Aercap Holdings N.v. · NYSE:AER
Aercap — Investor Day (May 2024)
117 slides from Aercap's investor day presentation, May 8, 2024
Slide 1: Capital Markets Day 2024
CAPITAL MARKETS DAY 2024 NEW YORK MAY 8, 2024
Slide 2: Forward Looking Statements and Non-GAAP Financial Information
FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL INFORMATION This presentation contains certain statements, estimates and forecasts with respect to future As a result, we cannot assure you that the forward-looking statements included in this presentation performance and events. These statements, es
Slide 3: Introduction
INTRODUCTION JOSEPH MCGINLEY HEAD OF INVESTOR RELATIONS
Slide 4: Agenda
AGENDA 09:00 – 09:05 WELCOME AND INTRODUCTION - JOSEPH MCGINLEY HEAD OF INVESTOR RELATIONS 09:05 – 09:35 STRATEGY - AENGUS KELLY CHIEF EXECUTIVE OFFICER 09:35 – 10:05 COMMERCIAL - PETER ANDERSON CHIEF COMMERCIAL OFFICER 10:05 – 10:25 RISK - ANTON JOINER CHIEF RISK OFFICER 10:25 – 10:50 COFFEE BREAK
Slide 5: Strategy
STRATEGY AENGUS KELLY CHIEF EXECUTIVE OFFICER
Slide 6: We Asked - What's on Your Mind?
WE ASKED - WHAT’S ON YOUR MIND? Clear focus on capital allocation strategy, industry supply & demand dynamics and outlook Market Sales Insurance Pricing Engines Strategy OEMs Unsecured Funding Trends Cycle Outlook Upside Framework Rate Economics Production Rates Balance Sheet Management Share Suppli
Slide 7: Today's Key Messages
TODAY’S KEY MESSAGES Supply and Demand Environment Expected to Remain Favorable for Years AerCap’s Industrial Platform Creates Significant Value Through the Asset’s Life Capital Allocation Strategy Maximizes Shareholder Value Through the Cycle These Factors Combine to Create Consistent ROE and BVPS
Slide 8: Strong Industry
STRONG INDUSTRY © AerCap
Slide 9: Aircraft Supply Issues Will Persist for Many Years
AIRCRAFT SUPPLY ISSUES WILL PERSIST FOR MANY YEARS Manufacturing delays, coupled with increased oversight and engine maturation challenges, continue to delay the delivery of new technology aircraft 2024 Narrowbody Deliveries Likely to Remain Below 2017 2024 Widebody Deliveries Likely to Remain Below
Slide 10: Supply Chain Issues Compounding
SUPPLY CHAIN ISSUES COMPOUNDING Several supply chain issues have resulted in significant delays to both turnaround times for used assets and new deliveries 1 2 MRO capacity was significantly OEMs remain significantly reduced during Covid-19, resulting in behind production schedules MRO substantial b
Slide 11: Engine OEMs Provide Key Brake to Supply
ENGINE OEMS PROVIDE KEY BRAKE TO SUPPLY Engine OEMs need multiple shop visits over 20 years to generate returns, which ensures restraint on new engine supply Lifecycle Revenue Sources for OEMs • Aircraft OEMs generate their revenues from the initial sale, 100% so are incentivized to increase product
Slide 12: Aircraft Demand Continues to Strengthen
AIRCRAFT DEMAND CONTINUES TO STRENGTHEN Widespread aircraft shortages are leading to higher extension rates and higher aircraft sale prices AerCap’s Aircraft Extension Rates Increasing AerCap’s Gain-on-Sale Margin Remains Above Trend 90% 30% 25% 80% 25% 24% 23% 21% 70% 20% 18% 18% 60% 15% 14% 10% 50
Slide 13: Strong Company
STRONG COMPANY © AerCap
Slide 14: Unrivaled Platform Generates Consistent Capital
UNRIVALED PLATFORM GENERATES CONSISTENT CAPITAL Portfolio Management Stable Liability Structure • Disciplined portfolio • Asset / Liability matching management CAPITAL GENERATION Leads to stronger revenues, profitability and cash flows Scale of Execution Strategic Positioning • Deal flow advantages;
Slide 15: History of Strategic Capital Allocation
HISTORY OF STRATEGIC CAPITAL ALLOCATION Dynamic capital allocation policy enables deployment of capital towards its most productive uses DE-LEVERING ORGANIC GROWTH M&A RETURN OF CAPITAL • Strong Balance Sheet • Direct OEM Orders • Counter-cyclical M&A • Share Repurchases • Prudent Leverage & • Off-M
Slide 16: Leverage Discipline Creates Financial Flexibility
DE-LEVERING LEVERAGE DISCIPLINE CREATES FINANCIAL FLEXIBILITY AerCap consistently manages to a prudent leverage range, supporting higher credit ratings Adj. Leverage Ratio (Net Debt / Equity) 4.0x ILFC Acquisition 3.8x 3.6x 3.4x 3.2x Charge related to Ukraine Conflict 3.0x $3.9bn Share Repurchases C
Slide 17: Engine Investment Offers New Optionality
ORGANIC GROWTH ENGINE INVESTMENT OFFERS NEW OPTIONALITY AerCap has invested over $40 billion in organic growth in the last ten years, rejuvenating the fleet AerCap Capex by Asset Investment Case for Engines ($ billion) 8.0 • Strategically important new asset class for AerCap, with investment focused
Slide 18: Long History of Successful M&A
M&A LONG HISTORY OF SUCCESSFUL M&A AerCap has grown by over $62 billion through counter-cyclical M&A transactions at a discount to book value Date Announced Acquiror Target Deal Value ($ bn) • AerCap has grown through four significant acquisitions all at a Jun. 2005 2.8 discount to book value • Thes
Slide 19: Balanced Returns to Shareholders >$8bn
RETURN OF CAPITAL BALANCED RETURNS TO SHAREHOLDERS AerCap generates significant cash flow each year to return to shareholders SHARE REPURCHASES MODEST DIVIDENDS >$8 billion announced since Broadens the investor base 2015, including $500 million announced today Signals confidence in the >$8BN 1.2% du
Slide 20: Strong Outlook
STRONG OUTLOOK © AerCap
Slide 21: Capital Recycling Trade – Highly Accretive
CAPITAL RECYCLING TRADE – HIGHLY ACCRETIVE Robust demand for mid-life and older aircraft continues to support secondary sales at attractive margins, freeing up capital to deploy into share repurchases 1Q 2024 Asset Sales 1Q 2024 Asset Sales and Share Repurchases ($ million) $1,000 2.0x $900 Total Mu
Slide 22: Supply Shortage Creating Arbitrage Opportunities
SUPPLY SHORTAGE CREATING ARBITRAGE OPPORTUNITIES AerCap sells assets to professional buyers above book value and buys shares from the market below book, creating value Average Age of Aircraft Sales Sales Units % by Asset Technology Significant Equity Multiple Arbitrage (Years) 25 2.0x 20 1.8x 14% 1.
Slide 23: Consistent Returns Despite Moves in Interest Rates
CONSISTENT RETURNS DESPITE MOVES IN INTEREST RATES AerCap’s Return on Equity has been remarkably consistent – Covid-19 and the Ukraine Conflict caused it to drop temporarily AerCap Return on Equity Since 2007 30% Global Oil European Debt Ebola / Russian Covid-19 Ukraine Financial Crisis Crisis Crisi
Slide 24: Consistent Outperformance Versus U.S. Treasuries
CONSISTENT OUTPERFORMANCE VERSUS U.S. TREASURIES AerCap’s Return on Equity has beaten 5-year U.S. Treasuries by more than 9% per annum on average since 2007 AerCap Return on Equity Since 2007 14% Global Oil European Debt Ebola / Russian Covid-19 Ukraine Financial Crisis Crisis Crisis Pandemic Confli
Slide 25: Steady Growth in Book Value Per Share
STEADY GROWTH IN BOOK VALUE PER SHARE AerCap’s book value per share has grown by a CAGR of ~20% over the last two years $90 $87.47 $85 $80 $75 $70 $65 $61.11 $60 $55 $50 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 AerCap BVPS See Supplemental Information – Endnotes. © AerCap 25
Slide 26: Today's Key Messages
TODAY’S KEY MESSAGES Supply and Demand Environment Expected to Remain Favorable for Years AerCap’s Industrial Platform Creates Significant Value Through the Asset’s Life Capital Allocation Strategy Maximizes Shareholder Value Through the Cycle These Factors Combine to Create Consistent ROE and BVPS
Slide 27: Commercial
COMMERCIAL PETER ANDERSON CHIEF COMMERCIAL OFFICER
Slide 28: Key Messages
KEY MESSAGES Aircraft Leasing is Driving Global Fleet Growth Platform Synergies Generate Competitive Advantages Portfolio Strategy Focused on In-Demand, New Technology Assets Impact of Higher Rents Underway, Beginning in 2024 © AerCap 28
Slide 29: Aviation Is a Resilient Industry
AVIATION IS A RESILIENT INDUSTRY Global passenger traffic is expected to continue its strong growth trajectory despite recent events Airbus GMF World Passenger Traffic Forecast (Baseline Scenario) 9/11 SARS Oil, Financial & Euro Crises, Brexit / Covid-19 Ukraine Russia & Ebola Trade Wars Conflict GM
Slide 30: Aircraft Leasing Market Continues to Grow
AIRCRAFT LEASING MARKET CONTINUES TO GROW Over the past 5 years, lessors accounted for 75% of global fleet growth Proportion of Global Fleet on Operating Leases 23,630 21,383 +2,247 16,963 14,356 75% 12,446 11,520 of 2018- 9,826 +1,694 2023 growth is 5,245 6,430 ~50% lessor LEASED 3,754 supply 30% 2
Slide 31: Evolution of AerCap – 2000
EVOLUTION OF AERCAP – 2000 Lessor Fleet by Units See Supplemental Information – Endnotes. © AerCap 31
Slide 32: Evolution of AerCap – 2013
EVOLUTION OF AERCAP – 2013 Lessor Fleet by Units See Supplemental Information – Endnotes. © AerCap 32
Slide 33: Evolution of AerCap – 2014
EVOLUTION OF AERCAP – 2014 Lessor Fleet by Units See Supplemental Information – Endnotes. © AerCap 33
Slide 34: Evolution of AerCap – 2020
EVOLUTION OF AERCAP – 2020 Lessor Fleet by Units See Supplemental Information – Endnotes. © AerCap 34
Slide 35: Evolution of AerCap – 2021
EVOLUTION OF AERCAP – 2021 Lessor Fleet by Units See Supplemental Information – Endnotes. © AerCap 35
Slide 36: Evolution of AerCap – 2024
EVOLUTION OF AERCAP – 2024 Lessor Fleet by Units See Supplemental Information – Endnotes. © AerCap 36
Slide 37: The AerCap Advantage
THE AERCAP ADVANTAGE AerCap’s platform is the competitive advantage to achieve superior returns throughout the life-cycle of assets 1st Financing Strong Balance Sheet 7th 2nd Trading & End-of-Life Purchasing Active Trader / Buy at the AerCap Materials Right Time 6th ADVANTAGE 3rd Transitions Specifi
Slide 38: The AerCap Advantage
THE AERCAP ADVANTAGE AerCap’s platform is a key competitive advantage PASSENGER AIRCRAFT CARGO AIRCRAFT © AerCap 38
Slide 39: The AerCap Advantage
THE AERCAP ADVANTAGE AerCap’s platform is a key competitive advantage PASSENGER AIRCRAFT CARGO AIRCRAFT © AerCap 39
Slide 40: The AerCap Advantage
THE AERCAP ADVANTAGE AerCap’s platform is a key competitive advantage PASSENGER AIRCRAFT CARGO AIRCRAFT © AerCap 40
Slide 41: The AerCap Advantage
THE AERCAP ADVANTAGE AerCap’s platform is a key competitive advantage PASSENGER AIRCRAFT CARGO AIRCRAFT © AerCap 41
Slide 42: AerCap Portfolio Transformation – 2014
AERCAP PORTFOLIO TRANSFORMATION – 2014 AerCap’s Transition to New Technology % of Fleet 40% Current Technology 35% New Technology A320 Family 30% 737NGs 25% 20% A330s 15% 777s 10% 787s 5% - - 4 8 12 16 Average Age (Years) See Supplemental Information – Endnotes. © AerCap 42
Slide 43: AerCap Portfolio Transformation – 2020
AERCAP PORTFOLIO TRANSFORMATION – 2020 AerCap’s Transition to New Technology % of Fleet 40% Pre-GECAS Acquisition Current Technology 35% New Technology 30% 787s 25% A320neo Family 20% 737NGs 15% A320 Family 10% A350s 5% A330s 777s E-2s 737 MAXs - - 4 8 12 16 Average Age (Years) See Supplemental Info
Slide 44: AerCap Portfolio Transformation – 2021
AERCAP PORTFOLIO TRANSFORMATION – 2021 AerCap’s Transition to New Technology % of Fleet 40% Post-GECAS Acquisition Current Technology 35% New Technology A320neo Family 30% 25% 20% 787s 737NGs A320 Family 15% 10% A350s 777s 5% 737 MAXs A330s E-2s - - 4 8 12 16 Average Age (Years) See Supplemental Inf
Slide 45: AerCap Portfolio Transformation – 2024
AERCAP PORTFOLIO TRANSFORMATION – 2024 AerCap’s Transition to New Technology % of Fleet 40% Current Technology 35% New Technology A320neo Family 30% 25% 20% 787s 15% A320 Family 10% 737NGs A350s 737 MAXs 5% A330neo 777s E-2s A330s A220s - - 4 8 12 16 Average Age (Years) See Supplemental Information
Slide 46: Fleet Transformation
FLEET TRANSFORMATION We expect that new technology aircraft will comprise ~75% of our fleet by the end of 2024 Continued Fleet Transition into New Technology Aircraft Previous Technology Aircraft GECAS Acquisition 100% 90% CURRENT TECHNOLOGY 80% WIDEBODY AIRCRAFT 70% 60% 50% CURRENT TECHNOLOGY 40% N
Slide 47: Investment in Liquid New Technology Assets
INVESTMENT IN LIQUID NEW TECHNOLOGY ASSETS AerCap’s order book comprises the most in-demand asset types Global Narrowbody Passenger Fleet Global Widebody Passenger Fleet (Units) Operators (Units) Operators A321neo 14% 100+ B787-9 18% 50+ B737-Max8 5% 100+ A350-900 8% 50+ A320neo 20% 100+ B787-8 3% 5
Slide 48: Lease Rates and Demand Increasing
LEASE RATES AND DEMAND INCREASING Driven by strong demand, forward order aircraft are being placed at higher rates A321neo Placements 2019 & 2023 Lease Rent ($) ~20% Increase Over ~4 years 2020 2021 2022 2023 2024 2025 2026 2027 Delivery Year Deals signed in 2019 Deals signed from 2023 See Supplemen
Slide 49: Lease Rates and Demand Increasing
LEASE RATES AND DEMAND INCREASING Driven by strong demand, forward order aircraft are being placed at higher rates B787-9 Placements 2019 & 2023 Lease Rent ($) ~10% Increase Over ~2 years 2023 2024 2025 2026 2027 Delivery Year Deals signed in 2019 Deals signed from 2023 See Supplemental Information
Slide 50: Used Aircraft Placed at Better and Longer Terms
USED AIRCRAFT PLACED AT BETTER AND LONGER TERMS Deals signed since 4Q 2023 were placed at an average term of seven years, versus five years in 2019 Lease Rent and Lease Terms on B737-800 Placements Lease Rent ($) Deals signed from 4Q 2023 Deals signed in 2019 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Slide 51: Strong Rental Recovery Underway
STRONG RENTAL RECOVERY UNDERWAY Deals signed during stronger market conditions are yet to be fully reflected in results Re-leases and New Aircraft Deliveries (Units) 120 Deal Contract Year Strong Market (2023 - present) 100 Recovering Market (2022) Weak Market (2020 - 21) 35 80 47 60 39 40 55 58 41
Slide 52: Risk
RISK ANTON JOINER CHIEF RISK OFFICER
Slide 53: Key Messages
KEY MESSAGES Rigorous Approach to Lease Protections at the Outset Cash Focus During Downturns Helped Navigate Through Crises Experience and Scale Means We Act First Providing Better Outcomes © AerCap 53
Slide 54: What Risk Management Means at AerCap
WHAT RISK MANAGEMENT MEANS AT AERCAP 5 Act Immediately 1 to Address Select the Defaults Right Lessee 4 RISK MANAGEMENT Constant Financial 2 and Technical Execute an Surveillance Appropriate Lease 3 Ensure Punctual Payment © AerCap 54
Slide 55: Improving Credit Quality of the Portfolio
IMPROVING CREDIT QUALITY OF THE PORTFOLIO GECAS transaction improved customer diversification and concentration GECAS Enhanced Customer Diversity GECAS Transaction Reduced Concentration Customer Credit Strength Normalizing 5 100% S&P = BB Overlapping ~BB 90% New Customers Customers 31% 80% 5.5 BB 38
Slide 56: Aircraft Leasing Leads on Cash Collection
AIRCRAFT LEASING LEADS ON CASH COLLECTION AerCap’s days receivables is much lower than other leasing industry peers Trade Receivables / Revenue Aircraft Leasing (Days) 2 DAYS 70 60 50 40 30 20 10 2 - 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 1Q24
Slide 57: Aircraft Leasing Leads on Cash Collection
AIRCRAFT LEASING LEADS ON CASH COLLECTION AerCap’s days receivables is much lower than other leasing industry peers Trade Receivables / Revenue Aircraft Leasing Railcar Leasing Truck Leasing Equipment Leasing (Days) 2 DAYS 23 DAYS 46 DAYS 58 DAYS 70 60 58 50 46 40 30 23 20 10 2 - 3Q14 1Q15 3Q15 1Q16
Slide 58: Risk Management – During a Global Pandemic
RISK MANAGEMENT – DURING A GLOBAL PANDEMIC Experience and decisive action mitigated the impact of the most extreme stress test the industry has ever faced CUSTOMERS SYSTEMATIC CLEAR SCALE AND EMERGED APPROACH STRATEGY EXPERIENCE STRONGER Methodical approach Focused on value Scale provides leverage T
Slide 59: Agility in Action
AGILITY IN ACTION We have the experience to detect early warning signs and the platform to secure aircraft quickly Go First Mounting Evidence Aircraft Recovered New Customer BANKRUPTCY of Distress from India and Secured FILING Deregistered Go First Cebu Pacific 4 AIRCRAFT RED LINES +2 MONTH +3 MONTH
Slide 60: Agility in Action
AGILITY IN ACTION We have the experience to detect early warning signs and the platform to release aircraft quickly Heightened Viva Colombia Consensual Viva Colombia 1st AerCap Surveillance Files for Creditor Aircraft Suspends Aircraft Back in Protection Control Operations Service Secured and Earnin
Slide 61: Repossession Management
REPOSSESSION MANAGEMENT AerCap has successfully repossessed aircraft in many challenging jurisdictions around the world Lithuania Ukraine Poland AerCap has repossessed Denmark Norway >200 Belgium Russia Bulgaria Canada Romania China UK Georgia United States Germany Armenia Myanmar France Afghanistan
Slide 62: Fireside Chat
FIRESIDE CHAT TOM SLATTERY RICHARD GREENER EVP AERCAP ENGINES HEAD OF CARGO PAT SHEEDY JOSEPH MCGINLEY PRESIDENT & CEO, HEAD OF INVESTOR MILESTONE AVIATION RELATIONS MODERATOR
Slide 63: Engines
High Res Engine Photo to be added ENGINES TOM SLATTERY EVP AERCAP ENGINES
Slide 64: AerCap Engines – Investment Case
AERCAP ENGINES – INVESTMENT CASE The global leader in engine leasing Fleet of >1,000 Engines, Built in Partnership with GE and CFM Organic Growth Driver; ~$8 Billion of Commitments Since 2022 Strong Synergies with Pax Business to Consistently Monetize Maintenance Value Plays a Key Role in Supporting
Slide 65: Market Positioning
MARKET POSITIONING AerCap Engines and SES portfolios are predominantly comprised of new technology engines, allowing AerCap to provide tailored fleet solutions to customers >600 >1,000 >400 SPARE ENGINES Engines Engines • Provides a range of engine fleet • Shannon Engine Support “SES” is a solutions
Slide 66: Engine Asset Management
ENGINE ASSET MANAGEMENT Providing efficient engine solutions to customers around the world Operating Engine Structured Short-term Asset Leases Exchanges Products Rentals Management Portfolio optimization AOG response - Lease days / Meeting airlines and via technical expertise terms generally Asset m
Slide 67: Market Positioning
MARKET POSITIONING AerCap Engines and SES portfolios are predominantly comprised of new technology engines, allowing AerCap to provide tailored fleet solutions to customers AerCap Engine Offices Dublin, Shannon, Dubai, Singapore, Miami, Cincinnati Principal Engine Locations Ireland, UK, Germany, Dal
Slide 68: Importance of Managing the Engine Lifecycle
IMPORTANCE OF MANAGING THE ENGINE LIFECYCLE Engine re-investment is similar to the acquisition cost of a narrowbody aircraft Engine Maintenance Spend versus Time ($ million) • Total spend ~$53 million (2024 prices) 60 • Opportunity to avoid ~20% of total spend utilizing AerCap 50 Engines strategies
Slide 69: AerCap Value Proposition
AERCAP VALUE PROPOSITION 2. Re–Market & Transition 1. New Equipment Placement 3. Extend Value Design & Test 1. First to market 2. Transition Advantage 3. Value Extension Global airline and manufacturer connection Price / return advantage • Engine leasing Unique view of market trends / needs Expertis
Slide 70: Cargo
CARGO RICHARD GREENER HEAD OF CARGO
Slide 71: AerCap Cargo – Investment Case
AERCAP CARGO – INVESTMENT CASE Global leader in the air freighter lease market 120 Aircraft Committed to Cargo Portfolio and Programs Complementary Synergies Giving Optionality for Passenger Aircraft Adds More Economic life to an Aircraft with Lower Transition Costs Experienced In Conversion Program
Slide 72: Air Cargo Market Update
AIR CARGO MARKET UPDATE Several factors support the long-term investment in air cargo Long Term Growth Aircraft Replacement E-Commerce Manufacturers Shipping Platforms Direct-to-Consumer to Air Cargo • Air cargo growth expected • Freighter replacement of 4.1% p.a. wave over the next 10 years in all
Slide 73: AerCap Cargo Portfolio Update
AERCAP CARGO PORTFOLIO UPDATE Near term growth will come from three Best-in-Class Cargo Conversion Programs B737-800BCF A321-200F B777-300ERSF • 60 owned aircraft converted • 15 firm orders, 1st converted aircraft • Certification on track for mid-2024 delivered in 2023 • 12 further conversion slots
Slide 74: Milestone
MILESTONE PAT SHEEDY PRESIDENT & CEO, MILESTONE AVIATION
Slide 75: Milestone – Investment Case
MILESTONE – INVESTMENT CASE The global leader in the helicopter market Globally Diversified Portfolio with >300 Helicopters and ~50 Customers Benefitting From Cyclical Upturn in Demand Across Mission Types Experience in Transitioning Assets Between Operators, Regions and Missions OEM Supply Constrai
Slide 76: Helicopter Supply Chain
HELICOPTER SUPPLY CHAIN Milestone provides efficient capital solutions to operators OEMs Lessors Operators End-Users Primarily IG-rated; consisting Mature OEM market Provide efficient financing Operate helicopters on of government with helicopter production solutions to operators contract for end-us
Slide 77: Wide Range of Primary Missions
WIDE RANGE OF PRIMARY MISSIONS OFFSHORE PAX TRANSPORT EMERGENCY MEDICAL SERVICES SEARCH & RESCUE UTILITY / FIRE / DEFENSE © AerCap 77
Slide 78: Finance
FINANCE PETER JUHAS CHIEF FINANCIAL OFFICER
Slide 79: Key Messages
KEY MESSAGES Significant Financial Outperformance Strong Liquidity and Funding Foundation Consistent Cash Flow Creates Financial Flexibility Optimized Capital Allocation and New Dividend Policy Compelling Investment Opportunity © AerCap 79
Slide 80: Financial Performance
FINANCIAL PERFORMANCE © AerCap
Slide 81: Financial Highlights for 2023
FINANCIAL HIGHLIGHTS FOR 2023 ~$ 2.4 ~$ 5.3 $ 10.73 ~22% ~25% BILLION BILLION RECORD RECORD RECORD UNLEVERED BOOK VALUE ADJUSTED NET OPERATING ADJUSTED EARNINGS GAIN-ON-SALE PER SHARE INCOME CASH FLOW PER SHARE MARGIN GROWTH See Supplemental Information – Adjusted Net Income and EPS Reconciliation a
Slide 82: ESG Highlights for 2023
ESG HIGHLIGHTS FOR 2023 AerCap continues to make progress on key environmental sustainability, social responsibility and governance matters ESG RATING AGENCY UPGRADES PROGRESS ON OUR ~75% NEW DIVERSITY, EQUITY, - MSCI & SUSTAINALYTICS TECHNOLOGY TARGET BY 2024 INCLUSION & BELONGING STAKEHOLDER COLLA
Slide 83: Raising Full Year 2024 Guidance
RAISING FULL YEAR 2024 GUIDANCE Full year 2024 adjusted EPS guidance increased to ~$9.20, not including additional 2Q - 4Q 2024 gains on sale 2024 2024 Adjusted Adjusted Earnings Earnings PerPer Share Share Guidance Guidance • Key drivers of outperformance include: ~$9.20 $9.00 ~$0.70 1Q’24 gains •
Slide 84: Liquidity and Funding
LIQUIDITY AND FUNDING © AerCap
Slide 85: Strong Liquidity & Funding Foundation
STRONG LIQUIDITY & FUNDING FOUNDATION $ % ACCESS TO LIQUIDITY DEBT INTEREST LEVERAGE CAPITAL MIX RATE RISK Diverse sources Sources-to- Secured debt-to- Hedging interest 2.40 to 1 of funding uses ratio of 1.7x total assets rate exposure adjusted of ~14% leverage ratio See Supplemental information – C
Slide 86: Diversified Funding Model
DIVERSIFIED FUNDING MODEL AerCap has a diversified funding model and executed a broad array of financing transactions in 2023 ~$8.1B ~$2.8B SECURED BANK / TERM ~$2.5B LOANS / OTHER DEBT CAPITAL MARKET SECURED BANK ISSUANCES TRANSACTIONS ~$3.1B OTHER UNSECURED 2023 DEBT / RCF 2023 SOURCES OF ~$1.6B O
Slide 87: Diversified Funding Footprint
DIVERSIFIED FUNDING FOOTPRINT With 100+ banking relationships, AerCap’s banking group is geographically diversified AMERICAS EMEA ASIA PACIFIC 2023 2023 2023 ~$7.7B ~$8.2B ~$5.2B 28 25 57 LENDERS LENDERS LENDERS See Supplemental information – Endnotes. © AerCap 87
Slide 88: Diversified Funding Footprint
DIVERSIFIED FUNDING FOOTPRINT With 100+ banking relationships, AerCap’s banking group is geographically diversified AMERICAS EMEA ASIA PACIFIC UK Germany Ireland $1.6B $2.3B China Canada $1.6B $0.1B $0.5B Switzerland Japan United States Netherlands $0.5B $6.0B $2.1B $0.4B France South Korea Spain $2
Slide 89: Financial Flexibility
FINANCIAL FLEXIBILITY © AerCap
Slide 90: Best-in-Class Operating Cash Flow
BEST-IN-CLASS OPERATING CASH FLOW AerCap is outperforming other aircraft lessors by a wide margin Last 12 Months Operating Cash Flow / Average Total Assets 10% 9% 8% AerCap 7.5% 7% 6% Other Aircraft Lessors 5% 4% 3% 2% 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 See Supplemental information – Endnotes. © AerCap 9
Slide 91: Proven Financial Flexibility
PROVEN FINANCIAL FLEXIBILITY AerCap’s adjusted leverage ratio has consistently been ~2.5x or less since 4Q 2022 Adj. Leverage Ratio (Net Debt / Equity) Sept 2020: Charge Mar 2022: Charge related related to Covid-19 to Ukraine Conflict 3.1x 2.9x 2.7x Target Adj. Leverage Ratio 2.7x 2.5x 2.3x Mar 2021
Slide 92: Upward Ratings Trajectory
UPWARD RATINGS TRAJECTORY AerCap is currently rated BBB with the 3 main rating agencies and is on positive outlook with Moody’s and S&P A3 A- Baa2 BBB A- BBB Positive Positive Stable Baa1 BBB+ BBB+ FEB. 2023 OCT. 2019 MAR. 2023 Baa2 UPGRADE BBB UPGRADE UPGRADE BBB FEB. 2017 MAR. 2016 JUL. 2016 UPGRA
Slide 93: Capital Allocation
CAPITAL ALLOCATION © AerCap
Slide 94: Effective Capital Allocation
EFFECTIVE CAPITAL ALLOCATION Dynamic capital allocation policy enables deployment of capital towards its most productive uses ORGANIC DE-LEVERING GROWTH RETURN OF M&A CAPITAL STRONG CAPITAL GENERATION PROVIDES FINANICAL FLEXIBILITY AND CAPITAL ALLOCATION OPPORTUNITIES © AerCap 94
Slide 95: AerCap Generates Large Amounts of Capital
AERCAP GENERATES LARGE AMOUNTS OF CAPITAL We generated ~$4.6 billion of equity capital in 2023 and deployed ~$4.3 billion 2023 Capital Generation and Deployment ($ billion) Increase $6.0 Decrease $5.0 1.2 (1.7) $4.0 $3.0 3.4 (2.6) $2.0 4.2 $1.0 1.1 0.8 - Excess Capital at Capital Generation Net Reco
Slide 96: Dividend Considerations: Why Pay a Dividend?
DIVIDEND CONSIDERATIONS WHY PAY A BROADENS POTENTIAL INVESTOR BASE SIGNALS CONFIDENCE IN DURABILITY OF CASH FLOWS DIVIDEND? BRINGS AERCAP MORE IN LINE WITH OTHER LARGE INDUSTRIALS AND FINANCIALS S&P 500 S&P 500 – Industrials Only S&P 500 – Financials Only Non-Dividend Payer Non-Dividend Payer Non-Di
Slide 97: Dividend Sizing
DIVIDEND SIZING Annualized dividend of $1.00 per share is consistent with historical S&P 500 company dividend initiations AerCap Annualized Dividend Average S&P 500 Dividend Initiation ~1.2% ~1.2% $1.00 PER SHARE / $85 SHARE PRICE = DIVIDEND DIVIDEND YIELD YIELD ~$1.8B 2024E ~11% ~19% ~$200 MILLION
Slide 98: Capital Return Strategy
CAPITAL RETURN STRATEGY We Will Continue to Target a 2.7x Adjusted Leverage Ratio Capital Return Strategy Remains Heavily Weighted Towards Share Repurchases We Are Initiating a ~$200 Million Annual Allocation for Dividends and Plan to Grow Dividend Per Share Primarily Through Share Repurchases © Aer
Slide 99: AerCap Investment Case
AERCAP INVESTMENT CASE © AerCap
Slide 100: AerCap: Financial or Industrial
AERCAP: FINANCIAL OR INDUSTRIAL Financials are typically valued on a ROE versus P/B basis Industrials are typically valued on a P/E or free cash flow basis AerCap is undervalued on both of these metrics © AerCap 100
Slide 101: AerCap Is Undervalued…as a Financial
20% 30% - 10% © AerCap RNR EG AER SYF 18% ACGL CINF ARCC BRK/A EWBC FCNCA MKL CNA See Supplemental information – Endnotes. APO MTB BAP AFL CB RF HIG COF JPM L FITB PNC WFC HBAN AMP BAC RGA AFG TROW CFG STT BEN USB BK DFS AIG PFG WRB RJF XP CRBG TRV ALLY PYPL GS PRU MS NTRS C IBKR AXP Return on Marke
Slide 102: …and as an Industrial
20x 90x 30x 40x 50x 60x 80x > 100x - 10x 70x © AerCap UBER SYM AXON VRT GE HEI RRX CMI TDG PWR ROL ACM CTAS See Supplemental information – Endnotes. TRU XYL XPO VRSK CPRT EFX TTEK IR HWM NSC ETN WSO FAST TT ODFL RSG PAYC BAH WM AME IEX FTV WAB NOC NDSN SAIA CLH …AND AS AN INDUSTRIAL EMR FIX ADP BR G
Slide 103: Leader in Capital Deployment
20% 14% 16% 18% 2% - 4% 6% 8% 10% 12% © AerCap RYAN FCNCA ERIE TFC ICE CME BX BRO SQ JKHY OWL TW BAP FDS KKR CBOE See Supplemental information – Endnotes. NDAQ MCO FITB TROW COF FIS RF BRK/A MSCI GPN APO MMC BLK BAC NTRS CG XP SCHW BEN MTB JPM MA SPGI AXP V WTW RJF C CPAY MS GS AON CFG LPLA PYPL WFC
Slide 104: Steady Growth in Book Value Per Share
STEADY GROWTH IN BOOK VALUE PER SHARE AerCap’s book value per share has grown by a CAGR of ~20% over the last two years $90 $87.47 $85 $80 $75 $70 $65 $61.11 $60 $55 $50 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 AerCap BVPS See Supplemental Information – Endnotes. © AerCap 104
Slide 105: Sources of Additional Value
SOURCES OF ADDITIONAL VALUE There are a number of strong tailwinds not included in AerCap’s book value today Book Value Per Share POTENTIAL INSURANCE RECOVERIES ASSET INFLATION GECAS DISCOUNT $87.47 BVPS TODAY © AerCap 105
Slide 106: The AerCap Advantage
THE AERCAP ADVANTAGE AerCap’s platform is the competitive advantage to achieve superior returns throughout the life-cycle of assets 1st Financing Strong Balance Sheet 7th 2nd Trading & End-of-Life Purchasing Active Trader / Buy at the AerCap Materials Right Time 6th ADVANTAGE 3rd Transitions Specifi
Slide 107: Q&A
Q&A © AerCap 107
Slide 108: Appendix
APPENDIX © AerCap 108
Slide 109: Adjusted Net Income and EPS Reconciliation
ADJUSTED NET INCOME AND EPS RECONCILIATION FY 2023 Earnings Per ($ million, except per share amounts) Net Income Share ($) Net Income / Earnings Per Share $3,136 $13.78 • Net Recoveries Related to Ukraine Conflict (1,288) (5.66) Amortization of Maintenance Rights and Lease Premium Assets 495 2.17 Re
Slide 110: Full Year 2024 Adjusted EPS Guidance
FULL YEAR 2024 ADJUSTED EPS GUIDANCE Projected FY 2024 ($ billion, except per share amounts) Net Income / EPS Net Income $1.4 Amortization of Maintenance Rights and Lease Premium Assets Recognized under Purchase Accounting 0.5 Net Recoveries Related to Ukraine Conflict (0.0) Income Tax Expense (0.1)
Slide 111: Capital Structure
CAPITAL STRUCTURE Adjusted Debt/Equity Calculation ($ million) 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 Debt (including fair value adjustments) 31,341 30,828 30,402 30,257 30,682 29,321 29,807 29,813 29,139 27,998 27,717
Slide 112: Capital Structure
CAPITAL STRUCTURE Adjusted Debt/Equity Calculation ($ million) 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Debt (including fair value adjustments) 28,890 28,546 28,388 29,508 30,759 29,020 29,284 29,486 32,761 30,684 31,087 28,742 Adjusted for: Unr
Slide 113: Capital Structure
CAPITAL STRUCTURE Adjusted Debt/Equity Calculation ($ million) 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Debt (including fair value adjustments) 28,553 28,099 27,540 50,205 48,913 47,928 47,350 46,533 46,296 46,256 47,493 46,484 45,724 Ad
Slide 114: Endnotes
ENDNOTES Unless otherwise stated, data as of March 31, 2024. SLIDE 21: Capital Recycling Trade – Highly Accretive SLIDE 9: Aircraft Supply Issues Will Persist for Many Years Owned asset sales only, across aircraft, engines and helicopters. 1. OEM Deliveries: Airbus and Boeing Annual Commercial Aircr
Slide 115: Endnotes
ENDNOTES SLIDES 59 – 60: Agility in Action Unless otherwise stated, data as of March 31, 2024. 1. Go First competitor fleet status per Cirium Fleets Analyzer, as of April 2024. SLIDE 46: Fleet Transformation 2. Airline suspension and bankruptcies per Reuters, as of February 2023 and May 2023. 1. New
Slide 116: Endnotes
ENDNOTES Unless otherwise stated, data as of March 31, 2024. SLIDE 109: Adjusted Net Income and EPS Reconciliation Amortization of maintenance rights and lease premium assets recognized under purchase accounting SLIDES 87 – 88: Diversified Funding Footprint includes $166 million adjustment to basic
Slide 117: Never Stand Still
NEVER STAND STILL PROPERTY OF AERCAP ©2024