AerCap has reported a net income of $270.3 million for the third quarter of 2019 and $835.9 million for the nine months ended September 30, 2019. Diluted earnings per share of $2.01 for Q3 and $6.10 for the nine months ended September 30, 2019.
The increase in net income was primarily driven by higher lease rents resulting from an increase in average lease assets due to the delivery of new technology aircraft from July 2018 through September 2019, as well as higher net gain on sale of assets.
During the reporting period, AerCap reported a 12% increase in EPS year over year. The lessor was upgraded to BBB rating by S&P Global Ratings and placed on Positive Outlook by Moody’s.
AerCap executed 108 aircraft transactions in the third quarter of 2019, confirming that new technology aircraft now comprise 55% of its owned fleet.
The lessor has over $40bn of contracted future lease revenues, with approximately 97% of lease rents through 2022 already contracted.
The average current lease at AerCap expires in 2027, which also boasts a 99.8% fleet utilisation rate for the third quarter of 2019.
AerCap highlights a $2.4 billion increase in average lease assets year over year, as well as a 13% increase in book value per share since September 30, 2018.
The lessor has repurchased 2 million shares in the third quarter of 2019 for $104 million and 9.1 million shares year to date through November 6, 2019 for $438 million. AerCap has now authorised a new $200 million share repurchase program, which will run through March 31, 2020.
Aengus Kelly, CEO of AerCap, commented: “We are very pleased to report another quarter of strong results. During the third quarter of 2019 we generated earnings per share of $2.01 and net income of $270 million. The 108 aircraft transactions executed this quarter demonstrate the scale and reach of the AerCap platform. Our earnings consistency and the discipline we have shown in managing our business are reflected in S&P’s recent upgrade of AerCap to BBB, another important milestone in our continuing upward ratings trajectory.”
In its results announcement, AerCap have an update on the Boeing 737 MAX situation as it pertains to its business. Prior to the grounding, AerCap had delivered five Boeing 737 MAX aircraft that are currently on lease to an airline customer, and the lessor currently has 95 737 MAX aircraft on order. “It is uncertain when and under what conditions the Boeing 737 MAX will return to service and when Boeing will resume making deliveries of these aircraft. As a result, we have incurred delays and expect to incur future delays on our scheduled Boeing 737 MAX deliveries.”
AerCap’s basic lease rents were $1,066.6 million for the third quarter of 2019, compared with $1,038.5 million for the same period in 2018. The increase was primarily due to a $2.4 billion increase in average lease assets.
Maintenance rents and other receipts were $72.6 million for the third quarter of 2019, compared with $93.9 million for the same period in 2018. The decrease was primarily due to lower maintenance revenue recognised as a result of lease terminations.
Net gain on sale of assets for the third quarter of 2019 was $40.5 million, relating to 19 aircraft sold for $561.3 million, compared with $20.0 million for the same period in 2018, relating to 13 aircraft sold for $187.5 million. The increase was primarily due to the volume and composition of asset sales.
Leasing expenses were $44.1 million for the third quarter of 2019, compared with $84.8 million for the same period in 2018. Asset impairment charges were $31.2 million for the third quarter of 2019, compared to $12.8 million recorded for the same period in 2018. Asset impairment charges recorded in the third quarter of 2019 primarily related to lease terminations and were partially offset by related maintenance revenue recognised upon termination.
AerCap’s effective tax rate for the third quarter of 2019 was 13.0%, the same as for the third quarter of 2018. The effective tax rate for the full year 2018 was 12.5%. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions.
Book value per share has increased 13% since September 30, 2018.