%)

Adjusted for:























   Mark-to-market of interest rate caps and swaps

0



(1)



NA



(14)



(30)



(52%)

Interest expense excluding mark-to-market of interest rate caps and swaps

311



316



(1%)



1,234



1,265



(3%)

Net interest margin (*)

$ 575



$ 747



(23%)



$ 2,528



$ 3,016



(16%)

Depreciation and amortization, including maintenance rights expense

(408)



(441)



(8%)



(1,691)



(1,753)



(4%)

Net interest margin less depreciation and amortization (*)

$ 167



$ 306



(45%)



$ 837



$ 1,263



(34%)

























Average lease assets (*)

$ 36,496



$ 37,789



(3%)



$ 37,145



$ 37,590



(1%)

























Annualized net spread (*)

6.3%



7.9%







6.8%



8.0%





























Net Spread less depreciation and amortization (*)

1.8%



3.2%







2.3%



3.4%





























(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures

Interest expense excluding mark-to-market of interest rate caps and swaps was $311 million for the fourth quarter of 2020, compared with $316 million for the same period in 2019. AerCap's average cost of debt was 4.1% for the fourth quarter of 2020, compared with 4.2% for the same period in 2019. The company's average cost of debt includes debt issuance costs, upfront fees and other impacts of approximately 0.3% to 0.4%.

Selling, General and Administrative Expenses



Three months ended December 31,



Year ended December 31,



2020



2019



% increase/

(decrease)



2020



2019



% increase/

(decrease)



(U.S. Dollars in millions)



(U.S. Dollars in millions)

























Selling, general and administrative expenses

$ 44



$ 54



(18%)



$ 173



$ 198



(13%)

Share-based compensation expenses

20



18



11%



69



69



(0%)

Total selling, general and administrative expenses

$ 64



$ 71



(11%)



$ 242



$ 267



(9%)

Selling, general and administrative expenses decreased by 11% to $64 million for the fourth quarter of 2020, compared with $71 million for the same period in 2019.

Other Expenses

Asset impairment charges were $27 million for the fourth quarter of 2020, compared to $16 million recorded for the same period in 2019. Asset impairment charges recorded in the fourth quarter of 2020 related to lease terminations and sales transactions and were partially offset by related maintenance revenue.

Effective Tax Rate

AerCap's effective tax rate for the full year 2020 was 5.5%, compared with the effective tax rate of 12.5% for the full year 2019. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions as well as the amount of permanent tax differences relative to pre-tax income.

The company's effective tax rate was 21.7% for the fourth quarter of 2020, compared to 11.1% for the fourth quarter of 2019. Our effective tax rate in any quarter can be impacted by revisions to the estimated full year rate.

Book Value Per Share



December 31,

2020



December 31,

2019



(U.S. Dollars in millions,

except share and per share data)









Total AerCap Holdings N.V. shareholders' equity

$8,864



$9,315









Ordinary shares outstanding

130,398,538



131,583,489

Unvested restricted stock

(2,552,346)



(2,354,318)

Ordinary shares outstanding (excl. unvested restricted stock)

127,846,192



129,229,171









Book value per ordinary share outstanding (excl. unvested restricted stock)

$69.34



$72.08

Financial Position



December 31,

2020



December 31,

2019



% increase/

(decrease) over

December 31,2019



(U.S. Dollars in millions)













Total cash, cash equivalents and restricted cash

$ 1,495



$ 1,300



15%

Total lease assets (*)

36,642



37,930



(3%)

Total assets

42,048



43,749



(4%)

Debt

28,742



29,486



(3%)

Total liabilities

33,116



34,367



(4%)

Total AerCap Holdings N.V. shareholders' equity

8,864



9,315



(5%)

Total equity

8,932



9,382



(5%)













(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to this non-GAAP measure

Aircraft Portfolio

As of December 31, 2020, AerCap's portfolio consisted of 1,330 aircraft that were owned, on order or managed. The average age of the company's owned fleet as of December 31, 2020 was 6.4 years (3.0 years for new technology aircraft, 12.1 years for current technology aircraft) and the average remaining contracted lease term was 7.3 years.

Notes Regarding Financial Information Presented in This Press Release

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

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The following are definitions of non-GAAP measures used in this press release. We believe these measures may further assist investors in their understanding of our operational performance.

Adjusted debt/equity ratio

This measure is the ratio obtained by dividing adjusted debt by adjusted equity.

  • Adjusted debt means consolidated total debt less cash and cash equivalents, and less a 50% equity credit with respect to certain long-term subordinated debt.
  • Adjusted equity means total equity, plus the 50% equity credit relating to the long-term subordinated debt.

Adjusted debt and adjusted equity are adjusted by the 50% equity credit to reflect the equity nature of those financing arrangements and to provide information that is consistent with definitions under certain of our debt covenants. We believe this measure may further assist investors in their understanding of our capital structure and leverage.





December 31,

2020



December 31,

2019





(U.S. Dollars in millions,

except debt/equity ratio)











Debt



$28,742



$29,486











Adjusted for:









   Cash and cash equivalents



(1,249)



(1,121)

   50% credit for long-term subordinated debt



(1,125)



(1,125)

Adjusted debt



$26,368



$27,240





















Equity



$8,932



$9,382











Adjusted for:









   50% credit for long-term subordinated debt



1,125



1,125

Adjusted equity



$10,057



$10,507







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