Sale of jets fuels €238m profit for Irish lessor
Dublin-headquartered aircraft lessor AerCap has beaten earnings expectations after posting net income of $282.9m (€238.1m) in the second quarter of the year as it made big gains from jet sales.
The company, whose chief executive is Aengus Kelly, inset, said that its total revenue for the period edged 2pc higher, to $1.26bn (€1.06bn). Basic lease revenue fell 5pc to $1.05bn.
"The decrease was primarily due to the sale of mid-life and older aircraft during 2016 and 2017, which reduced average lease assets," according to AerCap. The group had a 99.5pc fleet utilisation rate in the second quarter, when it also executed 108 aircraft transactions, including 25 widebody deals.
Analysts had pencilled in net income of $236m for the second quarter, but the lessor posted a $69.5m net gain on the sale of assets, which boosted the bottom line.
That compared to a $38.4m net gain on the sale of assets in the second quarter of 2016.
The latest figure was also way ahead of the $15m gain that had been predicted by Davy Stockbrokers. The second-quarter gain related to 24 aircraft sold and six aircraft reclassified to finance leases.
The second-quarter 2016 gain related to 32 aircraft sold and three aircraft reclassified to finance leases. AerCap repurchased 6.5m shares in the second quarter, at a cost of $293m, and has repurchased 14.2m shares in the first half of the year, at a cost of $639m.
Yesterday, the company said that it authorised an additional $250m share repurchase programme that will run to the end of the year.
Over the past two years, AerCap has forked out more than $2bn buying back almost a quarter of its own shares.
Mr Kelly welcomed what he said was a strong second quarter for AerCap, noting that it also recently completed a $1bn offering of 10-year senior notes. He said the debt issue further strengthens AerCap's financial position.
In June, AerCap placed an order for 30 Boeing 787-9 Dreamliners with an $8.1bn list price, in a move that will make it the biggest owner of the jet type.
Up to early 2017, AerCap had taken delivery of 55 787s, and the new order gave it a total order book of 67 of the aircraft.
Davy Stockbrokers said that AerCap's second quarter results provide "a strong reminder of the company's attractive investment proposition".
"The quarter itself was a significant beat versus estimates owing to net gains on sale of $70m at a margin of 17pc over book value," Davy added. "In contrast, the stock trades at an 8pc discount to book."