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Nov-06-2009AerCap posts smaller third-quarter profit(topic overview)
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Net spread, the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps, was $114.6 million in third quarter 2009 compared to $93.3 million in third quarter 2008, an increase of 23%. This measure reflects the increase in leasing income. [1] While basic lease rents for the third quarter 2009 increased 7% compared to third quarter 2008 to $142.4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 30% compared with third quarter 2008 to $27.8 million, as shown in the table below. We refer to the difference in these amounts as net spread, which increased 23% in third quarter 2009 over the same period in 2008 to an amount of $114.6 million.[2]
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.[2]
Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 36%. This decrease was also driven by lower maintenance revenue ($20.6 million) and lower income from the sale of assets ($5.8 million), partially offset by an increase in net spread.[2] Third quarter 2009 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $39.2 million, compared with $61.2 million in third quarter 2008 on the same basis.[2] Included in the third quarter 2009 net income amount were charges relating to mark-to-market of interest rate caps and share-based compensation of $3.7 million or $0.04 per basic and diluted share, net of tax.[2]
AerCap is required to recognize the change in fair value of the interest rate caps in AerCap's income statement during each period. 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.[2] 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.[2]
The after-tax charge relating to the mark-to-market of our interest rate caps was $3.0 million and the after-tax charge from share-based compensation was $0.7 million.[2]
The Company's consistent performance is attributable to the decrease in interest rates coupled with the use of interest rate caps, plus relatively stable basic lease rents achieved on deliveries of new, fuel-efficient aircraft."[2] The increase in basic lease rents of 7% was less than the increase in average lease assets of 23%, as a result of decreasing interest rates.[2] The impact of decreasing interest rates on basic lease rents was offset by lower interest expense.[2]
The decrease was mainly due to lower aircraft sales revenue and lower maintenance revenue, partially offset by higher basic lease revenue. -- Sales revenue for the third quarter 2009 was $49.0 million, compared to $122.4 million for the same period in 2008, and was generated from the sale of one aircraft, three engines and parts inventory. [2] The decrease in net income was largely due to lower maintenance revenue and lower income from the sale of assets in third quarter 2009 as compared to third quarter 2008. -- Third quarter 2009 basic and diluted earnings per share were $0.42.[2] AerCap recorded a third quarter 2009 net income of $35.5 million or $0.42 earnings per basic and diluted share.[2]
AerCap's CFO, Keith Helming, said: "Our third quarter 2009 results highlight the consistent growth in the Company's leasing related earnings as demonstrated through the 23% increase in net spread.[2] In third quarter 2009, AerCap announced that the Boards of Directors of AerCap Holdings N.V. and Genesis Lease Limited had approved a definitive agreement under which AerCap and Genesis will merge in an all share-for-share transaction. Klaus Heinemann, CEO of AerCap, commented: "AerCap continues to substantially grow its core leasing business as measured by the Company's net spread results.[1]
AMSTERDAM, Nov. 6 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") today announced the results of its operations for the third quarter ended September 30, 2009.[2]
The decrease in total lease revenue was due to lower maintenance rents in third quarter 2009 as compared to third quarter 2008. -- Total revenue for the third quarter 2009 was $212.5 million, compared to $301.9 million for the same period in 2008. [2] Total revenue in third quarter 2009 decreased 30% compared with third quarter 2008. This decrease was largely driven by lower sales revenue and lower maintenance revenue, partially offset by higher basic lease revenue.[2]
Sales revenue for the third quarter 2009 was $49.0 million, compared to $122.4 million for the same period in 2008, and was generated from the sale of one aircraft, three engines and parts inventory.[1] In third quarter 2008, $16.6 million was recorded as maintenance revenue as a result of the change in estimate.[2] The decrease was largely due to $21.2 million of non-recurring maintenance revenue in third quarter 2008.[2]
The termination of certain leases due to airline defaults triggered the recognition of $8.3 million of maintenance related revenues in third quarter 2008.[2]
Since third quarter 2008 AerCap records as revenue all maintenance rent receipts not expected to be repaid to lessees.[2]
Basic lease revenue rose 7 percent in the quarter but maintenance rents fell.[3]
ATLANTA, Nov 6 (Reuters) - Dutch leasing company AerCap Holdings NV ( AER.N ), which plans to acquire rival Genesis Lease Ltd ( GLS.N ), said on Friday that quarterly profit fell on lower aircraft maintenance revenue.[3] AerCap Holdings NV's (AER) third-quarter earnings fell 31% on revenue weakness as the Dutch plane-leasing company trumpeted growth in its core business.[4]
AMSTERDAM, Nov. 6 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. ("AerCap", NYSE: AER) today announced that it has signed a series of agreements with China Development Bank which provides funding for $86 million of pre-delivery payments and a $272 million long term funding facility covering four new Airbus A330 aircraft with deliveries scheduled in 2010 and 2011.[5] Separately, AerCap also said on Friday that it signed agreements with China Development Bank that provide $358 million of funding to cover four new Airbus ( EAD.PA ) A330 planes that are scheduled to be delivered in 2010 and 2011.[3]
AerCap said in September it would buy Genesis Lease for about $300 million in stock, giving it greater scale and access to more funds for plane purchases. The deal is expected to close this quarter.[3] Our average lease assets increased by 23% to $4.6 billion compared to third quarter 2008.[2] On October 29, 2009, we executed agreements for the sale of three of our A330-300 forward order aircraft delivering in 2010 (the sales will be recorded at time of delivery). -- Total assets were $6.4 billion at September 30, 2009, an increase of 22% over total assets of $5.3 billion at September 30, 2008. -- Committed purchases of aviation assets delivered or scheduled for delivery in 2009 are $1.8 billion, of which $1.1 billion closed in the nine month period ended September 30, 2009.[2] Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base.[2] The reconciliation of net spread to basic lease rents for the three and nine month periods ended September 30, 2009 and 2008 is included above.[2]
The Company's margin of net spread divided by average lease assets has remained constant year-over-year.[2]
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.[2] AerCap's blended effective tax rate during the nine month period ended September 30, 2009 was 2.5%, consisting of 0.4% for AerCap's aircraft business and 36.4% for AerCap's engine and parts business.[2] As of September 30, 2009, AerCap's portfolio consisted of 304 aircraft and 85 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.[2]
AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales.[2] John Wojick, vice president sales leasing, asset management and Latin America, at Boeing.[6]
Klaus Heinemann, chief executive of parent AerCap Holdings NV (AER), also said it could take delivery slots direct from manufacturers or "distressed" clients next year, when it plans to spend EUR2.5 billion on aviation assets.[7]
Shares of AerCap were up 2.5% at $9.12 premarket as the results beat analysts' expectations.[4] Third-quarter net income fell 31 percent to $35.5 million, or 42 cents a diluted share, from $51.3 million, or 60 cents a share, a year earlier.[3]
Revenue fell 30 percent to $212.5 million, compared with $274.8 million expected by analysts.[3] China Development Bank will lend $86 million of pre-delivery payments and a $272 million long-term funding facility to AerCap for four A330s delivering in 2010 and 2011.[6] Keith Helming, Chief Financial Officer of AerCap said: "AerCap is delighted to enter the rapidly developing Chinese aviation financing market with an agreement to provide $358 million of funding for four of our A330s.[5]
Of the $16.6 million, $12.9 million was collected from lessees during prior periods and was non-recurring.[2]
The non-recurring maintenance revenue related to a change in the estimate of the amount of maintenance rent expected to be reimbursed to lessees plus airline defaults. [2]
SOURCES
1. AerCap Holdings N.V. Reports Third Quarter 2009 Financial Results
2. American Chronicle | AerCap Holdings N.V. Reports Third Quarter 2009 Financial Results
3. UPDATE 1-AerCap posts lower quarterly profit | Reuters
4. AerCap Third-Quarter Profit Falls 31% But Beats Expectations - WSJ.com
5. AerCap Signs Agreements for $358 Million of Funding for Airbus A330s
6. Chinese bank funds A330s for AerCap - Airfinance Journal - November 2009
7. AerCap Sees 'Positive' Aircraft Demand, Taps Chinese Funding - WSJ.com
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