AerCap Holdings has revealed it has taken-out a $4.0 billion unsecured revolving credit facility with a syndicate of financial institutions that matures in February 2024.
In a statement the firm said that On March 12 it provided a borrowing notice to the lenders with respect to the remaining available amount under this facility.
Aengus Kelly, chief executive of AerCap, said, “We have decided to take this action as a precautionary measure, given recent market volatility. As I said earlier this week at an industry conference, AerCap continues to maintain a strong liquidity and financial position, with $28.2 billion of unencumbered assets and $8.2 billion of available liquidity as of December 31, 2019.”
AerCap’s statement came on the same day that analysts Cowen said it continued to believe the company has the ability to weather the storm, citing the firms with $8.2 Bn in liquidity and $28.2 Bn in unencumbered assets, despite the Irish lessor’s shares coming under considerable pressure in 2020 with prices down 54% so far.
“There will likely be increases in airline bankruptcies this year due to the spread of the virus, but management is prepared to reposition aircraft as necessary,” said Cowen in an analyst note.
Cowen in fact reiterated its outperform rating on the AerCap’s shares saying that while the stock is under significant pressure this is probably due to fear associated with travel and what that means for its customers. In addition to its large amounts of available liquidity and unencumbered assets they could AerCap has stopped their share repurchase program until there is further clarity on the coronavirus and is continuing to transact business, executing several transactions in March.
“AerCap, like the market, has come under significant pressure with the spread of the coronavirus around the world. AerCap has a diversified fleet which is helpful in good and bad times. The company started to see a recovery in China [but] other regions like Europe and increasingly North America are taking more extreme approaches to quarantine, which will hopefully slow the virus's spread,” said Cowen.
“AER has the best balance sheet in the industry with $8.2 Bn in liquidity and $28.2 Bn in unencumbered assets. The asset base might come under pressure with airlines parking aircraft, but AER has enough capital to make it through any near-term shock to demand. If China is a decent timeline for recovery, the virus could run its course in 3-5 months. Ultimately, AerCap has the ability to weather the storm and likely improve their standing over the long-term,” it added.