AerCap Holdings N.V. Paul Rofe,, Group Treasurer. 12 th. Global Transport Conference, September 15, th UBS

Transcription

1 AerCap Holdings N.V. Paul Rofe,, Group Treasurer 12 th 12 th UBS Global Transport Conference, September 15, 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 forward-looking statements. In some cases, forward-looking 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 forward-looking 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 forward-looking statements. As a result, there can be no assurance that the forward-looking 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 forward-looking 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 forward-looking statements. We do not undertake any obligation to, and will not, update any forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 AerCap Overview 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 22% of H lease revenues Europe 38% of H lease revenues Asia / Pacific 28% of H lease revenues Total Assets $5.2Bn at June 30, 2008 Contracted Orders $5.2Bn Total Assets $10.4Bn Including Purchase Commitments 314Aircraft Latin America 10% of H lease revenues AerCap Locations Africa/ Middle East 2% of H lease revenues 76 Engines 112 Customers in 48 Countries 4

5 What Makes AerCap 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 5

6 High Quality and Well Diversified Portfolio Aircraft Portfolio as of June 30, 2008 Number of Aircraft Owned Owned Portfolio % Net book Value at 30 June, 2008 Managed Portfolio Number of Aircraft Number of Aircraft on Order Number of Aircraft under Purchase Contract and letter of Intent Total Owned, Managed and Ordered Aircraft Airbus A300 Freighter 1 0.8% Airbus A % Airbus A % Airbus A % Airbus A % Airbus A % Boeing 737 NG % Boeing 737 Classic % Boeing % Boeing % Fokker % MD 11 Freighter 1 0.9% MD % MD % % narrowbody Work Horses of industry High share of liquid / remarketable aircraft Average age of owned aircraft fleet 7.5 years 76 engines in portfolio, as of June 30, 2008, incl. 2 on order CFM56 engines, one of the most widely used engines in the commercial aviation industry, represented 84% of our portfolio Total %

7 Customer Diversification Lessee Percentage of Lessee H lease revenue Thai Airways International Public Co., Ltd. 5.3% US Airways 4.0% Indian Airlines Ltd 3.6% My Travel Airways PLC 3.5% Kingfisher Airlines Ltd. 3.5% Wizz Air Ltd. 3.4% SkyBus 3.0% Tombo Capital Corporation. 3.0% British Midland Airways Ltd. 3.0% Air Berlin 2.9% Asiana Airlines 2.7% Gemini Air Cargo Inc. 2.5% Societe Air France 2.3% TAM 2.3% Korean Air Lease & Finance Co., Ltd. 2.3% Thomas Cook Airlines Belgium 2.2% Air Canada 2.2% Other 48.5% Total 100.0% 7

8 Managing Our Aircraft Portfolio New Aircraft Leases (Months) Used Aircraft Leases (Months) * HY HY1 Lease Terms in Months has Increased Significantly on AerCap Leases * Excluding the TUI portfolio the average number of months for HY1 is

9 Aircraft Lessors Offer Attractive Valuations with Stable Contracted Earnings and Strong Cash Flows Lessors are priced as pure aviation plays but operate very differently to airlines Airline valuations influenced by passenger traffic, record high fuel costs and a credit market in crisis Reality for lessors is different: Contracted earnings Sound cash flows Risk mitigants include: Portfolio purchased at significant discount to current market values Portfolio largely consists of favorable and efficient A320s and A330s Individual customer concentrations below 5% of lease revenue (all but one) Leases have good collateral (security deposits and maintenance reserves) OPPORTUNITIES FOR LEASE ORDERS (SALE AND LEASE BACKS) ARE INCREASING AS AIRLINES LOOK TO FREE UP CASH TO COPE WITH THE INDUSTRY DOWNTURN 9

10 Discussion Topics Update on Funding Hedging Net Spread Airline Defaults 2008 Outlook 10

11 Funding Environment Capital Markets suspended, no immediate relief expected ECA Funding is available Commercial Bank Deals are available European Banks are most active in sector at present remaining 2008 capacity? Funding Costs have risen The higher costs are to some extent set off by lower interest rates Advance rates are lower Growing reluctance from banks to offer commitments too far out. All in all a more difficult funding environment But deals are still being done and AerCap is participating 11

12 Funding/Access to Capital Unrestricted Cash Balance at June 30, 2008* Operating Cash Flow for 2Q 2008** $176 Million $86 Million Financing Transactions Completed in Q ALS II 30 new Aircraft Securitisation TUI Portfolio Acquisition Facility A320 Pre-Delivery Payments Debt Facility Engine Acquisition Facility A330 Pre-Delivery Payments Debt Facility Nearly $2 Billion $1.0 Billion $489 Million $269 Million $100 Million $68 Million Available Lines of Credit at June 30, 2008*** ~$3.0 Billion * Free cash only (excludes restricted cash balance of $183.8 million) ** Operating cash flow is reduced for interest cost *** Includes revolving lines of credit, ECA financing, and pre-delivery payment financing 12

13 ALS II Limited $1 Billion ALS II Ltd Securitization provides financing requirements for 30 A320 family aircraft from forward order delivering between 2008 and 2010 Type of aircraft A aircraft Key features of deal include: Issuance of Class A1 and A2 floating rate notes Commitment to fund aircraft upon delivery No recourse to AerCap Group Ratings of A1 / A+ by Moody s and S&P Spread of one month LIBOR plus 185bps Loan to Value 74% No insurance wrap Expected final payment date in 2020 AerCap Group remains owner of E note Number of aircraft A aircraft Year of scheduled delivery from Airbus

14 Capital Requirements and Sources ~$6 Billion of Purchases ( ) Cash Sources: Cash in Bank of ~$200 Million Operating Cash Flows Generated in ~$0.8B ~$1.5B Existing Revolving Lines of Credit ~$1.0B ALS II Securitzation 30 A320s ~$0.5B Bank Financing For TUI Aircraft Portfolio Purchase ~$1.3B ECA Financings in Process 10 A330s & 20 A320s ~$1.0B Sales and Remaining Financing Sale of 7 Slots Completed Likely Financing Sources: -ECAs -Bank Debt -Capital Markets -JOLs -GLLs ~$6 Billion of Capital Cash Needed for Purchases 14

15 Hedging Strategy and Interest Costs Hedging Strategy - Caps Used to Hedge Against Increases in Interest Rates - Caps Have an Initial Cost but Allow for the Benefits from Lower Interest Rates - Caps Generally Do Not Require Any Cash Collateral Lower Interest Costs Expected - AerCap Average Cost of Debt for Full Year 2007 was ~6.7%* - Average Cost of Debt for Full Year 2008 is Expected to be 4.5% or Lower, (Based on Current Interest Rates and Spreads) * Interest expense excludes mark-to-market on interest rate caps and cost of ALS refinancing 15

16 Net Spread (Margin) ($ Millions) 2Q Q 2008 % Change Basic Lease Rents % Less: Interest Expense* (50) (34) (32%) Net Spread (Margin) % Average Lease Assets 3,122 3,460 11% - Basic lease rents on floating rate leases were lower as a result of lower interest rates - Interest expense was also reduced by the same amount, keeping margins intact - Growth of ~11% in lease assets, plus benefit from caps driving ~24% increase in margins *Excludes non-cash impact relating to the mark-to-market of interest rate caps and 2007 refinancing charges 16

17 Net Spread Trends ($ Millions) 2007 Avg. Quarter st Quarter nd Quarter Net Spread (Margin)* Growth in Net Spread Reflective of Growth in Leasing Income; 2008 Avg. Quarter Expected to be ~$95 Million (+23% over 2007) * Net Spread = Basic rents minus interest expense (excluding non-cash charges relating to the mark-to-market of interest rate caps and 2007 refinancing charges) 17

18 Lease Yield, Interest Rates, and Net Spread st Half 2008 Lease Yield (excl. Maintenance) 16.1% 15.3% Interest Cost (% of Lease Asset) 6.1% 4.4% Net Spread (% of Lease Asset) 10.0% 10.9% Benefits from Use of Interest Rate Caps Driving Improvement in Net Spread Margin % Note: - Lease Yield incl. Maintenance is 18.1% in 2007 and 17.4% in 1 st Half Interest Cost as a % of Debt is 6.7% in 2007 and 4.7% in 1 st Half

19 Recent Example of Airline Default (1) Skybus in chapter 11 5 of AerCap A319s were at Skybus Demand for this type of aircraft is good AerCap was able to re-lease aircraft quickly to three different lessees at lease rentals the same (on average) as that received from Skybus AerCap had collected several $ million of security deposits and maintenance reserves from Skybus Immediate repossession of the aircraft was achieved in return for part of the security deposits/maintenance reserves Remaining security deposits and maintenance reserves was enough to offset downtime and transition costs 19

20 Recent Example of Airline Default (2) Zoom had been in default of the lease and we had been in contact to see whether this could be cured. The conclusion was that apart from our outstandings, the outstandings with several airport authorities and those with respect to navigation charges could not be cured and that there was a real and immediate danger of the aircraft being seized by Canadian airport authorities or Eurocontrol (depending on the destination). We therefore decided to terminate the lease in mid-flight from Paris Calgary - Vancouver. Zoom requested to finish their leg to Vancouver, which we refused because this would impair our legal position. After agreeing with Zoom that we would contribute towards the hiring of alternative transportation for passengers to Vancouver Zoom immediately handed possession of the aircraft to Aercap on arrival in Calgary. Seizure by the Calgary airport authority happened after we took physical possession of the aircraft. Because of the lease termination prior to landing in Calgary and the fact that we had taken immediate physical possession a judge decided that Calgary airport had no legal grounds to seize the aircraft. The aircraft is now in our Goodyear Arizona facilities. 20

21 2008 Financial Outlook Purchases of aviation assets in all of 2008 expected to be ~$1.3 billion 2008 net spread from leasing (basic lease rents less interest expense) expected to increase ~23% over 2007 Full year 2008 gains from aircraft sales expected to be comparable with sales revenue now expected to be higher than 2007 due to acceleration of remaining older aircraft sales Gains from aircraft sales in 2 nd half 2008 expected to be ~80% of 1 st half average cost of debt expected to be ~4.5% or lower 2008 tax rate expected to be lower than 2007 (~9-10%) 2008 ROE expected to be ~20% 21