The world's largest aircraft lessor, AerCap, increased its total revenue by 36% in the second quarter (Q2) of 2022. Total revenue for Q2 was $1.67 billion (€1.62 b), compared to $1.23 billion (€1.19 b) in Q2 2021. During Q2, AerCap executed 184 transactions, including 125 lease agreements, 16 purchases and 43 sales.

For the six months ended June 30 (H1 2022), AerCap's total revenue was $3.46 billion (€3.35 b), while in the first half of last year, it generated $$2.32 billion (€2.25 b), a 46% gain. Reflecting the surging recovery of air traffic and the acquisition of GECAS, lease revenue in H1 2022 was $3.3 billion (€3.2 b) compared to $2 billion (€1.94 b) last year. This was despite lease revenue being reduced by $52 million (€50.4 million) due to lost revenue from aircraft stuck in Russia. AerCap posted an adjusted net profit of $464 million (€450 m) for Q2 and $1 billion (€970 m) for H1 2022.

Narrowbodies are the backbone of AerCap's fleet

AerCap has a portfolio of more than 1,800 aircraft, 900 engines and 300 helicopters. It holds orders for another 460 new airplanes and has total assets of around $70 billion (€68 b). Looking at the owned and on-order fleet, the most popular is the Airbus A320neo family, accounting for 29% of the fleet. Overall, the A320-family aircraft account for 51%, the Boeing B737NG/MAX for 26% and the Boeing B787 is 6%. Other types include Airbus A220, A330, A350, Boeing B757, B767, B777, Embraer E190/195 E2 and E-Jets, ATR 72 and De Havilland DHC8-400.

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In an earnings call yesterday, CEO Aengus Kelly said:

"We fully expect that when international travel to China is permitted to fully reopen, there will be a massive surge in demand, which will further bolster both widebody and narrowbody aircraft demand. We saw this a few months ago when the US removed the COVID entry test requirements."

He added that global passenger traffic in the four main regions [Europe, North America, China and Asia-Pacifc ex-China] had increased to approximately 75,000 daily flights at the beginning of August. AerCap's presentation showed an increase of 11,000 flights a day in the last three months, and relative to 2019 levels, North America is at 82%, Europe at 82%, Asia-Pacific at 73% and China at 74%. Despite the harsh COVID restrictions, daily flights in China have grown from around 4,000 to 11,000 in the last three months.

Twenty-five countries above 2019 passenger levels

Kelly said that Ryanair was a good example, flying 9% more passengers in the second quarter of 2022 versus the second quarter of 2019. He adds, "Many airlines have underestimated the underlying strength of travel demand, having overcorrected on the way down, and are now playing catch-up [and] this again demonstrates how much people want and need to travel. The number of countries that have surpassed 2019 traffic levels has more than doubled since the start of the year to 25. I firmly believe that as borders are fully reopened, we will see the same rebound in international travel that we saw in the domestic markets."

With more than 300 customers spread globally, AerCap has intimate knowledge of where and how their aircraft are used. The lessor believes that there will be more supply chain disruptions for aircraft manufacturers, increasing the demand for leased aircraft. Based on that and the recovery in airline demand, it sees a healthy time ahead.