AerCap records $1.1 billion income for 2019

Aaron Woolner
By Aaron Woolner February 14, 2020 15:34

AerCap records $1.1 billion income for 2019

AerCap reported full year earnings of  $1,145.7m for 2019 and also announced a $250 share repurchase programme which will run until the end of June 2020.

The lessor also reported that new technology aircraft comprise 58% of its owned fleet, which Aengus Kelly, the firm’s chief executive said,  CEO of AerCap, said positioned the firm, “well for success in the years ahead and continued leadership in providing the most fuel-efficient aircraft to airlines around the world.”

According to the results announcement, AerCap has about $40bn of contracted future lease rents with 97% of lease rents through 2022 already contracted and an average current lease expiring in the third quarter of 2027.

The firm reported a 99.8% fleet utilisation rate for the fourth quarter of 2019, slightly above it 99.6% for full year figures for 2019. AerCap has an adjusted debt/equity ratio of 2.6 to 1 and the average age of  its owned fleet is 6.1 years 

This financial strength was reflected in the firm being upgraded to BBB rating by S&P Global Ratings. 

AerCap reported that it had repurchased 3.4 million shares in the fourth quarter of 2019 for $197 million and that it has authorized an additional $250 million share repurchase program, which will run through June 30, 2020.

Full year income was up on the $1,015.m recorded  for 2018 and Aer Cap attributed this to higher lease rents resulting from an increase in average lease assets due to the delivery of new technology aircraft in 2018 and 2019. 

With regard to the MAX grounding, AerCap said it was uncertain over when the airplane would return to service or when Boeing would restart deliveries and said this added a degree of uncertainty to the lessor’s future financial performance.

“We have incurred delays and expect to incur future delays on our Boeing 737 MAX deliveries, and any such future delays are likely to have an impact on our financial results.”

AerCap’s share repurchase programme will be funded using the company’s cash on hand and cash generated from operations. 

AerCap also reported that this month it has exercised an option to purchase an additional 50 Airbus A320neo Family aircraft from Airbus, with deliveries starting in 2024.

These results were viewed positively by equity analysts from Cowen, which reiterated its outperform rating on AerCap shares. 

“We are increasing our price target to $70 from $65, which is based on 0.9x our 2020 book value per share estimate,” Cowen said in an analysis of the results. “AerCap is well positioned to execute in the current environment given the breadth of their platform. 

The coronavirus will cause challenges for their Chinese customers, but AerCap remains committed to the country given the growth potential. Delivery delays at Boeing and Airbus will likely result in shifting delivery streams but will also result in opportunities in the sales market given the scarcity of aircraft. We believe there is upside to their 2020 sales target of $1 Bn.”

Aaron Woolner
By Aaron Woolner February 14, 2020 15:34