AerCap Holdings N.V. Peter Wortel, VP Investor Relations. Cowen Conference - Boston, September 3, 2008

Transcription

1 AerCap Holdings N.V. Peter Wortel, VP Investor Relations Cowen Conference - Boston, September 3, 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 Second Quarter 2008 Highlights Net income was $58.2 million in the second quarter 2008, exclusive of non-cash impact relating to mark-to-market of interest rate caps and share-based compensation Earnings per share in the second quarter 2008 were $0.68 excluding the items referenced above Basic rents in second quarter 2008 increased 2% from second quarter 2007, while interest expense excluding mark-to-market and refinancing charges decreased 32% The difference between basic rents and adjusted interest expense (net spread) was $93.1 million in the second quarter 2008, an increase of 24% Total assets were $5.2 billion as of June 30, 2008, up 18% from June 30, 2007 Committed purchases of aviation assets in 2008 are $1.3 billion, of which $933 million closed in first half

4 AerCap Overview 4

5 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 5

6 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 6

7 2008 Passenger Growth by Region 12% 11% 10% 9% 8% Year on Year RPK Growth May % 10.9% 7% 6% 5% 4% 6.0% 5.1% 4.7% 5.5% 3.6% 4.6% 3% 2% 1% 0% May - International (IATA) 0.4% May - US (ATA) May - Europe (AEA) May -Asia (AAPA) May - Latin America (ALTA) YTD - International (IATA) 0.9% YTD - US (ATA) YTD - Europe (AEA) YTD -Asia (AAPA) YTD - Latin America (ALTA) Sources: IATA (some 230 airlines, excludes; domestic traffic and non-members; such as charter operators and LCCs), ATA (12 US major airlines), AEA (32 European members excluding most LCCs and charter airlines) AAPA (17 major Asian airlines excluding Middle East, China, India and LCCs), ALTA (35 member airlines) 7

8 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 declining 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 8

9 Discussion Topics Update on Funding Net Spread Portfolio Analysis Additional Cash Flow Disclosures 2008 Outlook 9

10 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 10

11 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

12 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 12

13 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 13

14 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) 14

15 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

16 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 %

17 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% 17

18 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

19 Aircraft Portfolio Valuation ($ Billion) NBV or Price Paid External Appraisers Difference/ Appraisers Value A320 Family, A330s, & B737NGs (~95% of Portfolio; only ~12% > 8 Years of Age) % B757s, B767s, A300s (~1.5% of Portfolio) % B737 Classics and All Others (~3.5% of Portfolio) % Total Aircraft Assets % Note: - Based on data provided by external appraisers (Ascend, BK Associates, and AISI) - Includes AerCap s currently owned aircraft plus forward orders - Based on information as of March 31, Excluding JV partner s share 19

20 Aircraft Portfolio Valuation Distribution of Aircraft Portfolio Difference in NBV/Price Paid versus Appraiser Values, as a % of Appraiser Values % of Aircraft Portfolio Difference is Greater than 20% Difference is 15 19% Difference is 10 14% Difference is Less than 10% Total 63% 25% 9% 3% 100% * ** * Includes 10 B737NGs, 4 A320 Family, 6 B757s, 2 B767s, 2 MD80s ** Includes 3 B737NGs, 8 A320 Family, 1 B757 20

21 Sales Revenue vs. Proceeds from Sales (Income vs. Cash Flow Statement) ($ Million) Sales Revenue ( from Income Statement) 2Q H Less: Inventory Sales* (34) (68) Add:Cash Received from Prior Period Sales Non-Cash Maintenance Sales Revenue Proceeds from Sales/Disposal of Assets (from Cash Flow Statement) 24 (7) (7) 248 * Reflected in Change in Assets /Liabilities in Cash Flow Statement (Inventories) 21

22 Gain from Sales (Income vs. Cash Flow Statement) ($ Million) Gain from Sales (Income Statement). Sales Revenue less COGS Less: Inventory Sales* Gain on Disposal of Assets (Cash Flow Statement) 2Q (10) 30 1H (20) 53 * Reflected in Change in Assets /Liabilities in Cash Flow Statement (Inventories) 22

23 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% 23