AerCap Holdings N.V. Reports Second Quarter 2011 Financial Results

Amsterdam, Netherlands; August 5, 2011 – AerCap Holdings N.V. (the “Company” or “AerCap”) (NYSE: AER) today announced the results of its operations for the second quarter ended June 30, 2011.

Second Quarter 2011 Highlights

Net income
· Second quarter 2011 net income was $30.8 million, compared with net income of $48.9 million for the same period in 2010.
· Second quarter 2011 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $51.4 million, compared with net income of $59.6 million for the same period in 2010.
· In the second quarter 2011 the Company acquired the right to provide lease and aircraft related services to the Genesis portfolio for $21.4 million, net of tax. Excluding the impact of the mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights, second quarter 2011 net income was $72.8 million, an increase of 22% compared to net income of $59.6 million in the second quarter of 2010 on the same basis.

Earnings per share
· Second quarter 2011 basic and diluted earnings per share was $0.21, compared with $0.41 for the same period in 2010.
· Second quarter 2011 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $0.35, compared with $0.50 for the same period in 2010.
· Second quarter 2011 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights was $0.49, compared with $0.50 for the same period in 2010.

Other financial highlights
· Margin earned on lease assets (net spread) was $187.0 million in the second quarter of 2011 compared to $173.9 million in the second quarter of 2010, an increase of 8%.
· Basic lease rents for the second quarter of 2011 were $251.2 million, compared to $233.5 million for the same period in 2010, an increase of 8%. Total lease revenue (basic rents, maintenance rents and other receipts) for the second quarter of 2011 was $284.1 million, compared to $260.7 million for the same period in 2010, an increase of 9%. The increases were mainly due to the deliveries of forward order aircraft.
· Sales revenue for the second quarter of 2011 was $74.5 million, compared to $328.1 million for the same period in 2010. Sales revenue for the second quarter of 2011 was generated from the sale of our 50% interest in three A330 aircraft that had been part of a joint venture with a third party, the sale of five engines and parts inventory. Sales revenue for the second quarter of 2010 was higher than second quarter 2011 due to the sale of two new A330 aircraft and two new A320 aircraft.
· Total revenue for the second quarter of 2011 was $364.3 million, compared to $594.0 million for the same period in 2010 for the reasons mentioned above.
· Committed purchases of aviation assets delivered or scheduled for delivery in 2011 are $838 million, of which $638 million closed in the first half year of 2011.
· Total assets were $9.6 billion at June 30, 2011, an increase of 5% over total assets of $9.1 billion at June 30, 2010. The increase was driven primarily by deliveries of forward order aircraft.

Aengus Kelly, CEO of AerCap, commented: “Our second quarter results and activities illustrate AerCap’s ability to consistently deliver industry leading results. Net income for the quarter was $72.8 million or $0.49 cents after adjusting for the one-off charge relating to the buy-out of the Genesis portfolio servicing rights, the impact of the mark-to-market of interest rate caps and share-based compensation. This industry leading profitability is driven by the excellence of our platform, the quality of our portfolio and the efficiency and robustness of our funding structures.”

AerCap’s CFO, Keith Helming, said: “In addition to the strong earnings generated from our portfolio, our access to capital continues to expand. We completed another $1 billion of financings to date in 2011 including an extension of our $775 million non-recourse revolving debt facility by an additional two years. Total cash on hand at the end of the second quarter is in excess of $500 million and this amount will be further enhanced from the expected sale of AeroTurbine.”

Summary of Financial Results

AerCap recorded a second quarter 2011 net income of $30.8 million or $0.21 earnings per basic and diluted share. Second quarter 2011 net income included net charges relating to the mark-to-market of interest rate caps and share-based compensation of $20.6 million or $0.14 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $18.9 million, which reflects changes in forecasted interest rates, and the after-tax charge from share-based compensation was $1.7 million. Second quarter 2011 net income also included a one-off charge relating to the buy-out of the Genesis portfolio servicing rights of $21.4 million or $0.14 per basic and diluted share, net of tax. Second quarter 2011 net income excluding the impact of mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights was $72.8 million or $0.49 per basic and diluted share, net of tax.

Detailed Financial Data
($ in Millions)

Operating results

Net income for the second quarter of 2011 excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 14%. This decrease was primarily caused by the one-off charge relating to the buy-out of the Genesis portfolio servicing rights in the second quarter. Excluding the impact of mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights net income increased by 22%. This increase was primarily caused by an increase in net spread as a result of the deliveries of forward order aircraft and the purchase of the 50% equity interest in AerVenture from Waha.

Revenue breakdown

Basic lease rents were $251.2 million for the second quarter of 2011, an increase of 8% compared to the second quarter of 2010, as a result of our growing asset base. Our average lease assets increased by 12% to $8.4 billion compared to the second quarter of 2010. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $64.2 million in the second quarter of 2011, an 8% increase compared to the second quarter of 2010. The increase was primarily driven by the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 8% to $187.0 million in the second quarter of 2011 over the same period in 2010.

a) Interest on debt for the quarter ended June 30, 2011, includes $10.1 million of amortization of debt issuance costs.

Effective tax rate

AerCap’s blended effective tax rate during the first half year of 2011 was 8.0% (charge), consisting of 8.9% (charge) for AerCap’s aircraft business and 38.1% (credit) for AerCap’s engine and parts business. The blended effective tax rate in 2010 was 8.6% (charge).

Financial position

As of June 30, 2011, AerCap’s portfolio consisted of 335 aircraft and 95 engines that were either owned, on order, under contract or letter of intent, or managed.