Exhibit 99.1

 

		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
PRESS RELEASE		Corporate Communications
		+31 20 655 9616
FOR IMMEDIATE RELEASE		foberdieck@aercap.com

 

AerCap Holdings N.V. Reports Third Quarter 2008 Financial Results

 

Amsterdam, Netherlands; November 6, 2008 - AerCap Holdings N.V. (the “Company” or “AerCap”) (NYSE: AER) today announced the results of its operations for the third quarter ended September 30, 2008.

 

Third Quarter 2008 Highlights

 

·                 Third quarter 2008 net income was $51.3 million, compared with $48.6 million for the same period in 2007.  Third quarter 2008 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $61.1 million, compared with $58.1 million in third quarter 2007 on the same basis.

 

·                 Third quarter 2008 basic and diluted earnings per share were $0.60.  Third quarter 2008 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation were $0.72.

 

·                 Net spread, 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, was $93.3 million in third quarter 2008 compared to $74.5 million in third quarter 2007, an increase of 25%.  This measure reflects the increase in leasing income.

 

·                 Sales revenue for the third quarter 2008 was $122.4 million, compared to $187.1 million for the same period in 2007, and was generated from the sale of six aircraft, two engines and the sale of parts inventory.  In addition to the six aircraft sales, an A340 held in a joint venture that was 27% owned by AerCap was sold, which resulted in other revenue of $3.2 million.

 

·                 Total revenue for the third quarter 2008 was $301.9 million, compared to $335.9 million for the same period in 2007. The decrease was mainly due to lower aircraft sales revenue.

 

·                 Total assets were $5.3 billion at September 30, 2008, an increase of 24% over total assets of $4.3 billion at September 30, 2007.

 

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·                  Committed purchases of aviation assets delivered or scheduled for delivery in 2008 are $1.4 billion, of which $1.1 billion closed in the nine month period ended September 30, 2008.

 

Klaus Heinemann, CEO of AerCap, commented: “Our ability to achieve financial targets for the third quarter 2008 is the result of the efficient operation of our global aircraft asset management franchise in an increasingly difficult market environment. The recent weeks have shown unprecedented global financial challenges, the result of which reduces visibility of the primary factors which may impact the Company’s performance in the coming months including, but not limited to, the prevailing LIBOR rate.”

 

AerCap’s CFO, Keith Helming, added: “While the prevailing market conditions have delayed our ability to achieve high-margin aircraft sales, the Company’s leasing income or net spread performance continues to improve.  Furthermore, notwithstanding the well publicized market disruptions, AerCap’s operating discipline, focused on proactive management of credit and interest rate risk, coupled with the maintenance of substantial liquidity, helps better protect the Company in the coming months.”

 

Summary of Financial Results

 

AerCap recorded third quarter 2008 net income of $51.3 million or $0.60 per basic and diluted share.  Included in the third quarter 2008 net income amount were charges relating to the mark-to-market of interest rate caps and share-based compensation of $9.8 million or $0.12 per basic and diluted share, net of tax.  The after-tax charge relating to the mark-to-market of our interest rate caps was $8.2 million and the after-tax charge from share-based compensation was $1.6 million.

 

Detailed Financial Data

($ in Millions)

 

Operating results

 

		Three months ended								Nine months ended
		September 30,								September 30,
								% increase/								% increase/
		2008			2007			(decrease)		2008			2007			(decrease)
Revenues		$	301.9		$	335.9		-10	%	$	929.8		$	892.0		4	%
Net income		51.3			48.6			6	%	170.8			143.3			19	%

 

Total revenue in third quarter 2008 decreased 10% compared with third quarter 2007.  This decrease was largely driven by a lower amount of aircraft sales revenue in the third quarter 2008.

 

Revenue breakdown

 

		Three months ended								Nine months ended
		September 30,								September 30,
								% increase/								% increase/
		2008			2007			(decrease)		2008			2007			(decrease)
Lease revenue:
Basic rents		$	132.9		$	125.2		6	%	$	386.0		$	368.3		5	%
Maintenance rents		34.6			11.2			209	%	57.6			31.7			82	%
End-of-lease compensation		0.4			0.3			33	%	12.5			17.1			-27	%
Lease revenue		$	167.9		$	136.7		23	%	$	456.1		$	417.1		9	%
Sales revenue		122.4			187.1			-35	%	445.6			420.3			6	%
Management fees and interest income		8.0			12.1			-34	%	23.9			34.9			-32	%
Other revenue		3.6			—			100	%	4.2			19.7			-79	%
Total revenue		$	301.9		$	335.9		-10	%	$	929.8		$	892.0		4	%

 

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Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base.  This increase was partially offset by the impact from airline defaults which lowered basic lease rents by $5.9 million in third quarter 2008.

 

In addition, the increase in basic lease rents was reduced by the impact from decreasing interest rates on floating rate lease rentals between the periods.  However, the decrease in basic rents on floating rate leases was offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the third quarter 2008 increased 6% compared to third quarter 2007 to $132.9 million, interest expense excluding the impact of mark-to-market of interest rate caps and non-recurring charges decreased 22% compared with third quarter 2007 to $39.6 million, as shown in the table below.  We refer to the difference in these amounts of $93.3 as net spread, which increased 25% in third quarter 2008 over the same period in 2007.

 

		Three months ended								Nine months ended
		September 30,								September 30,
								% increase/								% increase/
		2008			2007			(decrease)		2008			2007			(decrease)
Basic rents		$	132.9		$	125.2		6	%	$	386.0		$	368.3		5	%
Interest on debt		$	51.0	*	$	58.3		-13	%	$	120.2	*	$	177.1		-32	%
Plus: mark-to-market of interest rate caps		(11.4		)	(7.6		)	50	%	(6.0		)	(8.0		)	-25	%
Less: Non-recurring charges to interest expense from refinancing of securitized bonds		—			—			0	%	—			(27.4		)	-100	%
Interest on debt excluding the impact of mark-to-market of interest rate caps and non-recurring charges to interest expense from refinancing of securitized bonds		$	39.6		$	50.7		-22	%	$	114.2		$	141.7		-19	%
Net Spread		$	93.3		$	74.5		25	%	$	271.8		$	226.6		20	%

 

*- Includes a gain of $2.8 million from discounted purchases of securitized bonds partially offset by a charge of $1.5 million relating to unamortized fees on the sale of securitized aircraft.

 

The increase in maintenance rents in third quarter 2008 when compared to prior periods is attributable, in part, to a change in the estimate of the amount of maintenance rent expected to be reimbursed to lessees. The change in estimate arose from the implementation of an improved model used to forecast future maintenance reimbursements. AerCap records as revenue, all maintenance rent receipts not expected to be repaid to lessees.  In third quarter 2008, $16.6 million was recorded as maintenance revenue as a result of the change in estimate. Of the $16.6 million, $3.7 million was collected from lessees during third quarter 2008 and $12.9 million was collected in prior periods. As of September 30, 2008, AerCap had an accrued maintenance liability of $208.1 million.

 

The increase in maintenance rents is also partially due to the airline lease defaults.  The termination of the leases triggered the recognition of $8.3 million of maintenance revenue in third quarter 2008, which represents the amount of maintenance rent previously collected from the airlines and still held by AerCap.

 

Effective tax rate

 

AerCap’s effective tax rate during the nine month period ended September 30, 2008 was 8.3%, consisting of 7.8% for AerCap’s aircraft business and 14.0% for AerCap’s engine and parts business.  The effective tax rate in 2007 was 11.8%.

 

Financial position

 

								% Increase
		September 30,			September 30,			over
		2008			2007			September 30,
Flight equipment held for lease		$	3,831.2		$	2,927.3		31	%
Total assets		5,269.5			4,253.2			24	%
Total liabilities		4,111.6			3,313.1			24	%
Total equity		1,126.6			907.9			24	%

 

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As of September 30, 2008, AerCap’s portfolio consisted of 314 aircraft and 74 engines that were either owned, on order, under contract or letter of intent, or managed.

 

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 the mark-to-market on our interest rate caps and share-based compensation during the applicable period, net of related tax benefits, to GAAP net income.  AerCap believes this measure provides investors with a more meaningful view on AerCap’s operational performance and allows investors to better understand its operational performance in relation to past and future reporting periods.  AerCap uses interest rate caps to allow the Company to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on its 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 the Company’s lease and other contracts.  AerCap does not apply hedge accounting to its interest rate caps.  As a result, AerCap is required to recognize the change in fair value of the interest rate caps in AerCap’s 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 month and nine month periods ended September 30, 2008 and 2007:

 

		Three months ended								Nine months ended
		September 30,								September 30,
								% increase/								% increase/
		2008			2007			(decrease)		2008			2007			(decrease)
Net income		$	51.3		$	48.6		6	%	$	170.8		$	143.3	*	19	%
Plus: mark-to-market of interest rate caps, net of tax		8.2			6.7			22	%	3.7			7.0			-47	%
share-based compensation, net of tax		1.6			2.8			-43	%	4.5			3.2			41	%
Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation		$	61.1		$	58.1		5	%	$	179.0		$	153.5		17	%

 

*- Includes a charge to interest expense from refinancing of securitized bonds of $24.0 million, net of tax.

 

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. 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.  AerCap believes this measure provides investors a better way to understand the changes and trends related to the earnings of its 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 for hedging purposes.  The reconciliation of net spread to basic rents for the three month and nine month periods ended September 30, 2008 and 2007 is included on page 3 of this press release.

 

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Conference Call

 

In connection with the earnings release, management will host an earnings conference call today, Thursday, November 6, 2008 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-676-6978 or (International) +1-706-634 5464 and referencing code 69158965 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.  A replay of the call will be available beginning at 10:30 am Eastern Time / 4:30 pm Central European Time on November 6, 2008 and continuing through December 6, 2008. To access the recording, call 800-642-1687 (U.S./Canada) or +1-706-645-9291 (International) and enter passcode 69158965. The 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 senior management today, Thursday, November 6, 2008, at 12:30 pm Eastern Time at The New York Palace.  Doors will open at 12:00 pm

 

To participate in either event, please register at: www.sharedvalue.net/aercap/q308results

 

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 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 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,” “will,” “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

 

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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

 

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AerCap Holdings N.V.

Consolidated Balance Sheets - Unaudited

(In thousands of U.S. Dollars)

 

		September 30, 2008			December 31, 2007			September 30, 2007
Assets
Cash and cash equivalents		$	176,444		$	241,736		$	271,997
Restricted cash		167,843			95,072			60,814
Trade receivables, net of provisions		38,694			35,591			26,978
Flight equipment held for operating leases, net		3,831,200			3,050,160			2,927,257
Flight equipment held for sale		6,139			136,135			163,962
Notes receivables, net of provisions		179,080			184,820			181,447
Prepayments on flight equipment		385,257			247,839			225,232
Investments		18,678			11,678			16,091
Goodwill		6,776			6,776			6,776
Intangibles, net		50,888			41,855			43,161
Inventory		89,746			90,726			75,861
Derivative assets		53,633			21,763			17,532
Deferred income taxes		76,091			85,253			91,897
Other assets		189,038			144,823			144,201
Total Assets		$	5,269,507		$	4,394,227		$	4,253,206
Liabilities and Shareholders’ equity
Accounts payable		$	137		$	16,376		$	6,693
Accrued expenses and other liabilities		118,638			81,379			76,914
Accrued maintenance liability		208,064			255,535			261,760
Lessee deposit liability		98,094			83,628			85,412
Debt*		3,603,013			2,892,744			2,781,646
Accrual for onerous contracts		31,053			46,411			69,174
Deferred revenue		38,516			33,574			30,338
Derivative liabilities		5,325			—			—
Deferred income taxes		8,782			3,425			1,152
Total liabilities		4,111,622			3,413,072			3,313,089
Minority interest		31,325			30,782			32,235
Share capital		699			699			699
Additional paid-in capital		607,852			602,469			605,093
Retained earnings		518,009			347,205			302,090
Total shareholders’ equity		1,126,560			950,373			907,882
Total Liabilities and Shareholders’ equity		$	5,269,507		$	4,394,227		$	4,253,206

 

* Includes $62.8 million of subordinated debt received from our joint venture partner relating to the TUI portfolio acquisition   

 

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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,
		2008			2007			2008			2007
Revenues
Lease revenue		$	167,932		$	136,689		$	456,134		$	417,069
Sales revenue		122,441			187,124			445,629			420,290
Interest revenue		4,889			8,272			14,931			23,722
Management fee revenue		3,065			3,789			8,970			11,137
Other revenue		3,607			—			4,156			19,744
Total Revenues		301,934			335,874			929,820			891,962
Expenses
Depreciation		45,329			35,143			123,331			106,298
Asset impairment		—			—			7,689
Cost of goods sold		108,850			151,103			359,716			327,685
Interest on debt		50,958			58,268			120,182			177,114
Operating lease in costs		4,254			4,652			11,209			15,512
Leasing expenses		5,421			495			23,213			14,230
Provision for doubtful notes and accounts receivable		(186		)	233			1,061			355
Selling, general and administrative expenses		33,366			27,934			96,652			82,161
Total Expenses		247,992			277,828			743,053			723,355
Income from continuing operations before income taxes and minority interest		53,942			58,046			186,767			168,607
Provision for income taxes		(3,896		)	(9,288		)	(15,421		)	(24,971		)
Net income before minority interest		50,046			48,758			171,346			143,636
Minority interest, net of taxes		1,285			(152		)	(543		)	(298		)
Net Income		$	51,331		$	48,606		$	170,803		$	143,338
Basic and diluted earnings per share		$	0.60		$	0.57		$	2.01		$	1.69
Weighted average shares outstanding - basic and diluted		85,036,957			85,036,957			85,036,957			85,036,957

 

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AerCap Holdings N.V.

Consolidated Statements of Cash Flows - Unaudited

(In thousands of U.S. Dollars)

 

		Three months ended September 30,				Nine months ended September 30,
		2008		2007		2008		2007
Net income		51,331		48,606		170,803		143,338
Adjustments to reconcile net income to net cash provided by operating activities
Minority interest		(1,285	)	152		543		298
Depreciation		45,328		35,143		123,330		106,298
Asset impairment		—		—		7,689		—
Amortisation of debt issuance cost		5,154		3,302		11,911		34,861
Amortisation of intangibles		3,788		2,939		10,827		7,862
Gain on elimination of fair value guarantee		—		—		—		(10,736	)
Gain on discounted purchase of securitized bonds		(2,783	)	—		(2,783	)	—
Provision for doubtful notes and accounts receivable		(186	)	233		1,061		355
Capitalised interest on pre-delivery payments		(909	)	(1,621	)	(2,308	)	(4,607	)
Gain on disposal of assets		(12,461	)	(31,304	)	(65,268	)	(74,788	)
Mark-to-market of non-hedged derivatives		13,980		2,823		2,904		339
Deferred taxes		3,529		(2,120	)	14,519		10,536
Share-based compensation		1,962		3,243		5,383		8,017
Changes in assets and liabilities
Trade receivables and notes receivable, net		22,539		(7,231	)	1,576		(16,271	)
Inventories		(7,061	)	24,899		9,214		12,973
Other assets and derivative assets		(22,160	)	(6,084	)	(47,652	)	(25,602	)
Accounts payable and accrued expenses, including accrued maintenance liability, lessee deposits		(26,269	)	(11,962	)	(18,454	)	(38,178	)
Deferred revenue		(1,526	)	(1,123	)	4,942		1,946
Net cash provided by operating activities		72,971		59,895		228,237		156,641
Purchase of flight equipment		(137,091	)	(68,273	)	(1,014,642	)	(457,450	)
Proceeds from sale/disposal of assets		104,535		147,256		352,427		332,438
Prepayments on flight equipment		(74,905	)	(37,432	)	(206,583	)	(106,634	)
Purchase of investments		(10,000	)	—		(10,000	)	—
Sale of investments		6,234		—		6,234		—
Purchase of intangibles		112		—		(21,410	)	(16,794	)
Movement in restricted cash		15,965		117,302		(72,771	)	51,463
Net cash (used in) provided by investing activities		(95,150	)	158,853		(966,745	)	(196,977	)
Issuance of debt		207,692		50,804		1,148,338		2,104,368
Repayment of debt		(181,898	)	(246,812	)	(435,286	)	(1,880,097	)
Debt issuance costs paid		(2,998	)	(398	)	(38,619	)	(42,417	)
Capital contributions from minority interests		—		—		—		—
Net cash provided by (used in) financing activities		22,796		(196,406	)	674,433		181,854
Net increase (decrease) in cash and cash equivalents		617		22,342		(64,075	)	141,518
Effect of exchange rate changes		(43	)	(469	)	(1,217	)	(722	)
Cash and cash equivalents at beginning of period		175,870		250,124		241,736		131,201
Cash and cash equivalents at end of period		176,444		271,997		176,444		271,997

 

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