AerCap Holdings N.V. posted robust financial results for Q3 2023, with adjusted EPS reaching an all-time high of $2.81 following the GECAS acquisition. The company also reported a net income of $1.1 billion and earnings per share of $4.86, buoyed by $646 million from insurance claims related to aircraft previously leased to the Aeroflot Group. Furthermore, AerCap announced a new $500 million share repurchase program, bringing the total authorization for 2023 to $2.65 billion.
Key takeaways from the earnings call:
- AerCap experienced high demand for aviation assets, with 80% of used aircraft lease agreements being extensions.
- Despite challenges on the supply side, AerCap remains committed to creating long-term shareholder value and has seen substantial growth in book value per share.
- The company raised its earnings guidance for the year, forecasting an EPS of around $9.50 before any fourth-quarter gains on sale.
- AerCap's liquidity position remained strong, with total sources of liquidity approximating $20 billion as of September 30.
- The company repurchased about 20 million shares during the quarter and announced a new $500 million share repurchase program that will run through March 2024.
Despite facing disruptions due to OEMs lagging on target deliveries and Pratt & Whitney's engine removals, AerCap has maintained its focus on long-term value creation. The company's strong performance has led to a revision in earnings guidance for the year, with an expected EPS of around $9.50 before any fourth-quarter gains on sale.
AerCap reported Q3 expenses of $166 million, which included $49 million in maintenance rights amortization expenses. The company also benefited from a one-time tax advantage of $44 million. Despite significant cash CapEx of $1.6 billion and almost $1.2 billion of share repurchases during the quarter, AerCap's leverage ratio remained steady at 2.51x.
The company's strong liquidity position was evident with total sources of liquidity standing at approximately $20 billion as of September 30. Meanwhile, the company's secured debt-to-total assets ratio was around 13% at the end of September, and the average cost of debt slightly increased to 3.5%.
AerCap's book value per share was $78.28 as of September 30, marking a 21% increase over the previous year. The company repurchased approximately 20 million shares during the quarter and announced a new $500 million share repurchase program set to run through March 2024. This strong performance led to an increase in their earnings guidance for the full year to around $9.50 of EPS.
GE reduced its stake in AerCap from 45% to 14.5% at the end of September, while AerCap also recovered $646 million from a Russian insurance claim. The company plans to manage its capital structure to a target of 2.7x net debt to equity. AerCap has been focused on share repurchases and has bought back approximately 14.5% of the company's stock.
During the earnings call, AerCap discussed their share repurchase program and cash flow generation, emphasizing the importance of creating value for shareholders. They also discussed future orders and capital market strategy for the next year, stating that they will continue with a similar approach to funding as this year.
AerCap's CEO, Aengus Kelly, mentioned that the assets being sold were on average 17 years old, which contributed to higher profit margins. He also highlighted that airlines are aware that the industry's challenges will persist for years, which is why lease extensions are long-term and many aircraft sales are to airlines. Despite the challenges in the supply chain, AerCap remains positive about its long-term outlook as the largest supplier of aircraft and engines globally.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.