One of the largest aircraft lessors in the world, AerCap, has publicized its full-2020 results and its performance in the past fiscal quarter. Somewhat surprisingly, especially given the past year’s events, the Irish leasing firm managed to post some big figures in terms of lease agreements and sale transactions. Let’s take a look at the company’s achievements.
With over 40% of all commercial aircraft leased, aircraft leasing is huge business – more than most industry-outsiders may think. Usually, when an aircraft order is announced by Airbus or Boeing, most of us only pay attention to the airline making the deal and operating the jets. Of course, behind the scenes, an aircraft leasing firm may, in fact, be the intermediary facilitating the deal. AerCap is just one firm behind many of these big deals.
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AerCap’s transactions for 2020 and the fourth quarter
According to AerCap’s results, the firm achieved the following for 2020:
- Signed financing transactions for approximately $8.3 billion.
- Signed lease agreements for 97 aircraft.
- Purchased 36 new aircraft.
- Executed sale transactions for 46 aircraft.
With leasing agreements for 97 aircraft signed in 2020, the firm managed to lease one aircraft for every four days this year – impressive given the circumstances of the global health crisis.
Indeed, in perhaps the most devastating year for commercial aviation in its entire history, AerCap was still able to sell 46 of its aircraft while at the same time delaying delivery of some orders. And perhaps it was this sales success that gave it the confidence to purchase aircraft as well.
In fact, in the fourth quarter alone, AerCap purchased 18 aircraft, consisting of the following:
- 12 Airbus A320neo family aircraft
- One Boeing 787-9
- Five Embraer E2 Family aircraft
On the other end, the lessor sold the following jets in the last fiscal quarter from its extensive portfolio:
- Two Airbus A320 family aircraft
- Two Boeing 737NGs
- Two Boeing 737 Classics
- Two Boeing 757s
- Three Boeing 767-300ERs
- One Boeing 777-300
AerCap’s size – and why it matters
In a promotional video to investors, President and Chief Commercial Officer Philip Scruggs notes the advantages of AerCap’s scale and informational advantage offers. They are:
- Buying at the right price
- Leasing at the right rate
- Selling at the right time
Indeed, the events of 2020 would amplify the importance of these actions, with the company’s size allowing it to make large purchases for the future, at a time when others may be desperately canceling orders to stabilize their balance sheets.
Another key point mentioned in its investor video is that AerCap buys aircraft at scale, directly from manufacturers – amplifying its purchasing power. This would allow the firm to negotiate far lower prices than those publicly listed. Simultaneously, these large purchases allow plane makers like Airbus and Boeing a safe and continuous backlog of orders.
Re-possessing distressed aircraft
A final note of interest in the company’s video was the mention of working quickly to re-possess distressed aircraft:
“AerCap works faster and more decisively than anyone else in the industry to re-possess and re-market distressed aircraft, ensuring consistent return [to investors].” – Angus Kelly, CEO of AerCap
Again, this has been extremely relevant in 2020. This may perhaps continue to be on the radar in 2021 as many airlines find themselves in financial distress (thus having distressed aircraft). Investopedia defines financial distress as “a condition in which a company or individual cannot generate sufficient revenues or income, making it unable to meet or pay its financial obligations.” Indeed, Allplane’s list of airlines that went bankrupt in 2020 has a handful of AerCap customers.
As vaccines are distributed this year and travel begins to pick-up, AerCap and other leasing firms may be able to ride the wave of recovery to higher levels of success.
What do you think of AerCap’s 2020 performance? Are you surprised? Let us know in the comments!