AerCap Holdings N.V. Aengus Kelly JP Morgan Investor Conference March 2008

Transcription

1 AerCap Holdings N.V. Aengus Kelly JP Morgan Investor Conference March 2008

2 Forward Looking Statements & Safe Harbor This presentation contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are forwardlooking statements. In some cases, forwardlooking statements can be identified by the use of forwardlooking terminology such as may, might, will," should, expect, plan, intend, estimate, anticipate, believe, predict, potential or continue or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this presentation are forwardlooking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied in the forwardlooking statements. As a result, there can be no assurance that the forwardlooking statements included in this presentation will prove to be accurate or correct. In light of these risks, uncertainties and assumptions, the future performance or events described in the forwardlooking statements in this presentation might not occur. Accordingly, you should not rely upon forwardlooking statements as a prediction of actual results and we do not assume any responsibility for the accuracy or completeness of any of these forwardlooking statements. We do not undertake any obligation to, and will not, update any forwardlooking statements, whether as a result of new information, future events or otherwise. 2

3 Agenda AerCap Overview Market Overview Portfolio & Liability Management Financial Overview Summary 3

4 AerCap Overview Global aviation company with proven track record and integrated business model providing aircraft, engines and parts to customers in every major region of the world North America/Caribbean 17% of 2007 lease revenues Europe 39% of 2007 lease revenues Asia / Pacific 34% of 2007 lease revenues Total Assets $4.4Bn at December 31, 2007 Contracted Orders $4.7Bn Total Assets $9.1Bn Including Purchase Commitments 316 Aircraft Latin America 10% of 2007 lease revenues AerCap Locations 69 Engines 101 Customers in 48 Countries 4

5 Investment Highlights Powerful, differentiated integrated business model, extracting value over entire asset life Attractive market with strong travel demand and tight aircraft supply Contracted orders of $4.7Bn creates strong pipeline of growth Experienced management team with proven track record and deep industry and financing experience = Proven earnings and cash flow growth 5

6 AerCap Business Model What Makes Us Different? Our unique integrated platform allows us to create value throughout the life of aircraft and engines Manufacture Disassembly Buy new aircraft from the manufacturer Buy used aircraft from the market Lease equipment to a global client base Sell used aircraft to the market Disassemble aircraft for engine leasing and part sales 6

7 Market Overview: Robust Demand and Tight Supply Demand for new and used commercial aircraft is driven by: Aging world aircraft fleet Ongoing restructuring of U.S. legacy carriers Rapid emergence of highgrowth Low Cost Carriers Rapid airline passenger growth in emerging markets Higher fuel prices More stringent environmental regulations of noise and emissions Used aircraft availability in March 2007 is at lowest point since 5 years (1) Strong aircraft demand driving large increase in orders and production backlog Manufacturers cannot increase supply sufficiently to meet near term demand Significant shift among airlines to lease rather than own aircraft (1) Source: Ascend 7

8 Ageing World Aircraft Fleet Passenger Jets Avg: 9, Years 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,079 2,071 4,415 Commercial Jets Average Fleet Age 2007 Avg: 11.3 Years 524 1,900 2,945 Avg: 10.3 Years 436 1,147 2,347 Avg: 18.3 Years Avg: 18.6 Years North America Europe Asia and Pacific Rim Africa and Middle East South America Less Than 11 Years 11 to 20 Years Greater Than 21 Years 21% of World Fleet >21 years creates significant reflecting need Source: SH&E Analysis December

9 LCC Share of Order Backlog by Region LCC Share of September 2007 Order Backlog, by Region 32 LCC Share (%) Europe Asia Pacific North America South America Africa and Middle East 2 Source: ACAS, September 2007, SH&E Analysis 9

10 Emerging Markets A Key Focus Ratio of Current Fleet and Order Backlog to Population (1) (Aircraft / Million of Population) Aircraft / Population Ratio AerCap 2007 Lease Revenues by Region (%) 28 Asia / Pacific Europe North America/Caribbean Latin America North America Western Europe Asia Pacific (excl. China) South America (excl. Brazil) Brazil Russia China India Current Fleet Backlog (1) Source: ACAS, September 2007 and IMF World Economic Outlook, July

11 Supply Remains Tight 1,600 1,400 1,430 Longhaul network 3% Charter 3% 1,200 1, Freight 3% Low cost / short haul 37% Global network carriers 54% Annual Aircraft Production at Boeing and Airbus Notes: (1) 2007 projected deliveries (Source: Boeing, Airbus) (2) Current in production aircraft available for sale / lease (Source: BACK JetMart) (3) Average annual demand estimated for next 20 years as projected by Boeing (Source: SH&E) (1) Stored Aircraft (2) Estimated Annual (3) Demand 11

12 Portfolio Management Asset Yield Aircraft Lease Portfolio FY 2006 FY 2007 Utilization Rate 98.9% 98.4% Portfolio Yield* 17% 18% Average Term (Months) New Aircraft Leases ** Used Aircraft Leases Aircraft Lease Revenue Contracted as a % of 2007 Aircraft Lease Revenue: ~108% * Lease revenue divided by average book value of flight equipment on lease ** Reflects 22 lease agreements and 24 LOIs for new aircraft leases signed during the year 12

13 Portfolio Management Lease Duration Lease Terms in Months Continue to Lengthen New Aircraft Leases Used Aircraft Leases (1) (1) Based on 22 lease agreements and 24 letters of intent for new aircraft signed during

14 Portfolio Aircraft and Engine Transactions 81 new aircraft lease agreements and lettersofintent executed during aircraft and 51 engines delivered to lessees during aircraft and 18 engines purchased during aircraft and 22 engines sold during 2007 from our owned portfolio 14

15 Portfolio Management Optimization Optimizing Our Portfolio with Sales ($ Million) 4Q2006 4Q 2007 Aircraft Sales Q 2007 (8 aircraft) Engine Sales Part Sales Fokker 100s 1 Dash A300 Freighter 1 A Sale Revenue

16 High Quality and Well Diversified Portfolio Aircraft Portfolio as of December 31, 2007 Number of Aircraft Owned Owned Portfolio % Net book Value at 31 December Managed Portfolio Number of Aircraft Number of Aircraft on Order(1) Number of Aircraft under Purchase Contract and letter of Intent Total Owned, Managed and Ordered Aircraft Airbus A300 Freighter Airbus A319 Airbus A320 Airbus A321 Airbus A330 Airbus A340 Boeing 737 Boeing 767 Boeing 757 Fokker 100 MD 11 Freighter MD83 MD % 13.0% 37.5% 21.7% 8.6% 0.0% 12.7% 1.5% 2.0% 0.2% 1.1% 0.1% 0.4% DC % 3 DC % 1 Fairchild Dornier % % narrowbody Work Horses of industry High share of liquid / remarketable aircraft Average age of owned aircraft fleet 7.4 years 69 engines in portfolio, as of December 31, 2007, incl. 2 on order CFM56 engines, one of the most widely used engines in the commercial aviation industry, represented 67% of our portfolio Total % ) Includes 50 A320 aircraft and 18 A319 aircraft on order by our consolidated JV AerVenture 16

17 Liability Management Funding Strategy Optimize Funding Costs Utilize Capital Markets, ECA Funding, TaxBased Structures, etc. Overall Cost of Capital Competitive with Key Industry Leaders Eliminate Liquidity Risk No Bullet Maturities Securitization Vehicles Allow Extension of Terms Available Lines of Credit in addition to Capital Markets Minimize Risk to Equity (Recession Proofing) Key Investments and Funding Vehicles are RingFenced Recourse to AER Significantly Reduced 17

18 Liability Management Access to Funding Cash Balance at December 31, 2007* $242 Million Operating Cash Flow for Full Year 2007** $206 Million Fourth Quarter Financings (Total of $440 Million) A330 PreDelivery Payments Debt Facility Aircraft Acquisition Debt Facility AeroTurbine Debt Facility Increase*** $182 Million $150 Million $108 Million $1 Billion Revolver Extended by one year to May, 2014 Available Lines of Credit at December 31, 2007**** ~$2.1 Billion * Free cash only (excludes restricted cash balance of $95 million) ** Operating cash flow is reduced for interest cost *** Total AeroTurbine debt facility is $328 million **** Includes revolving lines of credit, ECA financing and PDP financing 18

19 Liability Management Cost of Debt ($ Million) Total Debt at YearEnd 2,555 2,893 Average Cost of Debt in Fourth Quarter* 7.6% 6.4% Debt / Equity Ratio at YearEnd Based on Book Equity of $950 million 3.4 to to 1 * Interest expense divided by average debt balance, excluding marktomarket on interest rate caps 19

20 Liability Management Hedging Strategy AerCap uses caps to hedge against increases in interest rates Caps have an initial cost but allow for the benefits from lower interest rates Under no circumstances do caps require cash collateral Expected benefit in 2008 from lower interest rates: AerCap average cost of debt for full year 2007 was ~6.7%* Average cost of debt for full year 2008 is expected to be ~5.5% (inclusive of new debt), based on current interest rates. Benefits from lower interest rates in 2008 expected to be ~$35 million, pretax. * Interest expense excludes marktomarket on interest rate caps and cost of ALS refinancing 20

21 Financial Overview Strong Revenue and Earnings Growth (US$MM) Revenues Net Income 1200 $1,177 $ $ $ $391 $ $ $ (1) Notes: (1) Excludes pretax impairment charges of $134.7million in (2) 2006 and 2007 net income adjusted for refinancing charges, mark to market interest rate caps and share based compensation in 2006 and

22 Strong Balance Sheet with Contracted Growth Total Assets As of Dec 31, 2007 $4,690 $9,084 (US$ in millions) Cash and Cash Equivalents Flight Equipment, Net 3,186.3 Notes Receivable, Net Prepayments on Flight Equipment $3,604 $3,061 $3,918 $4,394 Other Assets Total Assets Term Debt Other Liabilities Shareholders Equity Es tim ate d CapEx 2012 Total Liabilities and Shareholders Equity Debt / Equity (x) Balance Sheet Positioned for Future Growth 22

23 Summary Powerful, differentiated integrated business model, extracting value over entire asset life Attractive market with strong travel demand and tight aircraft supply Contracted orders of $4.7Bn creates strong pipeline of growth Experienced management team with proven track record and deep industry and financing experience = Proven earnings and cash flow growth 23