AerCap Holdings N.V. Reports Financial Results for the Fourth Quarter 2021

• Net income for the fourth quarter of 2021 was $89 million, or $0.44 per share. Net income for the full year 2021 was $1,001 million, or $6.71 per share.
• Excluding expenses related to the GECAS transaction, net income was $211 million, or $1.04 per share for the fourth quarter of 2021, and $1,294 million, or $8.68 per share for the full year 2021.
• The airline industry continues to experience a rapid recovery in air travel in many of the world's major markets.

DUBLIN, March 30, 2022 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the fourth quarter of 2021 ended December 31, 2021.

Aengus Kelly, Chief Executive Officer of AerCap, said: "2021 was a milestone year for AerCap as we closed the GECAS transaction on November 1st. This transaction significantly enhanced and diversified our fleet, broadened our customer base and geographic reach, increased our product offering and added outstanding new talent - the combination of which we expect to lead to increased revenues, earnings and cash flows in the future. Notwithstanding the Ukraine invasion and the broad sanctions imposed against Russia, where we had approximately 5% of our fleet, we believe the continued recovery in air travel in many parts of the world puts AerCap on a positive trajectory heading into 2022."

Highlights

• Completed the GECAS acquisition on November 1, 2021, making AerCap the worldwide industry leader across all areas of aviation leasing: aircraft, engines and helicopters.
• Executed 230 transactions in the fourth quarter 2021, including 158 lease agreements, 42 purchases and 30 sales.
• Completed the offering of $21 billion of senior unsecured notes in October 2021 and a $2 billion secured institutional term loan in November 2021 to finance the GECAS acquisition with an average coupon of approximately 2.6% and an average tenor of 7.1 years.
• Adjusted debt/equity ratio of 2.66 to 1 at December 31, 2021.
• Fourth quarter cash flow from operating activities was $1.7 billion, more than 2.5x higher than the fourth quarter of 2020.
• Continued to see significant improvements in cash collections, trade receivables and deferral requests.
• Special items in the fourth quarter of 2021 included $139 million ($122 million after-tax) of expenses related to the GECAS transaction.

Revenue and Net Spread

Basic lease rents were $1,283 million for the fourth quarter of 2021, compared with $885 million for the same period in 2020. The increase was primarily due to the impact of the GECAS acquisition.

Maintenance rents and other receipts were $97 million for the fourth quarter of 2021, compared with $110 million for the same period in 2020. The decrease was primarily due to lower maintenance revenue recognized as a result of lease terminations during the fourth quarter of 2021.

Net gain on sale of assets for the fourth quarter of 2021 was $25 million, relating to 24 assets sold for $412 million, compared with $14 million for the same period in 2020, relating to 12 aircraft sold for $97 million. The increase was primarily due to the higher volume and composition of asset sales.

Other income for the fourth quarter of 2021 was $38 million, compared with $22 million for the same period in 2020. The increase was primarily due to the impact of the GECAS acquisition.

Interest expense excluding mark-to-market of interest rate caps and swaps was $379 million for the fourth quarter of 2021, compared with $311 million for the same period in 2020. AerCap's average cost of debt was 3.2% for the fourth quarter of 2021, compared with 3.8% for the same period in 2020, excluding debt issuance costs, upfront fees and other impacts.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $119 million for the fourth quarter of 2021, compared with $64 million for the same period in 2020. The increase was primarily driven by higher compensation-related expenses as a result of the GECAS acquisition.

Other Expenses

Asset impairment charges were $6 million for the fourth quarter of 2021, compared to $27 million recorded for the same period in 2020. Asset impairment charges recorded in the fourth quarter of 2021 related to lease terminations and sales transactions and were more than offset by related maintenance revenue.

Leasing expenses were $162 million for the fourth quarter of 2021, compared with $91 million for the same period in 2020. The increase was primarily driven by an increase in our provision for expected credit losses.

Effective Tax Rate

AerCap's effective tax rate for the full year 2021 was 14.2%, compared with the effective tax rate of 5.5% for the full year 2020. 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 2021 and the fourth quarter of 2020. Our effective tax rate in any quarter can be impacted by revisions to the estimated full year rate.

Book Value Per Share

Financial Position

Aircraft Portfolio

As of December 31, 2021, AerCap's portfolio consisted of 3,701 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of December 31, 2021 was 7.1 years (3.4 years for new technology aircraft, 13.0 years for current technology aircraft) and the average remaining contracted lease term was 7.3 years.

Ukraine Conflict

In response to the Russian invasion of Ukraine on February 24, 2022, the United States, the European Union, the United Kingdom and other countries have imposed broad, far-reaching sanctions against Russia, certain Russian persons and certain activities involving Russia or Russian persons. These sanctions include prohibitions regarding the supply of aircraft and aircraft components to Russian persons or for use in Russia, subject to certain wind-down periods. AerCap intends to fully comply with all applicable sanctions and we have terminated the leasing of all our aircraft and engines with Russian airlines. As of December 31, 2021, approximately 5% of AerCap's fleet by net book value was on lease to Russian airlines. We continue to make efforts to repossess additional aircraft and engines from our former Russian airline customers, but it is unclear if we will be able to do so, or what the condition of these assets will be at the time of repossession. We expect to recognize an impairment on our assets in Russia that have not been returned to us as early as the first quarter of 2022, although we have not determined the amount of any impairment.

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.

Net income / earnings per share excluding GECAS transaction and integration-related expenses

Net income excluding GECAS transaction and integration-related expenses is calculated as net income excluding the after-tax impact of transaction and integration-related expenses. Earnings per share excluding GECAS transaction and integration-related expenses is calculated by dividing net income excluding GECAS transaction and integration-related expenses by the weighted average of our ordinary shares outstanding. Given the relative significance of this item during 2021, 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, 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 fourth quarter 2021 results, management will host a conference call with members of the investment community today, Wednesday, March 30, 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 0402 or (International) +353 1 246 5638 and referencing code 8067205 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 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.