AerCap Holdings N.V. Reports Third Quarter 2010 Financial Results

Net spread, which is the margin earned on our leased assets, was $171.8 million for the third quarter of 2010, an increase of 50% over third quarter 2009

AMSTERDAM, Nov. 5, 2010 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the third quarter ended September 30, 2010.

Third Quarter 2010 Highlights

    --  Third quarter 2010 basic and diluted earnings per share were $0.43,
        compared with $0.42 for the same period in 2009. Third quarter 2010
        basic and diluted earnings per share excluding the impact of the
        mark-to-market of interest rate caps and share-based compensation were
        $0.51, compared with $0.46 in the third quarter 2009 on the same basis.
    --  Third quarter 2010 net income was $51.9 million, compared with net
        income of $35.5 million for the same period in 2009. Third quarter 2010
        net income excluding the impact of the mark-to-market of interest rate
        caps and share-based compensation was $61.1 million, compared with $39.2
        million in the third quarter 2009 on the same basis.
    --  Net spread, the difference between basic lease rents and interest
        expense excluding the impact from the mark-to-market of interest rate
        caps, was $171.8 million in the third quarter of 2010 compared to $114.6
        million in the third quarter of 2009, an increase of 50%. This measure
        reflects the increase in leasing income and excludes income derived from
        the sale of aircraft.
    --  Basic lease rents for the third quarter of 2010 were $233.9 million,
        compared to $142.4 million for the same period in 2009, an increase of
        64%. Total lease revenue (basic rents, maintenance rents and
        end-of-lease compensation) for the third quarter of 2010 was $254.0
        million, compared to $153.8 million for the same period in 2009, an
        increase of 65%.
    --  Sales revenue for the third quarter 2010 was $218.2 million, compared to
        $49.0 million for the same period in 2009, and was generated from the
        sale of three aircraft, five engines and parts inventory.
    --  Total revenue for the third quarter of 2010 was $478.1 million, compared
        to $212.5 million for the same period in 2009. The increase was mainly
        due to the increase in sales revenue and an increase in lease revenue
        which was primarily driven by the all-share acquisition of Genesis Lease
        Limited ("the Genesis Transaction") which occurred in March 2010 and the
        deliveries of forward order aircraft.
    --  Total assets were $9.3 billion at September 30, 2010, an increase of 46%
        over total assets of $6.4 billion at September 30, 2009. The Genesis
        Transaction accounted for $1.5 billion of the increase in total assets.
        The remaining $1.4 billion increase was driven primarily by deliveries
        of forward order aircraft.
    --  Committed purchases of aviation assets delivered or scheduled for
        delivery in 2010 are $2.5 billion, of which $2.4 billion closed in the
        nine month period ended September 30, 2010.


Klaus Heinemann, CEO of AerCap, commented: "The end of the third quarter 2010 marks the completion of the largest expansion program in AerCap's history. Lease assets increased by 67% to $7.97 billion compared to the end of the same quarter last year. This growth was achieved with solid equity support. AerCap's total equity reached $1.98 billion by quarter end, and we were able to achieve this without dilution of earnings per share.  Third quarter earnings per share were 51 cents on an adjusted basis compared to 46 cents for the same quarter last year.  This strong financial performance coupled with the recent addition of Waha Leasing to the AerCap family positions the Company for continued long term success."

AerCap's CFO, Keith Helming, said: "The 125% increase in total revenue, 50% growth in net spread and the consequent 46% increase in net income in the third quarter 2010 compared to the same period in 2009 further underlines our ability to deliver profitable growth.  The increase in these key metrics was mainly due to the completion of the Genesis Transaction and the deliveries of our forward order aircraft.  In addition, our liquidity position continues to be strong as demonstrated by the $520 million of cash on hand at the end of September."

Summary of Financial Results

The Genesis Transaction which was completed on March 25, 2010 is fully reflected in all AerCap Holdings N.V. second and third quarter 2010 consolidated financial statements. The Genesis Transaction was not included in the AerCap Holdings N.V. first quarter 2010 income statement (including the number of outstanding shares used for earnings per share calculations) other than one line item reflecting a $0.3 million amalgamation gain (net of transaction expenses and tax). The impact of the Genesis Transaction was also reflected in one line item in the AerCap Holdings N.V. first quarter 2010 consolidated cash flow statement (purchase of subsidiaries, net of cash acquired).

AerCap recorded third quarter 2010 net income of $51.9 million or $0.43 earnings per basic and diluted share. Third quarter 2010 net income included net charges relating to mark-to-market of interest rate caps and share-based compensation of $9.2 million or $0.08 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $9.0 million reflecting changes in forecasted interest rates. The after-tax charge from share-based compensation was $0.2 million.

Detailed Financial Data

($ in Millions)

Operating results


                Three months ended             Nine months ended
                September 30,                  September 30,

                                  % increase/                      % increase/
                2010     2009     (decrease)   2010       2009     (decrease)



Revenues        $ 478.1  $ 212.5  125%         $ 1,436.8  $ 715.7  101%

Net income      51.9     35.5     46%          135.1      122.0    11%

Net income
excluding the
impact of
mark-to-market
of interest
rate caps and
share-based
compensation    61.1     39.2     56%          167.4      109.9    52%





Total revenue in the third quarter of 2010 increased 125% compared to the third quarter of 2009. This increase resulted primarily from an increase in sales revenue and basic lease rents driven by the additional aircraft acquired in the Genesis Transaction and the deliveries of forward order aircraft. For similar reasons, net income excluding the impact of mark-to-market of interest rate caps and share-based compensation increased by 56%.

Revenue breakdown




               Three months ended              Nine months ended
               September 30,                   September 30,

                                 % increase/                       % increase/
               2010     2009     (decrease)    2010       2009     (decrease)



Lease
revenue:

Basic lease
rents          $ 233.9  $ 142.4  64%           $ 633.2    $ 425.2  49%

Maintenance
rents          20.1     10.4     93%           56.8       49.9     14%

End-of-lease
compensation
and other
receipts       -        1.0      (100%)        -          9.7      (100%)

Lease revenue  $ 254.0  $ 153.8  65%           $ 690.0    $ 484.8  42%

Sales revenue  218.2    49.0     345%          728.8      208.6    249%

Management
fees and
interest
income         3.8      5.3      (28%)         11.7       17.0     (31%)

Other revenue  2.1      4.4      (52%)         6.3        5.2      21%

Total revenue  $ 478.1  $ 212.5  125%          $ 1,436.8  $ 715.6  101%





Basic lease rents were $233.9 million for the third quarter of 2010, an increase of 64% compared to the third quarter of 2009, as a result of our growing asset base. Our average lease assets increased by 70% to $7.8 billion compared to the third quarter of 2009. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $62.1 million in the third quarter of 2010, an increase of $34.3 million over the same period in 2009. The increase was primarily driven by the Genesis Transaction ($15.0 million) and the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 50% to $171.8 million in the third quarter of 2010 over the same period in 2009.


                Three months ended              Nine months ended
                September 30,                   September 30,

                                  % increase/                     % increase/
                2010     2009     (decrease)    2010     2009     (decrease)



Basic lease
rents           $ 233.9  $ 142.4  64%           $ 633.2  $ 425.2  49%



Interest on
debt            $ 75.1   $ 32.8   129%          $ 202.1  $ 68.3   196%

Plus:
mark-to-market
of interest
rate caps       (13.0)   (5.0)    160%          (47.6)   17.2     (377%)

Interest on
debt excluding
the impact of
mark-to-market
of interest
rate caps       $ 62.1   $ 27.8   123%          $ 154.5  $ 85.5   81%



Net Spread      $ 171.8  $ 114.6  50%           $ 478.7  $ 339.7  41%





* The increase in net spread is lower than the increase in basic lease rents as a result of the delivery of new forward order aircraft and the Genesis Transaction. For new aircraft, the net spread is lower at the start of the lease because of higher interest expenses resulting from a higher loan to value.

Effective tax rate

AerCap's blended effective tax rate during the nine month period ended September 30, 2010 was 9.0% (charge), consisting of 9.3% (charge) for AerCap's aircraft business and 29.8% (income) for AerCap's engine and parts business. The blended effective tax rate in 2009 was 1.9% (charge). The blended effective tax rate in any year is impacted by the source and the amount of earnings among AerCap's different tax jurisdictions.  The increase in the 2010 blended tax rate as compared to 2009 is the result of having more earnings generated from higher tax rate jurisdictions.

Financial position




                                                               % Increase
                                                               over
                                 September 30,  September 30,  September 30,
                                 2010           2009           2009



Total cash (incl. restricted).   $ 519.7        $ 324.4        60%

Flight equipment held for lease  7,974.1        4,761.9        67%

Total assets                     9,338.6        6,417.6        46%

Total liabilities                7,358.1        5,082.9        45%

Total equity                     1,980.5        1,334.8        48%





As of September 30, 2010, AerCap's portfolio consisted of 324 aircraft and 83 engines that were either owned, on order, under contract or letter of intent, or managed. This includes aircraft that AerCap added through the Genesis Transaction in March 2010.

Notes Regarding Financial Information Presented In This Press Release

The financial information presented in this press release is not audited.

The following is a definition of non-GAAP measures used in this press release and a reconciliation of such measure to the most closely related GAAP measure:

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation. This measure is determined by adding non-cash charges related to the mark-to-market losses on our interest rate caps and share based compensation during the applicable period, net of related tax benefits, to GAAP net income. In addition to GAAP net income, we believe this measure may provide investors with supplemental information regarding our operational performance and may further assist investors in their understanding of our operational performance in relation to past and future reporting periods. We use interest rate caps to allow us to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on our floating rate debt. Management determines the appropriate level of caps in any period with reference to the mix of floating and fixed cash inflows from our lease and other contracts. We do not apply hedge accounting to our interest rate caps. As a result, we recognize the change in fair value of the interest rate caps in our income statement during each period. Following is a reconciliation of net income excluding the impact of mark-to-market of interest rate caps and share-based compensation to net income for the three and nine month periods ended September 30, 2010 and 2009:


                   Three months ended            Nine months ended
                   September 30,                 September 30,

                                   % increase/                     % increase/
                   2010    2009    (decrease)    2010     2009     (decrease)



Net income         $ 51.9  $ 35.5  46%           $ 135.1  $ 122.0  11%

Plus:
mark-to-market of
interest rate
caps, net of tax   9.0     3.0     (200%)        30.8     (14.5)   312%

share-based
compensation, net
of tax             0.2     0.7     (71%)         1.5      2.4      (38%)

Net income
excluding the
impact of
mark-to-market of
interest rate
caps and
share-based
compensation       $ 61.1  $ 39.2  56%           $ 167.4  $ 109.9  52%





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. The average number of shares is based on a daily average.

Net spread (refer to third table under Revenue breakdown section of this press release). 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.  We believe this measure may further assist investors in their understanding of the changes and trends related to the earnings of our 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 to hedge our interest rate risk. The reconciliation of net spread to basic lease rents for the three and nine month periods ended September 30, 2010 and 2009 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Friday, November 5, 2010 at 9:30 am Eastern Time / 2:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 1-866-239-0753 or (International) +31-20-713-2998 and referencing code 7436381 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations."

The presentation slides for the conference call will be posted on AerCap's website in advance of the call. The webcast replay will be archived in the "Investor Relations" section of the company's website for one year.

In addition, a New York Group Lunch Presentation for investors and analysts will be hosted by AerCap's management today, Friday, November 5, 2010, at 12:30 pm Eastern Time at The New York Palace (the Henry Room), 455 Madison Avenue, New York. Doors will open at 12:00 pm.

To participate in either event, please register at: www.sharedvalue.net/aercap/Q310

For further information, contact Peter Wortel: +31 20 655 9658 (pwortel@aercap.com)

or Mark Walter (Shared Value): +44 (0)20 7321 5039 (aercap@sharedvalue.net).

About AerCap Holdings N.V.

AerCap is the world's leading independent aircraft leasing company. AerCap also provides engine leasing, aircraft management services, aircraft maintenance, repair and overhaul services and aircraft disassemblies. AerCap is headquartered in The Netherlands and has offices in Ireland, the United States, Singapore, China and the United Kingdom.

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," "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, 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 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, there can be no assurance 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. 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 http://www.aercap.com.

Financial Statements Follow




 AerCap Holdings N.V.

 Consolidated Balance Sheets -
 Unaudited

 (In thousands of U.S. Dollars)



                                   September 30,   December 31,  September 30,
                                   2010            2009          2009



 Assets

 Cash and cash equivalents         $ 285,763       $ 182,617     $ 203,377

 Restricted cash                   233,954         140,746       121,067

 Trade receivables, net of
 provisions                        60,001          48,070        49,037

 Flight equipment held for
 operating leases, net             7,974,109       5,230,437     4,761,918

 Net investment in direct finance
 leases                            28,170          34,532        34,069

 Notes receivables, net of
 provisions                        7,939           138,488       141,628

 Prepayments on flight equipment   197,616         527,666       632,333

 Investments                       30,774          21,031        20,367

 Goodwill                          6,776           6,776         6,776

 Intangibles, net                  64,568          31,399        34,602

 Inventory                         119,097         102,538       108,444

 Derivative assets                 23,981          44,866        38,572

 Deferred income taxes             102,117         80,098        80,463

 Other assets                      203,715         180,237       184,975

 Total Assets                      $ 9,338,580     $ 6,769,501   $ 6,417,628





 Liabilities and Equity



 Accounts payable                  $ 17,516        $ 11,832      $ 16,004

 Accrued expenses and other
 liabilities                       98,149          80,399        77,591

 Accrued maintenance liability     400,461         228,006       216,345

 Lessee deposit liability          138,316         126,093       113,025

 Debt                              6,562,293     * 4,846,664     4,593,268

 Accrual for onerous contracts     10,917          22,363        24,378

 Deferred revenue                  66,106          33,011        33,479

 Derivative liabilities            64,302          7,801         8,783

 Total liabilities                 7,358,060       5,356,169     5,082,873



 Share capital                     1,163           699           699

 Additional paid-in capital        968,724         593,133       592,133

 Accumulated other comprehensive
 income (loss)                     (470)           -             -

 Retained earnings                 799,309         664,177       621,012

 Total AerCap Holdings N.V.
 shareholders' equity              1,768,726       1,258,009     1,213,844

 Non-controlling interest          211,794         155,323       120,911

 Total Equity                      1,980,520       1,413,332     1,334,755



 Total Liabilities and Equity      $ 9,338,580     $ 6,769,501   $ 6,417,628



 * Includes $88.0 million of subordinated debt received from
 our joint venture partners



                                   September 30,   December 31,  September 30,
 Supplemental information          2010            2009          2009

 Debt/equity ratio                 3.3             3.4           3.4

 Debt/equity ratio (adjusted for
 subordinated debt)                3.1             3.2           3.2








 AerCap Holdings N.V.

 Consolidated Income
 Statements - Unaudited

 (In thousands of U.S.
 Dollars, except share and
 per share data)

                               Three months ended       Nine months ended
                               September 30,            September 30,

                               2010         2009        2010         2009



 Revenues

 Lease revenue                 $ 254,008    $ 153,890   $ 690,013    $ 484,932

 Sales revenue                 218,194      49,012      728,779      208,608

 Interest revenue              748          2,433       3,617        7,656

 Management fee revenue        3,021        2,821       8,069        9,294

 Other revenue                 2,117        4,354       6,319        5,217

 Total Revenues                478,088      212,510     1,436,797    715,707



 Expenses

 Depreciation                  89,946       55,663      239,920      160,153

 Asset impairment              2,761        382         5,482        21,332

 Cost of goods sold            202,053      39,973      671,875      179,293

 Interest on debt              75,144       32,844      202,075      68,319

 Operating lease in costs      3,057        3,268       9,271        9,855

 Leasing expenses              17,322       10,648      43,738       51,885

 Provision for doubtful notes
 and accounts receivable       514          55          1,030        408

 Selling, general and
 administrative expenses       21,710       27,806      86,488       82,796

 Other expenses                -            1,900       -            1,900

 Total Expenses                412,507      172,539     1,259,879    575,941



 Income from continuing
 operations before income
 taxes                         65,581       39,971      176,918      139,766



 Provision for income taxes    (6,144)      (784)       (15,892)     (3,471)

 Amalgamation gain, net of
 transaction expenses and tax  -            -           274          -



 Net Income                    59,437       39,187      161,300      136,295



 Net (income) attributable to
 non-controlling interest      (7,559)      (3,735)     (26,168)     (14,293)



 Net Income attributable to
 AerCap Holdings N.V.          $ 51,878     $ 35,452    $ 135,132    $ 122,002



 Basic and diluted earnings
 per share                     $ 0.43       $ 0.42      $ 1.25       $ 1.43



 Weighted average shares
 outstanding - basic and
 diluted                       119,386,445  85,036,957  107,936,616  85,036,957





* The increase of $42.3 million in interest on debt in the third quarter 2010 as compared to the third quarter 2009 was primarily driven by (i) a $8.1 million increase in the mark-to-market on interest rate caps, (ii) a $15.0 million increase from the Genesis Transaction and (iii) the increase in our lease portfolio from the delivery of our forward order aircraft. The same items were also the primary drivers for the increase in the nine month period ended September 30, 2010 as compared to the nine month period ended September 30, 2009.


 AerCap Holdings N.V.

 Consolidated Statements of
 Cash Flows - Unaudited

 (In thousands of U.S. Dollars)

                                 Three months ended    Nine months ended
                                 September 30,         September 30,

                                 2010       2009       2010         2009



 Net income                      59,437     39,187     161,300      136,295

 Adjustments to reconcile net
 income to net cash provided by
 operating activities

 Depreciation                    89,945     55,663     239,919      160,153

 Asset impairment                2,761      382        5,482        21,332

 Amortisation of debt issuance
 cost                            7,347      3,901      19,677       11,789

 Amortisation of intangibles     5,930      3,294      16,092       12,499

 Provision for doubtful notes
 and accounts receivable         563        587        920          940

 Capitalised interest on
 pre-delivery payments           (155)      (225)      (468)        (934)

 Gain on disposal of assets      (6,798)    21         (36,050)     1,039

 Mark-to-market of non-hedged
 derivatives                     (5,931)    3,862      35,905       (15,642)

 Deferred taxes                  6,007      724        14,292       1,863

 Share-based compensation        99         912        1,656        2,910

 Changes in assets and
 liabilities                                           -

 Trade receivables and notes
 receivable, net                 (9,459)    (11,378)   (3,308)      (5,850)

 Inventories                     2,885      35,867     11,761       33,146

 Other assets and derivative
 assets                          2,120      (3,791)    (5,516)      (14,521)

 Other liabilities               (13,298)   (26,865)   (26,850)     (63,627)

 Deferred revenue                9,057      (3,326)    21,054       (1,442)

 Net cash provided by operating
 activities                      150,510    98,815     455,866      279,950



 Purchase of flight equipment    (467,600)  (271,054)  (1,788,962)  (845,868)

 Proceeds from sale/disposal of
 assets                          167,862    1,891      593,625      80,243

 Prepayments on flight
 equipment                       (25,979)   (116,693)  (110,759)    (403,054)

 Purchase of subsidiaries, net
 of cash acquired                -          -          70,618       -

 Purchase of investments         -          -          (7,500)      -

 Purchase of intangibles         -          -          (9,006)      -

 Movement in restricted cash     12,508     7,117      (61,752)     (7,670)

 Net cash used in investing
 activities                      (313,209)  (378,739)  (1,313,736)  (1,176,349)



 Issuance of debt                496,126    562,464    2,112,408    1,843,442

 Repayment of debt               (327,805)  (313,149)  (1,213,445)  (1,081,578)

 Debt issuance costs paid        (12,809)   (6,212)    (48,093)     (20,325)

 Maintenance payments received   38,030     25,546     106,563      74,429

 Maintenance payments returned   (5,843)    (8,011)    (28,567)     (33,620)

 Security deposits received      7,971      9,222      24,892       32,287

 Security deposits returned      (8,187)    (9,020)    (25,315)     (16,550)

 Capital contributions from
 non-controlling interests       -          -          32,375       104,200

 Net cash provided by financing
 activities                      187,483    260,840    960,818      902,285



 Net increase in cash and cash
 equivalents                     24,784     (19,084)   102,948      5,886

 Effect of exchange rate
 changes                         723        4,038      198          3,928

 Cash and cash equivalents at
 beginning of period             260,256    218,423    182,617      193,563

 Cash and cash equivalents at
 end of period                   285,763    203,377    285,763      203,377





Certain reclassifications have been made to prior years consolidated statements of cash flow to reflect the current year presentation.


For Investors:

Keith Helming

Chief Financial Officer

+31 20 655 9670

khelming@aercap.com



Peter Wortel

Investor Relations

+31 20 655 9658

pwortel@aercap.com



For Media:

Frauke Oberdieck

Corporate Communications

+31 20 655 9616

foberdieck@aercap.com





SOURCE AerCap Holdings N.V.