AerCap has reported a net loss for the first quarter of 2022 – including net charges related to the Ukraine Conflict – was $2.0 billion, or $8.35 per share.
Net income for the first quarter of 2022 was $540 million, or $2.23 per share, after adjustments for net charges related to the Ukraine Conflict and other items.
“During the first quarter, we continued to see a broad-based recovery in travel around the world as governments lifted travel restrictions and demand for travel continued to increase. We expect to see demand for travel continue to grow as the recovery progresses,” said Aengus Kelly, Chief Executive Officer of AerCap. “During the first quarter, we ceased all of our leasing activity to Russian airlines and took a charge primarily related to our aircraft and engines that remain in Russia. We have filed insurance claims related to these assets and will vigorously pursue all available remedies to recover our losses,” Kelly added.
During the quarter, AerCap executed 157 transactions in the first quarter of 2022, including 102 lease agreements, 25 purchases and 30 sales. AerCap has placed 92% of new aircraft order book through 2023.
First quarter cash flow from operating activities was $1.3 billion, more than three times higher than the first quarter of 2021.
AerCap reported that it continued to see significant improvements in cash collections, trade receivables and deferral requests.
The lessor’s adjusted debt/equity ratio of 2.9 to 1 at March 31, 2022. AerCap has confirmed that it has $17 billion in total sources of liquidity, representing next 12 months’ sources-to-uses coverage ratio of 2.1x.
Basic lease rents were $1,554 million for the first quarter of 2022, compared with $889 million for the same period in 2021. The increase was primarily due to the impact of the GECAS acquisition. Basic lease rents were reduced by $57 million in the first quarter of 2022 as a result of the amortization of lease premium assets.
Maintenance rents and other receipts were $186 million for the first quarter of 2022, compared with $183 million for the same period in 2021.
Net gain on sale of assets for the first quarter of 2022 was $3 million, relating to 23 assets sold for $452 million, compared with $5 million for the same period in 2021, relating to nine aircraft sold for $184 million. The decrease was primarily due to the composition of asset sales.
Other income for the first quarter of 2022 was $47 million, compared with $19 million for the same period in 2021. The increase was primarily due to higher management fee income, interest income and other income as a result of the GECAS acquisition.
Interest expense excluding mark-to-market of interest rate caps and swaps was $417 million for the first quarter of 2022, compared with $291 million for the same period in 2021. AerCap’s average cost of debt was 3.0% for the first quarter of 2022, and 3.7% for the same period in 2021, excluding debt issuance costs, upfront fees and other impacts.
Prior to the Russian invasion, AerCap had 135 aircraft and 14 engines on lease with Russian airlines, which represented approximately 5% of AerCap’s fleet by net book value as of December 31, 2021. The lessor has removed 22 aircraft and three engines outside of Russia, and 113 aircraft and 11 engines remain in Russia.
During the first quarter of 2022, AerCap recognized a pre-tax charge of $2.7 billion ($2.4 billion after- tax) to earnings, comprised of flight equipment write-offs and impairments, which were partially offset by the derecognition of lease-related assets and liabilities. AerCap has recognized a total loss on its assets that remain in Russia and Ukraine and impairment losses on the assets it has recovered from Russian and Ukrainian airlines.
AerCap has requested payment of all letters of credit related to its aircraft and engines leased to Russian airlines - approximately $260 million. To date, the company has received payments of $210 million related to these letters of credit. AerCap confirms that it has initiated legal proceedings against one financial institution which rejected payment demands in respect of certain letters of credit.
AerCap has also stated that it has submitted an insurance claim for approximately $3.5 billion with respect to all aircraft and engines remaining in Russia and reiterated its intention “to pursue all of our claims under these policies with respect to our assets leased to Russian airlines as of February 24, 2022. However, the timing and amount of any recoveries under these policies are uncertain and we have not recognized any claim receivables as of March 31, 2022”.
As of March 31, 2022, AerCap’s portfolio consisted of 3,615 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company’s owned aircraft fleet as of March 31, 2022 was 7.0 years (3.6 years for new technology aircraft, 12.9 years for current technology aircraft) and the average remaining contracted lease term was 7.3 years.