AerCap report second quarter earnings

Eleanor Steed
By Eleanor Steed July 30, 2018 16:38

AerCap report second quarter earnings

During the second quarter of 2018, AerCap reports net income of $254.2 million, compared with $282.9 million for the same period in 2017, with diluted earnings per share of $1.70, compared with $1.67 for the same period in 2017.

AerCap states that the decrease in net income was primarily driven by lower other income as well as a decrease in net gain on sale of assets. Other income for the second quarter of 2017 included contractual payments related to a lease termination agreement.

The increase in diluted earnings per share was primarily driven by the repurchase of 24.9 million shares from April 2017 through June 2018.

During the reporting period, AerCap executed 90 aircraft transactions, including 17 widebodies. The lessor purchased 20 aircraft for $1.5 billion. AerCap’s current owned fleet has an average age of 6.6 years, with a 7.1 year average remaining lease term.

AerCap says that its fleet utilization rate for the second quarter of 2018 is at 98.9%.

Also during the quarter, AerCap closed on $2.7 billion of debt financing, has $11.7 billion of available liquidity and adjusted debt/equity ratio of 2.8 to 1. AerCap’s book value per share of $59.25, an increase of 12% since June 30, 2017. The lessor has also repurchased 1.9 million shares in the second quarter of 2018 for $101 million.

Aengus Kelly, CEO of AerCap, commented: “The AerCap platform remained active in the quarter, completing 90 aircraft transactions, including 17 widebody transactions. We took delivery of 20 aircraft and expect to take delivery of over 200 new technology aircraft through the end of 2020. We continue to see strong global demand from our airline customers and have access to $11.7 billion of liquidity to meet our strategic objectives.”

Basic lease rents were $1,023.1 million for the second quarter of 2018, compared with $1,053.5 million for the same period in 2017. The decrease was primarily due to the sale of mid-life and older aircraft from April 2017 through June 2018.

Maintenance rents and other receipts were $107.9 million for the second quarter of 2018, compared with $104.1 million for the same period in 2017.

Net gain on sale of assets for the second quarter of 2018 was $51.2 million, relating to 30 aircraft sold and four aircraft reclassified to finance leases, compared with $69.5 million for the same period in 2017, relating to 24 aircraft sold and six aircraft reclassified to finance leases. The decrease was primarily due to the composition of asset sales.

Other income for the second quarter of 2018 was $12.4 million, compared with $36.7 million for the same period in 2017. Other income for the second quarter of 2017 included contractual payments related to a lease termination agreement.
Interest expense excluding mark-to-market of interest rate caps of $4.5 million was $289.4 million for the second quarter of 2018, compared with $266.0 million for the same period in 2017. AerCap’s average cost of debt was 4.1% for the second quarter of 2018, compared with 3.9% for the same period in 2017. The average cost of debt increased primarily due to the issuance of new longer-term bonds to replace shorter-term ILFC notes, which had lower reported interest expense as a result of ILFC acquisition purchase accounting.

Annualized net spread was 8.4% for the second quarter of 2018, compared with 9.3% for the same period in 2017. The decrease was primarily due to the lower age of our owned fleet, which increased our average remaining lease term to 7.1 years.

Leasing expenses were $103.3 million for the second quarter of 2018, compared with $136.3 million for the same period in 2017. The decrease was primarily due to lower maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights intangible asset balance. Asset impairment charges were $14.0 million for the second quarter of 2018, compared to $5.3 million recorded for the same period in 2017. Asset impairment recorded in the second quarter of 2018 related to sales transactions and lease terminations and was offset by maintenance revenue.

Eleanor Steed
By Eleanor Steed July 30, 2018 16:38