AerCap Holdings N.V. Reports First Quarter 2007 Financial Results

    AMSTERDAM, Netherlands, May 15 /PRNewswire-FirstCall/ --

    -- First quarter 2007 net income was $60.5 million, up 70% over first
       quarter 2006.
    -- We changed our method of accounting for certain maintenance obligations
       as required by the issuance of a FASB Staff Position.  The results for
       first quarter 2007 and 2006 include the application of the new method.
    -- First quarter 2007 basic and diluted earnings per share were $0.71, up
       58% over first quarter 2006.
    -- First quarter 2007 revenue was $309.5 million, up 123% over first
       quarter 2006.
    -- Sales revenue in the first quarter 2007 totaled $148.9 million and were
       generated from the sale of five aircraft, ten engines and sale of parts
    -- Total assets were $4.0 billion at March 31, 2007, a 27% increase over
       total assets of $3.2 billion at March 31, 2006.
    -- Committed purchases of aviation assets for the full year 2007 are $746
       million, of which $248 million were purchased in the first quarter of
    -- We closed a refinancing of debt on 70 aircraft on May 8, 2007 through
       the issuance of $1.66 billion of securitized bonds.
    -- We signed an agreement for the purchase of an additional 10 new A330-
       200 aircraft with Airbus on May 14, 2007.

Summary of Financial Results

AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) announced the results of its operations for the quarter ended March 31, 2007. The Company recorded net income for the first quarter 2007 of $60.5 million, or $0.71 per basic and diluted common share. This result represents an increase of 70% over the net income for the first quarter 2006. Klaus Heinemann, CEO of AerCap, commented, "Our strong net income in the first quarter 2007 reflects the successful operation of our integrated business model in a healthy industry environment. With the increase of our A330 forward order commitment with Airbus from 20 to 30 aircraft, the total number of aircraft under contract or letter of intent, now equals 121. This committed growth provides us with increased economies of scale for future operations and positions us to take advantage of customer demand for new technology aircraft in the future." AerCap's CFO, Keith Helming, added, "Our strong first quarter performance as compared to the prior year first quarter is evidence of the execution of our growth strategy and improvement of the economics in the aircraft operating lease industry."

    Detailed Financial Data
    ($ in Millions)

    Operating results
                                                            % increase over
                  First Quarter 2007   First Quarter 2006   First Quarter 2006

    Revenues            $309.5              $139.1                  123%
    Net income            60.5                35.5                   70%

    Revenue breakdown:
                                                                 % increase
                                                               (decrease) over
                             First Quarter     First Quarter    First Quarter
                                 2007              2006              2006

    Lease revenue              $139.7             $87.9                59%
    Sales revenue               148.9              33.2               348%
    Management fees,
     interest income
     and other revenue           20.9              17.9                17%
    Total revenue              $309.5            $139.0               123%

Effective tax rate

The effective tax rate for our aircraft business was 13.2% and was 38% for our engine and parts business, resulting in an overall consolidated effective tax rate of 14.3% during the first quarter 2007. We have adopted FIN 48 "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" effective January 1, 2007. The adoption of FIN 48 was immaterial to our financial statements.

    Financial position
                                                              % Increase over
                                       March 31,    March 31,     March 31,
                                         2007         2006          2006

    Flight equipment held for lease   $3,076.8      $2,280.1         35%
    Total assets                       4,030.1       3,174.8         27%
    Total liabilities                  3,184.6       2,695.2         18%
    Total equity                         813.8         455.2         79%

As of March 31, 2007, our portfolio consisted of 341 aircraft and 71 engines that were either owned, on order, under contract or letter of intent, or managed. The number of aircraft and engines in our portfolio increased 35% since March 31, 2006 (303 aircraft and 2 engines).

ALS Securitization Refinancing

On May 8, 2007 we completed a refinancing of ALS, a securitization vehicle we established in September 2005, with the issuance of $1.66 billion of securitized bonds in one class of AAA-rated G-3 floating rate bonds. The proceeds from the refinancing, in addition to the issuance to AerCap of new class E-2 junior notes were used to redeem $812.1 million of G-1A, G-2A, C-1 and D-1 classes of ALS debt and to finance 28 additional aircraft that had been secured by a variety of other debt structures within the AerCap group. Net cash proceeds to AerCap after payment of all expenses and repayment of previously existing debt on the securitized aircraft total approximately $150 million. The G-3 bonds issued were priced at one-month LIBOR + 26 basis points. We estimate that the interest savings from this refinancing will be approximately $16 million per year, excluding any additional earnings generated from the reinvestment of the cash proceeds. Coincident with the ALS refinancing, the AerFunding warehouse was amended and restructured, resulting in a reduced interest rate spread and a two year extension to the revolving period. The size of the AerFunding facility remains $1.0 billion, which provides us with significant committed debt funding capacity for future acquisitions. As a result of the ALS refinancing, we expect to incur charges in the second quarter of 2007 of approximately $26 million for the write-off of unamortized debt issuance costs from the refinanced debt in addition to ALS bond prepayment and other related fees.

Maintenance Adjustment

On September 8, 2006, the Financial Accounting Standards Board issued FSP No. AUG AIR-1 ''Accounting for Planned Major Maintenance Activities'' ("FSP"). The FSP amends certain provisions in the AICPA Industry Audit Guide, "Audit of Airlines" and is applicable for our financial year beginning January 1, 2007. The FSP eliminates the "accrue in advance" methodology in accounting for certain future maintenance payments. As a result of the FSP, our previous method of accruing for the payment of top-up or lessor contribution obligations at the signing of a lease is no longer permitted. Accordingly, we have adjusted our historical financial statements in accordance with Statement of Financial Accounting Standards No. 154 "Accounting Changes and Error Corrections" ("FAS 154") to reflect the application of the new policy for top- up and lessor contribution obligations. Under our new policy, we will recognize an expense at the time of the occurrence of a lessor contribution or top-up payment, except in instances where we have established an accrual as an assumed liability for such payment, in connection with the purchase of an aircraft with a lease attached.

Following is a summary of the full-year 2005 and full-year 2006 effect of the adjustment on each financial statement line item affected by the change:

                                 As Originally                      Effect of
                                   Reported         As Adjusted     Adjustment

      Year ended December 31,
       2005 (A)
    Lease revenue                   $348.9             $335.7       $(13.2)
    Sales revenue                     92.1               88.3         (3.8)
    Depreciation                     112.3              112.4          0.1
    Leasing expenses                  21.9               27.4          5.5
    Income tax provision              14.7               10.0         (4.7)
    Net income                        83.4               65.5        (17.9)

      Year ended December 31,
    Depreciation                     102.4              102.5          0.1
    Leasing expenses                  47.4               21.5        (25.9)
    Income tax provision              16.3               21.2          4.9
    Net income                        88.0              108.9         20.9

    (A)  The figures above for the year ended December 31, 2005 include the
         aggregation of results for the six months ended June 30, 2005 for
         AerCap B.V. (the predecessor company) and the results for the period
         from June 27, 2005 to December 31, 2005 for AerCap Holdings N.V. (the
         successor company).  Of the net income impact of the maintenance
         adjustment of ($17.9) million, $0.4 million relates to the period
         from June 27, 2005 to December 31, 2005.  The aggregation of these
         two periods is not in accordance with US GAAP as AerCap B.V. and
         AerCap Holdings N.V. are different reporting entities for accounting
         purposes.  This aggregated information is presented for information
         purposes only.  The following table presents the originally reported
         US GAAP results by period:

                        Six Months   Period from June 27, 2005    Non-GAAP
                        Ended June         to December          Aggregation
                         30, 2005           31, 2005             of Periods

    Lease revenue         $175.3          $173.6                   $348.9
    Sales revenue           79.6            12.5                     92.1
    Depreciation            66.4            45.9                    112.3
    Leasing expenses         9.7            12.2                     21.9
    Income tax provision    (4.1)          (10.6)                   (14.7)
    Net income              33.7            49.7                     83.4

    There is no impact on our cash flows from the change in accounting policy.

    Notes Regarding Financial Information Presented In This Press Release
    The financial information presented in this press release is not audited.

Annual General Meeting of Shareholders

The Company held its 2006 annual general meeting (AGM) of shareholders on May 11, 2007 in Amsterdam. The AGM adopted the annual accounts and voted for all other items which required a vote.

Conference Call

In connection with the earnings release, management will host an earnings conference call on Tuesday, May 15, 2007 at 9:30 A.M. eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by (800) 218-9073 (U.S. domestic) or 001 303 262-2211 (International); there is no passcode.

A webcast of the conference call will be available at

For those who are not able to listen to the live call a replay will be available through May 22, 2007 and can be accessed by dialing toll-free (800) 405-2236 (U.S. domestic) or 001 303 590-3000 (International), pass code 11088128.

About AerCap Holdings N.V.

AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. AerCap also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations. AerCap has a fleet of over 300 aircraft owned, managed or under contracted orders and a diversified commercial engine portfolio. AerCap is headquartered in The Netherlands and has offices in Ireland and the United States.

Forward Looking Statements

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future operations. Words such as "expect(s)" and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. AerCap's expectations may not be attained. There are important factors that could cause actual results, level of activity, performance or achievements to differ from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this press release may 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. Such forward-looking statements speak only as of the date of this press release. AerCap expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

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                         Financial Statements Follow

    AerCap Holdings N.V.
    Consolidated Balance Sheets - Unaudited
    (In thousands of U.S. Dollars)

                                              December 31, 2006
                              March 31, 2007      (adjusted)     March 31,2006
    Cash and cash equivalents      $140,103       $131,201        $252,516
    Restricted cash                  99,459        112,277         130,542
    Trade receivables, net of
     provisions                      32,458         25,058          7,444
    Flight equipment held for
     operating leases, net        3,076,815      2,969,111      2,280,121
    Notes receivables, net of
     provisions                     166,344        167,451        171,170
    Prepayments on flight
     equipment                      150,621        166,630        122,514
    Investments                      16,091         18,001          5,056
    Goodwill                          6,776          6,776            -
    Intangibles                      49,080         34,229         35,290
    Inventory                        72,115         82,811            -
    Derivative assets                18,764         17,871         23,638
    Deferred income taxes            88,939         97,841         90,515
    Other assets                    112,489         92,431         55,944
    Total Assets                 $4,030,054     $3,921,688     $3,174,750

    Liabilities and Shareholders' equity

    Accounts payable                 $7,222         $6,958         $3,491
    Accrued expenses and other
     liabilities                     70,828         92,466         68,218
    Accrued maintenance liability   261,653        263,563        163,327
    Lessee deposit liability         72,591         77,686         55,094
    Term debt                     2,665,987      2,555,139      2,245,256
    Accrual for onerous contracts    72,718        111,333        130,008
    Deferred revenue                 29,065         28,391         23,712
    Derivative liabilities              -              -            6,053
    Deferred income taxes             4,490          3,383            -
    Total liabilities             3,184,554      3,138,919      2,695,159

    Minority interest                31,685         31,938         24,400

    Ordinary share capital              699            699            646
    Additional paid-in capital      593,999        591,553        369,354
    Retained earnings               219,117        158,580         85,191
    Total shareholders' equity      813,815        750,832        455,191

    Total Liabilities and
     Shareholders' equity        $4,030,054     $3,921,688     $3,174,750

    AerCap Holdings N.V.
    Consolidated Income Statements - Unaudited
    (In thousands of U.S. Dollars, except per share data)

                                            Three months ended
                                                 March 31,
                                        2007 (A)             2006
    Lease revenue                      $139,703            $87,941
    Sales revenue                       148,885             33,215
    Interest revenue                      7,272              8,934
    Management fee revenue                3,025              3,681
    Other revenue                        10,587              5,322
    Total Revenues                      309,472            139,093

    Depreciation                         33,968             24,360
    Cost of goods sold                  118,003             20,502
    Interest on term debt                50,484             28,203
    Operating lease in costs              6,237              6,356
    Leasing expenses                      4,032              4,528
    Provision for doubtful notes and
     accounts receivable                   (141)            (1,298)
    Selling, general and
     administrative expenses             26,585             11,133
    Total Expenses                      239,168             93,784

    Income from continuing operations
     before income taxes and
     minority interest                   70,304             45,309

    Provision for income taxes          (10,019)           (10,423)

    Net income before minority
     interest                            60,285             34,886

    Minority interest, net of taxes         252                600

    Net Income                          $60,537            $35,486

    Basic and diluted earnings per
     share                                $0.71              $0.45

    Weighted average shares
     outstanding - basic and
     diluted                         85,036,957         78,236,957

    (A) - Includes the results of operations of AeroTurbine

    AerCap Holdings N.V.
    Consolidated Statements of Cash Flows - Unaudited

                                                  Three months ended
                                                      March 31,
                                                2007              2006

    Net income                                 60,537            35,486
    Adjustments to reconcile net
     income to net cash provided by
     operating activities
    Minority interest                            (252)             (600)
    Depreciation and amortisation              33,968            24,360
    Amortisation of debt issuance cost          1,708             1,821
    Amortisation of intangibles                 1,944             3,281
    Gain on elimination of fair value
     guarantee                                (10,736)              -
    Provision for doubtful notes and
     accounts receivable                         (141)           (1,298)
    Capitalised interest on pre-
     delivery payments                         (1,564)           (1,367)
    Gain on disposal of assets                (24,961)          (12,713)
    Change in fair value of derivative
     instruments                                 (893)           (7,252)
    Deferred taxes                             10,009            10,089
    Share-based compensation                    2,446               -
    Changes in assets and liabilities
      Trade receivables and notes
       receivable, net                         (6,152)           25,880
      Inventories                              10,779               -
      Other assets                             (7,498)           (1,013)
      Accounts payable and accrued
       expenses, including
       accrued maintenance
       liability, lessee deposits             (51,185)          (24,333)
      Deferred revenue                            674             1,703
    Net cash provided by operating
     activities                                18,683            54,044

    Purchase of flight equipment             (223,585)         (108,250)
    Proceeds from sale/disposal of
     assets                                   126,905            33,215
    Prepayments on flight equipment           (18,650)          (28,000)
    Purchase of investments                       -              (2,056)
    Purchase of intangibles                   (16,794)              -
    Movement in restricted cash                12,818            27,188
    Net cash used in investing
     activities                              (119,306)          (77,903)

    Issuance of term debt                     246,503           133,057
    Repayment of term debt                   (135,655)          (60,797)
    Debt issuance costs paid                   (1,459)           (4,210)
    Capital contributions from
     minority interests                           -              25,000
    Net cash provided by financing
     activities                               109,389            93,050

    Net (decrease) increase in cash
     and cash equivalents                       8,766            69,191
    Effect of exchange rate changes               136              (229)
    Cash and cash equivalents at
     beginning of period                      131,201           183,554
    Cash and cash equivalents at end
     of period                                140,103           252,516

SOURCE AerCap Holdings