AerCap Holdings N.V. Reports Financial Results for the First Quarter 2022

• Net loss for the first quarter of 2022, including net charges related to the Ukraine Conflict, was $2.0 billion, or $8.35 per share.
• Net income for the first quarter of 2022 was $540 million, or $2.23 per share, after adjustments for net charges related to the Ukraine Conflict and other items.

DUBLIN, May 17, 2022 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the first quarter of 2022 ended March 31, 2022.

"During the first quarter, we continued to see a broad-based recovery in travel around the world as governments lifted travel restrictions and demand for travel continued to increase. We expect to see demand for travel continue to grow as the recovery progresses," said Aengus Kelly, Chief Executive Officer of AerCap.

"During the first quarter, we ceased all of our leasing activity to Russian airlines and took a charge primarily related to our aircraft and engines that remain in Russia. We have filed insurance claims related to these assets and will vigorously pursue all available remedies to recover our losses," Mr. Kelly added.

Highlights:

• Executed 157 transactions in the first quarter of 2022, including 102 lease agreements, 25 purchases and 30 sales.
• First quarter cash flow from operating activities was $1.3 billion, more than three times higher than the first quarter of 2021.
• Continued to see significant improvements in cash collections, trade receivables and deferral requests.
• Adjusted debt/equity ratio of 2.9 to 1 at March 31, 2022.
• 92% of new aircraft order book placed through 2023.
• $17 billion in total sources of liquidity, representing next 12 months' sources-to-uses coverage ratio of 2.1x.

Revenue and Net Spread

Basic lease rents were $1,554 million for the first quarter of 2022, compared with $889 million for the same period in 2021. The increase was primarily due to the impact of the GECAS acquisition. Basic lease rents were reduced by $57 million in the first quarter of 2022 as a result of the amortization of lease premium assets.

Maintenance rents and other receipts were $186 million for the first quarter of 2022, compared with $183 million for the same period in 2021.

Net gain on sale of assets for the first quarter of 2022 was $3 million, relating to 23 assets sold for $452 million, compared with $5 million for the same period in 2021, relating to nine aircraft sold for $184 million. The decrease was primarily due to the composition of asset sales.

Other income for the first quarter of 2022 was $47 million, compared with $19 million for the same period in 2021. The increase was primarily due to higher management fee income, interest income and other income as a result of the GECAS acquisition.

Interest expense excluding mark-to-market of interest rate caps and swaps was $417 million for the first quarter of 2022, compared with $291 million for the same period in 2021. AerCap's average cost of debt was 3.0% for the first quarter of 2022, and 3.7% for the same period in 2021, excluding debt issuance costs, upfront fees and other impacts.

Net Charges Related to Ukraine Conflict

In response to the Russian invasion of Ukraine and sanctions imposed by the United States, the European Union, the United Kingdom and other countries, we terminated the leasing of all our aircraft and engines with Russian airlines. Prior to the Russian invasion, we had 135 aircraft and 14 engines on lease with Russian airlines, which represented approximately 5% of AerCap's fleet by net book value as of December 31, 2021. We have removed 22 aircraft and 3 engines outside of Russia, and 113 aircraft and 11 engines remain in Russia.

During the first quarter of 2022, we recognized a pre-tax charge of $2.7 billion ($2.4 billion after-tax) to our earnings, comprised of flight equipment write-offs and impairments, which were partially offset by the derecognition of lease-related assets and liabilities. We recognized a total loss on our assets that remain in Russia and Ukraine and impairment losses on the assets we have recovered from Russian and Ukrainian airlines.

We had letters of credit related to our aircraft and engines leased to Russian airlines as of February 24, 2022 of approximately $260 million, confirmed by nine financial institutions in Western Europe. We have presented requests for payment to all these institutions. To date, we have received payments of $210 million related to these letters of credit. We have initiated legal proceedings against one financial institution which rejected our payment demands in respect of certain letters of credit.

Our lessees are required to provide insurance coverage with respect to leased aircraft and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our flight equipment are not subject to a lease or where a lessee's policy fails to indemnify us. We have submitted an insurance claim for approximately $3.5 billion with respect to all aircraft and engines remaining in Russia and intend to pursue all of our claims under these policies with respect to our assets leased to Russian airlines as of February 24, 2022. However, the timing and amount of any recoveries under these policies are uncertain and we have not recognized any claim receivables as of March 31, 2022.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $97 million for the first quarter of 2022, compared with $57 million for the same period in 2021. The increase was primarily driven by higher expenses as a result of the GECAS acquisition and is consistent with our $150 million annual expense savings target from the GECAS acquisition.

Other Expenses

Asset impairment charges were $2 million for the first quarter of 2022, compared to $16 million for the same period in 2021. Asset impairment charges recorded in the first quarter of 2022 related to lease terminations and were offset by related maintenance revenue. Leasing expenses were $208 million for the first quarter of 2022, compared with $45 million for the same period in 2021. The increase was primarily due to higher leasing expenses and an increase in maintenance rights expense as a result of the GECAS acquisition.

Effective Tax Rate

AerCap's effective tax rate was 12.2% for the first quarter of 2022, compared to 15% for the first quarter of 2021. During the first quarter of 2022, we recorded an income tax benefit due to the recognition of net charges related to the Ukraine Conflict. Excluding these charges, our effective tax rate was 14%. 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 or loss, and certain other discrete items.

Book Value Per Share

Financial Position

Flight Equipment Portfolio

As of March 31, 2022, AerCap's portfolio consisted of 3,615 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of March 31, 2022 was 7.0 years (3.6 years for new technology aircraft, 12.9 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 net income / earnings per share

Adjusted net income is calculated as net loss excluding the after-tax impact of net charges related to the Ukraine Conflict, the amortization of maintenance rights and lease premium assets recognized under purchase accounting, and GECAS transaction and integration-related expenses. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average of our ordinary shares outstanding. Given the relative significance of these items during the first quarter of 2022, we have chosen to present this measure in order to assist investors in their understanding of the changes and trends related to our earnings.

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.

Net interest margin, annualized net spread, annualized net spread less depreciation and amortization and average cost of debt

Net interest margin is calculated as the difference between basic lease rents and interest expense, excluding the impact of the mark-to-market of interest rate caps and swaps. Annualized net spread is net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is net interest margin less depreciation and amortization, including maintenance rights expense, expressed as a percentage of average lease assets. Average cost of debt is calculated as interest expense, excluding mark-to-market on interest rate caps and swaps, debt issuance costs, upfront fees and other impacts, divided by average debt balance. We believe these measures may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. These measures reflect the impact from changes in the number of aircraft leased, lease rates and utilization rates, as well as the impact from changes in the amount of debt and interest rates.

Lease assets

Lease assets include flight equipment held for operating leases, flight equipment held for sale, net investment in finance leases and maintenance rights assets.

Conference Call

In connection with its report of first quarter 2022 results, management will host a conference call with members of the investment community today, Tuesday, May 17, 2022, at 8:30 am Eastern Time. The call can be accessed live via webcast by AerCap's website at www.aercap.com under "Investors", or by dialing (U.S./Canada) +1 929 477 0448 or (International) +353 1 246 5638 and referencing code 5103066 at least 5 minutes before start time.

The webcast replay will be archived in the "Investors" section of the company's website for one year.

For further information, contact Joseph McGinley: +353 1 418 0428 ([email protected]).

About AerCap

AerCap is the global leader in aviation leasing with one of the most attractive order books in the industry. AerCap serves approximately 300 customers around the world with comprehensive fleet solutions. AerCap is listed on the New York Stock Exchange (AER) and is based in Dublin with offices in Shannon, Miami, Singapore, Amsterdam, Shanghai, Abu Dhabi, Seattle, Toulouse and other locations around the world.

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," "should," "expect," "plan," "intend," "will," "aim," "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, and 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, including the impacts of, and associated responses to: the Ukraine Conflict; the Covid-19 pandemic; our ability to successfully integrate GECAS' operations and employees and realize anticipated synergies and cost savings; and the potential impact of the consummation of the GECAS transaction on relationships, including with employees, suppliers, customers and competitors, 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, we cannot assure you 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. Except as required by applicable law, 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 www.aercap.com and follow us on Twitter www.twitter.com/aercapnv.

SOURCE AerCap Holdings N.V.