UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
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For the month of November 2019 | Commission File Number 001-33159 |
AERCAP HOLDINGS N.V.
(Translation of Registrant’s Name into English)
AerCap House, 65 St. Stephen’s Green, Dublin D02 YX20, Ireland, +353 1 819 2010
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Other Events
On November 8, 2019, AerCap Holdings N.V. filed its interim financial report for the quarter ended September 30, 2019.
The information contained in this Form 6-K is incorporated by reference into the Company’s Form F-3 Registration Statements File Nos. 333-224192 and 333-234028 and Form S-8 Registration Statements File Nos. 333-180323, 333-154416, 333-165839, 333-194637 and 333-194638, and related Prospectuses, as such Registration Statements and Prospectuses may be amended from time to time.
INDEX
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| TABLE OF DEFINITIONS |
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ACSAL | Acsal Holdco, LLC |
AerCap, we, us or the Company | AerCap Holdings N.V. and its subsidiaries |
AerCap Trust | AerCap Global Aviation Trust |
AerDragon | AerDragon Aviation Partners Limited and Subsidiaries |
AerLift | AerLift Leasing Limited and Subsidiaries |
AICDC | AerCap Ireland Capital Designated Activity Company, a designated activity company with limited liability incorporated under the laws of Ireland |
AIG | American International Group, Inc. |
Airbus | Airbus S.A.S. |
AOCI | Accumulated other comprehensive income (loss) |
Boeing | The Boeing Company |
ECA | Export Credit Agency |
ECAPS | Enhanced Capital Advantaged Preferred Securities |
Embraer | Embraer S.A. |
EOL | End of lease |
EPS | Earnings per share |
Ex-Im | Export-Import Bank of the United States |
FASB | Financial Accounting Standards Board |
GECC | General Electric Capital Corporation |
ILFC | International Lease Finance Corporation |
LIBOR | London Interbank Offered Rates |
MR | Maintenance reserved |
Part-out | Disassembly of an aircraft for the sale of its parts |
PB | Primary beneficiary |
Peregrine | Peregrine Aviation Company and Subsidiaries |
SEC | U.S. Securities and Exchange Commission |
U.S. GAAP | Accounting Principles Generally Accepted in the United States of America |
VIE | Variable interest entity |
PART I FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited) | |
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AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
As of September 30, 2019 and December 31, 2018
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| | | | | | | | | |
| Note | | September 30, 2019 | | December 31, 2018 |
| | | (U.S. Dollars in thousands, except share data) |
Assets | | | | | |
Cash and cash equivalents | 4 | | $ | 1,036,919 |
| | $ | 1,204,018 |
|
Restricted cash | 4 | | 159,694 |
| | 211,017 |
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Trade receivables | | | 54,863 |
| | 40,379 |
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Flight equipment held for operating leases, net | 5 | | 35,231,489 |
| | 35,052,335 |
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Maintenance rights and lease premium, net | 7 | | 917,353 |
| | 1,113,190 |
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Flight equipment held for sale | 8 | | 801,645 |
| | 184,129 |
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Net investment in finance and sales-type leases | 6 | | 1,038,832 |
| | 1,003,286 |
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Prepayments on flight equipment | 23 | | 2,930,971 |
| | 3,024,520 |
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Other intangibles, net | 7 | | 312,688 |
| | 328,570 |
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Deferred income tax assets | 14 | | 152,428 |
| | 138,281 |
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Other assets | 9 | | 912,132 |
| | 909,190 |
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Total Assets | | | $ | 43,549,014 |
| | $ | 43,208,915 |
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| | | | | |
Liabilities and Equity | | | | | |
Accounts payable, accrued expenses and other liabilities | 11 | | $ | 1,046,204 |
| | $ | 1,009,945 |
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Accrued maintenance liability | 12 | | 2,281,224 |
| | 2,237,494 |
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Lessee deposit liability | | | 762,261 |
| | 768,677 |
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Debt | 13 | | 29,283,522 |
| | 29,507,587 |
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Deferred income tax liabilities | 14 | | 935,812 |
| | 804,598 |
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Commitments and contingencies | 23 | | | | |
Total Liabilities | | | 34,309,023 |
| | 34,328,301 |
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| | | | | |
Ordinary share capital, €0.01 par value, 350,000,000 ordinary shares authorized as of September 30, 2019 and December 31, 2018; 146,847,345 and 151,847,345 ordinary shares issued and 134,742,482 and 142,674,664 ordinary shares outstanding (including 2,229,371 and 2,429,442 shares of unvested restricted stock) as of September 30, 2019 and December 31, 2018, respectively | 16, 20 | | 1,810 |
| | 1,866 |
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Additional paid-in capital | | | 2,448,236 |
| | 2,712,417 |
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Treasury shares, at cost (12,104,863 and 9,172,681 ordinary shares as of September 30, 2019 and December 31, 2018, respectively) | 16 | | (591,085 | ) | | (476,085 | ) |
Accumulated other comprehensive income (loss) | | | (108,139 | ) | | (1,824 | ) |
Accumulated retained earnings | | | 7,424,094 |
| | 6,591,674 |
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Total AerCap Holdings N.V. shareholders’ equity | | | 9,174,916 |
| | 8,828,048 |
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Non-controlling interest | | | 65,075 |
| | 52,566 |
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Total Equity | | | 9,239,991 |
| | 8,880,614 |
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Total Liabilities and Equity | | | $ | 43,549,014 |
| | $ | 43,208,915 |
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Supplemental balance sheet information—amounts related to assets and liabilities of consolidated VIEs for which creditors do not have recourse to our general credit: | | | | |
Restricted cash | | | $ | 73,385 |
| | $ | 87,584 |
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Flight equipment held for operating leases and held for sale | | | 2,111,934 |
| | 2,230,634 |
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Other assets | | | 74,667 |
| | 82,995 |
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Accrued maintenance liability | | | $ | 40,154 |
| | $ | 44,073 |
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Debt | | | 1,420,028 |
| | 1,497,144 |
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Other liabilities | | | 79,960 |
| | 89,598 |
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The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Income Statements
For the Three and Nine Months Ended September 30, 2019 and 2018
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| | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| Note | | 2019 | | 2018 | | 2019 | | 2018 |
| | | (U.S. Dollars in thousands, except share and per share data) |
Revenues and other income | | | | | | | | | |
Lease revenue: | | |
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Basic lease rents | | | $ | 1,066,584 |
| | $ | 1,038,521 |
| | $ | 3,218,934 |
| | $ | 3,094,517 |
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Maintenance rents and other receipts | | | 72,600 |
| | 93,939 |
| | 268,506 |
| | 289,218 |
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Net gain on sale of assets | | | 40,519 |
| | 19,992 |
| | 140,217 |
| | 160,517 |
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Other income | 18 | | 14,382 |
| | 14,065 |
| | 52,731 |
| | 36,043 |
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Total Revenues and other income | | | 1,194,085 |
| | 1,166,517 |
| | 3,680,388 |
| | 3,580,295 |
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Expenses | | | | | | | | | |
Depreciation and amortization | 5, 7 | | 415,313 |
| | 412,722 |
| | 1,260,255 |
| | 1,253,169 |
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Asset impairment | 19 | | 31,168 |
| | 12,843 |
| | 54,018 |
| | 28,929 |
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Interest expense | | | 312,311 |
| | 292,082 |
| | 978,931 |
| | 851,396 |
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Leasing expenses | | | 44,080 |
| | 84,814 |
| | 201,045 |
| | 320,591 |
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Selling, general and administrative expenses | 17 | | 64,712 |
| | 63,401 |
| | 196,128 |
| | 234,455 |
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Total Expenses | | | 867,584 |
| | 865,862 |
| | 2,690,377 |
| | 2,688,540 |
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Income before income taxes and income of investments accounted for under the equity method | | | 326,501 |
| | 300,655 |
| | 990,011 |
| | 891,755 |
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Provision for income taxes | 14 | | (42,445 | ) | | (39,089 | ) | | (128,701 | ) | | (115,932 | ) |
Equity in net earnings of investments accounted for under the equity method | | | (12,065 | ) | | 2,711 |
| | (8,028 | ) | | 8,520 |
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Net income | | | $ | 271,991 |
| | $ | 264,277 |
| | $ | 853,282 |
| | $ | 784,343 |
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Net income attributable to non-controlling interest | | | (1,701 | ) | | (926 | ) | | (17,346 | ) | | (1,353 | ) |
Net income attributable to AerCap Holdings N.V. | | | $ | 270,290 |
| | $ | 263,351 |
| | $ | 835,936 |
| | $ | 782,990 |
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Basic earnings per share | 20 | | $ | 2.03 |
| | $ | 1.81 |
| | $ | 6.16 |
| | $ | 5.36 |
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Diluted earnings per share | 20 | | $ | 2.01 |
| | $ | 1.79 |
| | $ | 6.10 |
| | $ | 5.21 |
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| | | | | | | | | |
Weighted average shares outstanding - basic | | | 133,182,744 |
| | 145,669,773 |
| | 135,732,923 |
| | 146,040,042 |
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Weighted average shares outstanding - diluted | | | 134,175,597 |
| | 147,123,818 |
| | 136,990,028 |
| | 150,231,051 |
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The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30, 2019 and 2018
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| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
| (U.S. Dollars in thousands) |
Net income | $ | 271,991 |
| | $ | 264,277 |
| | $ | 853,282 |
| | $ | 784,343 |
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Other comprehensive income (loss): | | | | | | | |
Net change in fair value of derivatives (Note 10), net of tax of $1,748, $(1,404), $15,188 and $(5,449), respectively | (12,239 | ) | | 9,830 |
| | (106,315 | ) | | 38,141 |
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Total other comprehensive income (loss) | (12,239 | ) | | 9,830 |
| | (106,315 | ) | | 38,141 |
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Comprehensive income | 259,752 |
| | 274,107 |
| | 746,967 |
| | 822,484 |
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Comprehensive income attributable to non-controlling interest | (1,701 | ) | | (926 | ) | | (17,346 | ) | | (1,353 | ) |
Total comprehensive income attributable to AerCap Holdings N.V. | $ | 258,051 |
| | $ | 273,181 |
| | $ | 729,621 |
| | $ | 821,131 |
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The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2019 and 2018
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| Nine Months Ended September 30, |
| 2019 | | 2018 |
| (U.S. Dollars in thousands) |
Net income | $ | 853,282 |
| | $ | 784,343 |
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Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 1,260,255 |
| | 1,253,169 |
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Asset impairment | 54,018 |
| | 28,929 |
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Amortization of debt issuance costs, debt discount, debt premium and lease premium | 61,297 |
| | 59,631 |
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Amortization of fair value adjustments on debt | (62,361 | ) | | (115,549 | ) |
Maintenance rights write-off (a) | 174,544 |
| | 234,964 |
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Maintenance liability release to income | (143,316 | ) | | (177,264 | ) |
Net gain on sale of assets | (140,217 | ) | | (160,517 | ) |
Deferred income taxes | 131,708 |
| | 117,716 |
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Collections of finance and sales-type leases | 72,775 |
| | — |
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Other | 134,416 |
| | 88,593 |
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Changes in operating assets and liabilities: | | | |
Trade receivables | (15,424 | ) | | (47,430 | ) |
Other assets | (7,053 | ) | | (11,206 | ) |
Accounts payable, accrued expenses and other liabilities | (36,561 | ) | | 6,555 |
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Net cash provided by operating activities | 2,337,363 |
| | 2,061,934 |
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Purchase of flight equipment | (2,396,722 | ) | | (2,200,397 | ) |
Proceeds from sale or disposal of assets | 1,171,886 |
| | 1,338,776 |
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Prepayments on flight equipment | (1,015,332 | ) | | (1,505,490 | ) |
Collections of finance and sales-type leases | — |
| | 73,617 |
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Other | (17 | ) | | (21,359 | ) |
Net cash used in investing activities | (2,240,185 | ) | | (2,314,853 | ) |
Issuance of debt | 5,339,455 |
| | 4,069,555 |
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Repayment of debt | (5,523,401 | ) | | (3,981,988 | ) |
Debt issuance costs paid, net of debt premium received | (18,524 | ) | | (52,734 | ) |
Maintenance payments received | 564,374 |
| | 567,511 |
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Maintenance payments returned | (249,382 | ) | | (364,319 | ) |
Security deposits received | 199,091 |
| | 141,114 |
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Security deposits returned | (194,841 | ) | | (144,795 | ) |
Dividend paid to non-controlling interest holders and others | (4,837 | ) | | (2,700 | ) |
Repurchase of shares and tax withholdings on share-based compensation | (425,609 | ) | | (597,047 | ) |
Net cash used in financing activities | (313,674 | ) | | (365,403 | ) |
Net decrease in cash, cash equivalents and restricted cash | (216,496 | ) | | (618,322 | ) |
Effect of exchange rate changes | (1,926 | ) | | 2,966 |
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Cash, cash equivalents and restricted cash at beginning of period | 1,415,035 |
| | 2,024,125 |
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Cash, cash equivalents and restricted cash at end of period | $ | 1,196,613 |
| | $ | 1,408,769 |
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The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30, 2019 and 2018
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| Nine Months Ended September 30, |
| 2019 | | 2018 |
| (U.S. Dollars in thousands) |
Supplemental cash flow information: | | | |
Interest paid, net of amounts capitalized | $ | 971,055 |
| | $ | 893,258 |
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Income taxes paid, net | 303 |
| | 1,289 |
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(a) Maintenance rights write-off consisted of the following: | | | |
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EOL and MR contract maintenance rights expense | $ | 51,431 |
| | $ | 122,130 |
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MR contract maintenance rights write-off due to maintenance liability release | 11,338 |
| | 19,546 |
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EOL contract maintenance rights write-off due to cash receipt | 111,775 |
| | 93,288 |
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Maintenance rights write-off | $ | 174,544 |
| | $ | 234,964 |
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The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30, 2019 and 2018
Non-Cash Investing and Financing Activities
Nine Months Ended September 30, 2019:
Flight equipment held for operating leases in the amount of $114.6 million was reclassified to net investment in finance and sales-type leases.
Flight equipment held for operating leases in the amount of $1.6 billion was reclassified to flight equipment held for sale.
Accrued maintenance liability in the amount of $141.5 million was settled with buyers upon sale or disposal of assets.
Nine Months Ended September 30, 2018:
Flight equipment held for operating leases in the amount of $76.9 million was reclassified to net investment in finance and sales-type leases.
Flight equipment held for operating leases in the amount of $895.6 million, net, was reclassified to flight equipment held for sale.
Flight equipment held for operating leases in the amount of $38.4 million, net, was reclassified to inventory, which is included in other assets.
Accrued maintenance liability in the amount of $204.8 million was settled with buyers upon sale or disposal of assets.
The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity
For the Three Months Ended September 30, 2019 and 2018
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of ordinary shares issued | | Ordinary share capital | | Additional
paid-in
capital | | Treasury
shares | | Accumulated other comprehensive income (loss) | | Accumulated retained earnings | | AerCap Holdings N.V. shareholders’ equity | | Non-controlling interest | | Total equity |
| (U.S. Dollars in thousands, except share data) |
Balance as of June 30, 2019 | 146,847,345 |
| | $ | 1,810 |
| | $ | 2,444,458 |
| | $ | (494,545 | ) | | $ | (95,900 | ) | | $ | 7,157,186 |
| | $ | 9,013,009 |
| | $ | 65,166 |
| | $ | 9,078,175 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,792 | ) | | (1,792 | ) |
Repurchase of shares | — |
| | — |
| | — |
| | (103,904 | ) | | — |
| | — |
| | (103,904 | ) | | — |
| | (103,904 | ) |
Share cancellation | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Ordinary shares issued, net of tax withholdings | — |
| | — |
| | (11,923 | ) | | 7,364 |
| | — |
| | (3,382 | ) | | (7,941 | ) | | — |
| | (7,941 | ) |
Share-based compensation | — |
| | — |
| | 15,701 |
| | — |
| | — |
| | — |
| | 15,701 |
| | — |
| | 15,701 |
|
Total comprehensive income (loss) | — |
| | — |
| | — |
| | — |
| | (12,239 | ) | | 270,290 |
| | 258,051 |
| | 1,701 |
| | 259,752 |
|
Balance as of September 30, 2019 | 146,847,345 |
| | $ | 1,810 |
| | $ | 2,448,236 |
| | $ | (591,085 | ) | | $ | (108,139 | ) | | $ | 7,424,094 |
| | $ | 9,174,916 |
| | $ | 65,075 |
| | $ | 9,239,991 |
|
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of ordinary shares issued | | Ordinary share capital | | Additional
paid-in
capital | | Treasury
shares | | Accumulated other comprehensive income (loss) | | Accumulated retained earnings | | AerCap Holdings N.V. shareholders’ equity | | Non-controlling interest | | Total equity |
| (U.S. Dollars in thousands, except share data) |
Balance as of June 30, 2018 | 156,847,345 |
| | $ | 1,923 |
| | $ | 2,963,443 |
| | $ | (434,457 | ) | | $ | 42,585 |
| | $ | 6,095,973 |
| | $ | 8,669,467 |
| | $ | 54,349 |
| | $ | 8,723,816 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,535 | ) | | (1,535 | ) |
Repurchase of shares | — |
| | — |
| | — |
| | (86,656 | ) | | — |
| | — |
| | (86,656 | ) | | — |
| | (86,656 | ) |
Share cancellation | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Ordinary shares issued, net of tax withholdings | — |
| | — |
| | (4,463 | ) | | 2,921 |
| | — |
| | 357 |
| | (1,185 | ) | | — |
| | (1,185 | ) |
Share-based compensation | — |
| | — |
| | 15,045 |
| | — |
| | — |
| | — |
| | 15,045 |
| | — |
| | 15,045 |
|
Total comprehensive income (loss) | — |
| | — |
| | — |
| | — |
| | 9,830 |
| | 263,351 |
| | 273,181 |
| | 926 |
| | 274,107 |
|
Balance as of September 30, 2018 | 156,847,345 |
| | $ | 1,923 |
| | $ | 2,974,025 |
| | $ | (518,192 | ) | | $ | 52,415 |
| | $ | 6,359,681 |
| | $ | 8,869,852 |
| | $ | 53,740 |
| | $ | 8,923,592 |
|
The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity (Continued)
For the Nine Months Ended September 30, 2019 and 2018
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of ordinary shares issued | | Ordinary share capital | | Additional
paid-in
capital | | Treasury
shares | | Accumulated other comprehensive income (loss) | | Accumulated retained earnings | | AerCap Holdings N.V. shareholders’ equity | | Non-controlling interest | | Total equity |
| (U.S. Dollars in thousands, except share data) |
Balance as of December 31, 2018 | 151,847,345 |
| | $ | 1,866 |
| | $ | 2,712,417 |
| | $ | (476,085 | ) | | $ | (1,824 | ) | | $ | 6,591,674 |
| | $ | 8,828,048 |
| | $ | 52,566 |
| | $ | 8,880,614 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (4,837 | ) | | (4,837 | ) |
Repurchase of shares | — |
| | — |
| | — |
| | (410,238 | ) | | — |
| | — |
| | (410,238 | ) | | — |
| | (410,238 | ) |
Share cancellation | (5,000,000 | ) | | (56 | ) | | (262,504 | ) | | 262,560 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Ordinary shares issued, net of tax withholdings | — |
| | — |
| | (53,406 | ) | | 32,678 |
| | — |
| | (3,516 | ) | | (24,244 | ) | | — |
| | (24,244 | ) |
Share-based compensation | — |
| | — |
| | 51,729 |
| | — |
| | — |
| | — |
| | 51,729 |
| | — |
| | 51,729 |
|
Total comprehensive income (loss) | — |
| | — |
| | — |
| | — |
| | (106,315 | ) | | 835,936 |
| | 729,621 |
| | 17,346 |
| | 746,967 |
|
Balance as of September 30, 2019 | 146,847,345 |
| | $ | 1,810 |
| | $ | 2,448,236 |
| | $ | (591,085 | ) | | $ | (108,139 | ) | | $ | 7,424,094 |
| | $ | 9,174,916 |
| | $ | 65,075 |
| | $ | 9,239,991 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of ordinary shares issued | | Ordinary share capital | | Additional
paid-in
capital | | Treasury
shares | | Accumulated other comprehensive income (loss) | | Accumulated retained earnings | | AerCap Holdings N.V. shareholders’ equity | | Non-controlling interest | | Total equity |
| (U.S. Dollars in thousands, except share data) |
Balance as of December 31, 2017 | 167,847,345 |
| | $ | 2,058 |
| | $ | 3,714,563 |
| | $ | (731,442 | ) | | $ | 14,274 |
| | $ | 5,580,257 |
| | $ | 8,579,710 |
| | $ | 59,104 |
| | $ | 8,638,814 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (6,717 | ) | | (6,717 | ) |
Repurchase of shares | — |
| | — |
| | — |
| | (492,085 | ) | | — |
| | — |
| | (492,085 | ) | | — |
| | (492,085 | ) |
Share cancellation | (11,000,000 | ) | | (135 | ) | | (541,421 | ) | | 541,556 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Ordinary shares issued, net of tax withholdings | — |
| | — |
| | (276,183 | ) | | 163,779 |
| | — |
| | (4,807 | ) | | (117,211 | ) | | — |
| | (117,211 | ) |
Share-based compensation | — |
| | — |
| | 77,066 |
| | — |
| | — |
| | — |
| | 77,066 |
| | — |
| | 77,066 |
|
Cumulative effect due to adoption of new accounting standard | — |
| | — |
| | — |
| | — |
| | — |
| | 1,241 |
| | 1,241 |
| | — |
| | 1,241 |
|
Total comprehensive income (loss) | — |
| | — |
| | — |
| | — |
| | 38,141 |
| | 782,990 |
| | 821,131 |
| | 1,353 |
| | 822,484 |
|
Balance as of September 30, 2018 | 156,847,345 |
| | $ | 1,923 |
| | $ | 2,974,025 |
| | $ | (518,192 | ) | | $ | 52,415 |
| | $ | 6,359,681 |
| | $ | 8,869,852 |
| | $ | 53,740 |
| | $ | 8,923,592 |
|
The accompanying notes are an integral part of these Unaudited Financial Statements.
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
1. General
The Company
We are the global leader in aircraft leasing with 1,360 aircraft owned, managed or on order, and total assets of $43.5 billion as of September 30, 2019. Our ordinary shares are listed on the New York Stock Exchange under the ticker symbol AER. Our headquarters is located in Dublin, and we have offices in Shannon, Los Angeles, Singapore, Amsterdam, Shanghai and Abu Dhabi. We also have representative offices at the world’s largest aircraft manufacturers, Boeing in Seattle and Airbus in Toulouse.
The Condensed Consolidated Financial Statements presented herein include the accounts of AerCap Holdings N.V. and its subsidiaries. AerCap Holdings N.V. was incorporated in the Netherlands as a public limited liability company (“naamloze vennootschap” or “N.V.”) on July 10, 2006.
2. Basis of presentation
General
Our Condensed Consolidated Financial Statements are presented in accordance with U.S. GAAP.
We consolidate all companies in which we have direct and indirect legal or effective control and all VIEs for which we are deemed the PB under Accounting Standards Codification (“ASC”) 810. All intercompany balances and transactions with consolidated subsidiaries are eliminated. The results of consolidated entities are included from the effective date of control or, in the case of VIEs, from the date that we are or become the PB. The results of subsidiaries sold or otherwise deconsolidated are excluded from the date that we cease to control the subsidiary or, in the case of VIEs, when we cease to be the PB.
Unconsolidated investments where we have significant influence are reported using the equity method of accounting.
Our Condensed Consolidated Financial Statements are stated in U.S. dollars, which is our functional currency.
Our interim financial statements have been prepared pursuant to the rules of the SEC and U.S. GAAP for interim financial reporting, and reflect all normally recurring adjustments that are necessary to fairly state the results for the interim periods presented. Certain information and footnote disclosures required by U.S. GAAP for complete annual financial statements have been omitted and, therefore, our interim financial statements should be read in conjunction with our Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on March 8, 2019. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of those for a full fiscal year.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Use of estimates
The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The use of estimates is or could be a significant factor affecting the reported carrying values of flight equipment, intangibles, investments, trade and notes receivables, deferred income tax assets and accruals and reserves. Actual results may differ from our estimates under different conditions, sometimes materially.
Reportable segments
We manage our business and analyze and report our results of operations on the basis of one business segment: leasing, financing, sales and management of commercial aircraft and engines.
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
3. Summary of significant accounting policies
Our significant accounting policies are described in our Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on March 8, 2019.
Recent accounting standards adopted during 2019:
Lease accounting
In February 2016, the FASB issued an accounting standard, ASC 842, Leases, that requires lessees to recognize lease-related assets and liabilities on the balance sheet. In certain circumstances, the lessee is required to remeasure the lease payments. Qualitative and quantitative disclosures, including significant judgments made by management, are required to provide insight into the extent of revenue and expense recognized and expected to be recognized from existing contracts.
We adopted the new standard on its required effective date of January 1, 2019 using the optional transition method provided under Accounting Standards Update 2018-11, Targeted Improvements. Under this optional transition method, we applied the new lease standard at the effective date and will continue to report prior comparative periods in accordance with ASC 840, Leases. We have elected the package of practical expedients, which permits us to not reassess lease identification, lease classification or initial direct costs. Upon adoption, we recognized operating lease-related assets and liabilities, where we are the lessee, of $58 million. In accordance with ASC 842, commencing with the three months ended March 31, 2019, we classified collections of finance and sales-type leases as part of operating activity cash flows. In periods prior to the adoption of ASC 842, these finance and sales-type leases cash flows are classified as part of investing activity cash flows.
As a lessor, we lease most of our aircraft under operating leases. Under the new lease standard, the accounting for leases as a lessor is similar to the previous standard (refer to our Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on March 8, 2019).
As a lessee, we lease office space in several locations globally. In accordance with ASC 842, Leases, we determine if an arrangement is a lease at its inception. For leases with terms greater than 12 months, operating lease right-of-use (“ROU”) assets and liabilities are included in other assets (Note 9) and other liabilities (Note 11), respectively, in our Condensed Consolidated Balance Sheets, and finance leases are included in flight equipment held for operating leases (Note 5) and debt (Note 13).
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our contractual obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date and are calculated based on the present value of lease payments over the lease term. To determine the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date.
Our assumed lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Future application of accounting standards:
Allowance for credit losses
In June 2016, the FASB issued an accounting standard that requires entities to estimate lifetime expected credit losses for most financial assets measured at amortized cost and certain other instruments, including loan and other receivables, net investments in leases and off-balance sheet credit exposures. The standard also requires additional disclosures, including how the entity develops its allowance for credit losses for financial assets measured at amortized cost and disaggregated information on the credit quality of net investments in leases measured at amortized cost by year of the asset’s origination for up to five annual periods. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption will be permitted in any interim or annual period beginning after December 15, 2018. The new standard must be adopted using the modified retrospective transition approach. We will adopt the standard on its required effective date of January 1, 2020. We continue to evaluate the effect the adoption of the standard will have on our Condensed Consolidated Balance Sheets and Condensed Consolidated Income Statements. Based on the analysis performed to date we currently do not expect a significant impact when we adopt this new standard.
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
4. Restricted cash
Our restricted cash balance was $159.7 million and $211.0 million as of September 30, 2019 and December 31, 2018, respectively, and was primarily related to our ECA financings and Ex-Im financings, our AerFunding revolving credit facility and other debt. See Note 13—Debt.
The following is a reconciliation of cash, cash equivalents and restricted cash as of September 30, 2019, December 31, 2018 and September 30, 2018:
|
| | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 | | September 30, 2018 |
Cash and cash equivalents | $ | 1,036,919 |
| | $ | 1,204,018 |
| | $ | 1,175,969 |
|
Restricted cash | 159,694 |
| | 211,017 |
| | 232,800 |
|
Total cash, cash equivalents and restricted cash | $ | 1,196,613 |
| | $ | 1,415,035 |
| | $ | 1,408,769 |
|
5. Flight equipment held for operating leases, net
Movements in flight equipment held for operating leases during the nine months ended September 30, 2019 and 2018 were as follows:
|
| | | | | | | |
| Nine Months Ended September 30, |
| 2019 | | 2018 |
Net book value at beginning of period | $ | 35,052,335 |
| | $ | 32,396,827 |
|
Additions | 3,369,748 |
| | 3,391,450 |
|
Depreciation | (1,240,975 | ) | | (1,230,211 | ) |
Disposals and transfers to held for sale | (1,781,765 | ) | | (1,230,677 | ) |
Transfers to net investment in finance and sales-type leases/inventory | (114,602 | ) | | (115,330 | ) |
Impairment (Note 19) | (53,252 | ) | | (25,254 | ) |
Net book value at end of period | $ | 35,231,489 |
| | $ | 33,186,805 |
|
| | | |
Accumulated depreciation as of September 30, 2019 and 2018 | $ | (7,242,465 | ) | | $ | (6,576,230 | ) |
Our current operating lease agreements expire over the next 15 years. The contracted minimum future lease payments receivable from lessees for flight equipment on non-cancelable operating leases for our owned aircraft and engines as of September 30, 2019 were as follows:
|
| | | |
| Contracted minimum future lease payments receivable |
2019 - remaining | $ | 1,055,144 |
|
2020 | 4,035,412 |
|
2021 | 3,773,162 |
|
2022 | 3,511,939 |
|
2023 | 3,238,105 |
|
Thereafter | 12,976,025 |
|
| $ | 28,589,787 |
|
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
6. Net investment in finance and sales-type leases
Components of net investment in finance and sales-type leases as of September 30, 2019 and December 31, 2018 were as follows:
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Future minimum lease payments to be received | $ | 752,468 |
| | $ | 792,265 |
|
Estimated residual values of leased flight equipment | 583,519 |
| | 528,916 |
|
Less: Unearned income | (297,155 | ) | | (317,895 | ) |
| $ | 1,038,832 |
| | $ | 1,003,286 |
|
As of September 30, 2019, the cash flows receivable, including the estimated residual values at lease termination, on finance and sales-type leases were as follows:
|
| | | |
| Cash flows receivable |
2019 - remaining | $ | 39,433 |
|
2020 | 156,885 |
|
2021 | 139,752 |
|
2022 | 208,050 |
|
2023 | 135,136 |
|
Thereafter | 656,731 |
|
Undiscounted cash flows receivable | $ | 1,335,987 |
|
Less: Unearned income | (297,155 | ) |
| $ | 1,038,832 |
|
During the three months ended September 30, 2019 and 2018, we recognized interest income from net investment in finance and sales-type leases of $15.3 million and $16.7 million, respectively, included in basic lease rents. During the nine months ended September 30, 2019 and 2018, we recognized interest income from net investment in finance and sales-type leases of $46.5 million and $49.9 million, respectively, included in basic lease rents.
7. Intangibles
Maintenance rights and lease premium, net
Maintenance rights and lease premium, net consisted of the following as of September 30, 2019 and December 31, 2018:
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Maintenance rights | $ | 899,931 |
| | $ | 1,088,246 |
|
Lease premium, net | 17,422 |
| | 24,944 |
|
| $ | 917,353 |
| | $ | 1,113,190 |
|
Movements in maintenance rights during the nine months ended September 30, 2019 and 2018 were as follows:
|
| | | | | | | |
| Nine Months Ended September 30, |
| 2019 | | 2018 |
Maintenance rights at beginning of period | $ | 1,088,246 |
| | $ | 1,464,599 |
|
EOL and MR contract maintenance rights expense | (51,431 | ) | | (122,130 | ) |
MR contract maintenance rights write-off due to maintenance liability release | (11,338 | ) | | (19,546 | ) |
EOL contract maintenance rights write-off due to cash receipt | (111,775 | ) | | (93,288 | ) |
EOL and MR contract maintenance rights write-off due to sale of aircraft | (13,771 | ) | | (64,574 | ) |
Maintenance rights at end of period | $ | 899,931 |
| | $ | 1,165,061 |
|
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
7. Intangibles (Continued)
The following tables present details of lease premium and related accumulated amortization as of September 30, 2019 and December 31, 2018:
|
| | | | | | | | | | | |
| September 30, 2019 |
| Gross carrying amount | | Accumulated
amortization | | Net carrying amount |
Lease premium | $ | 67,606 |
| | $ | (50,184 | ) | | $ | 17,422 |
|
| | | | | |
| December 31, 2018 |
| Gross carrying amount | | Accumulated
amortization | | Net carrying amount |
Lease premium | $ | 73,300 |
| | $ | (48,356 | ) | | $ | 24,944 |
|
Lease premium amounts that are fully amortized are removed from the gross carrying amount and accumulated amortization columns in the tables above.
During the three months ended September 30, 2019 and 2018, we recorded lease premium amortization expense of $2.3 million and $2.6 million, respectively. During the nine months ended September 30, 2019 and 2018, we recorded lease premium amortization expense of $7.5 million and $8.0 million, respectively.
Other intangibles
Other intangibles consisted of the following as of September 30, 2019 and December 31, 2018:
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Goodwill | $ | 58,094 |
| | $ | 58,094 |
|
Customer relationships, net | 246,059 |
| | 261,941 |
|
Contractual vendor intangible assets | 8,535 |
| | 8,535 |
|
| $ | 312,688 |
| | $ | 328,570 |
|
The following tables present details of customer relationships and related accumulated amortization as of September 30, 2019 and December 31, 2018:
|
| | | | | | | | | | | |
| September 30, 2019 |
| Gross carrying amount | | Accumulated
amortization | | Net carrying amount |
Customer relationships | $ | 360,000 |
| | $ | (113,941 | ) | | $ | 246,059 |
|
| | | | | |
| December 31, 2018 |
| Gross carrying amount | | Accumulated
amortization | | Net carrying amount |
Customer relationships | $ | 360,000 |
| | $ | (98,059 | ) | | $ | 261,941 |
|
During the three months ended September 30, 2019 and 2018, we recorded amortization expense for customer relationships of $5.3 million. During the nine months ended September 30, 2019 and 2018, we recorded amortization expense for customer relationships of $15.9 million.
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
8. Flight equipment held for sale
Generally, an aircraft is classified as held for sale when the sale is probable, the aircraft is available for sale in its present condition, and the aircraft is expected to be sold within one year. Aircraft are reclassified from flight equipment held for operating leases to flight equipment held for sale at the lower of the aircraft carrying value or fair value, less costs to sell. Depreciation is no longer recognized for aircraft classified as held for sale.
As of September 30, 2019, 27 aircraft with a total net book value of $801.6 million met the held for sale criteria and were classified as flight equipment held for sale in our Condensed Consolidated Balance Sheet. Aggregate maintenance and security deposit amounts received from the lessees of approximately $185 million will be assumed by the buyers of these aircraft upon consummation of the individual sale transactions.
As of December 31, 2018, seven aircraft with a total net book value of $184.1 million met the held for sale criteria and were classified as flight equipment held for sale in our Consolidated Balance Sheet. During the first quarter of 2019, the sale of six of those aircraft closed and the sale of the remaining aircraft closed during the third quarter of 2019.
9. Other assets
Other assets consisted of the following as of September 30, 2019 and December 31, 2018:
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Inventory | $ | 6,431 |
| | $ | 30,971 |
|
Debt issuance costs | 23,321 |
| | 36,814 |
|
Lease incentives | 234,951 |
| | 251,961 |
|
Other receivables | 275,498 |
| | 220,289 |
|
Investments | 123,656 |
| | 132,113 |
|
Notes receivables | 85,090 |
| | 58,994 |
|
Derivative assets (Note 10) | 9,574 |
| | 69,105 |
|
Operating lease ROU assets (Note 15) | 45,257 |
| | — |
|
Other tangible fixed assets | 27,070 |
| | 29,151 |
|
Straight-line rents, prepaid expenses and other | 81,284 |
| | 79,792 |
|
| $ | 912,132 |
| | $ | 909,190 |
|
10. Derivative financial instruments
We have entered into interest rate derivatives to hedge the current and future interest rate payments on our variable rate debt. These derivative financial instruments can include interest rate swaps, caps, floors, options and forward contracts.
As of September 30, 2019, we had interest rate caps and swaps outstanding, with underlying variable benchmark interest rates ranging from one to six-month U.S. dollar LIBOR.
Some of our agreements with derivative counterparties require a two-way cash collateralization of derivative fair values. As of September 30, 2019 and December 31, 2018, we had cash collateral of $0.6 million and $5.5 million, respectively, from various counterparties and the obligation to return such collateral was recorded in accounts payable, accrued expenses and other liabilities. We had not advanced any cash collateral to counterparties as of September 30, 2019 or December 31, 2018.
The counterparties to our interest rate derivatives are primarily major international financial institutions. We continually monitor our positions and the credit ratings of the counterparties involved and limit the amount of credit exposure to any one party. We could be exposed to potential losses due to the credit risk of non-performance by these counterparties. We have not experienced any material losses to date.
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
10. Derivative financial instruments (Continued)
Our derivative assets are recorded in other assets and our derivative liabilities are recorded in accounts payable, accrued expenses and other liabilities in our Condensed Consolidated Balance Sheets. The following tables present notional amounts and fair values of derivatives outstanding as of September 30, 2019 and December 31, 2018:
|
| | | | | | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 |
| Notional amount (a) | | Fair value | | Notional amount (a) | | Fair value |
Derivative assets not designated as accounting hedges: | | | | | | | |
Interest rate caps | $ | 2,472,500 |
| | $ | 4,369 |
| | $ | 2,523,500 |
| | $ | 32,547 |
|
Derivative assets designated as accounting cash flow hedges: | | | | | | | |
Interest rate swaps | $ | 501,044 |
| | $ | 2,032 |
| | $ | 1,900,957 |
| | $ | 36,558 |
|
Interest rate caps | 200,000 |
| | 3,173 |
| | — |
| | — |
|
Total derivative assets | | | $ | 9,574 |
| | | | $ | 69,105 |
|
| |
(a) | The notional amount is excluded for caps and swaps which are not yet effective. |
|
| | | | | | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 |
| Notional amount (a) | | Fair value | | Notional amount (a) | | Fair value |
Derivative liabilities designated as accounting cash flow hedges: | | | | | | | |
Interest rate swaps | $ | 3,776,000 |
| | $ | 116,304 |
| | $ | 1,375,000 |
| | $ | 29,321 |
|
Total derivative liabilities | | | $ | 116,304 |
| | | | $ | 29,321 |
|
| |
(a) | The notional amount is excluded for swaps which are not yet effective. |
We recorded the following in other comprehensive income related to derivative financial instruments for the three and nine months ended September 30, 2019 and 2018:
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
Gain (Loss) | | | | | | | |
Effective portion of change in fair market value of derivatives designated as accounting cash flow hedges: | | | | | | | |
Interest rate swaps | $ | (13,992 | ) | | $ | 11,234 |
| | $ | (121,508 | ) | | $ | 43,590 |
|
Interest rate caps | 5 |
| | — |
| | 5 |
| | — |
|
Income tax effect | 1,748 |
| | (1,404 | ) | | 15,188 |
| | (5,449 | ) |
Net changes in cash flow hedges, net of tax | $ | (12,239 | ) | | $ | 9,830 |
| | $ | (106,315 | ) | | $ | 38,141 |
|
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
10. Derivative financial instruments (Continued)
We expect to reclassify approximately $20 million from AOCI as an increase in interest expense in our Condensed Consolidated Income Statements over the next 12 months. The following table presents the effect of derivatives recorded as reductions to or (increases) in interest expense in our Condensed Consolidated Income Statements for the three and nine months ended September 30, 2019 and 2018:
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
Gain (Loss) | | | | | | | |
Derivatives not designated as accounting hedges: | | | | | | | |
Interest rate caps | $ | (3,365 | ) | | $ | 4,945 |
| | $ | (29,073 | ) | | $ | 25,999 |
|
Reclassification to Condensed Consolidated Income Statements: | | | | | | | |
Reclassification of amounts previously recorded within AOCI | (86 | ) | | — |
| | 6,080 |
| | — |
|
Effect from derivatives on interest expense | $ | (3,451 | ) | | $ | 4,945 |
| | $ | (22,993 | ) | | $ | 25,999 |
|
11. Accounts payable, accrued expenses and other liabilities
Accounts payable, accrued expenses and other liabilities consisted of the following as of September 30, 2019 and December 31, 2018:
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Accounts payable, accrued expenses and other | $ | 233,418 |
| | $ | 296,523 |
|
Deferred revenue | 403,137 |
| | 421,542 |
|
Accrued interest | 242,002 |
| | 262,559 |
|
Derivative liabilities (Note 10) | 116,304 |
| | 29,321 |
|
Operating lease liabilities (Note 15) | 51,343 |
| | — |
|
| $ | 1,046,204 |
| | $ | 1,009,945 |
|
12. Accrued maintenance liability
Movements in accrued maintenance liability during the nine months ended September 30, 2019 and 2018 were as follows:
|
| | | | | | | |
| Nine Months Ended September 30, |
| 2019 | | 2018 |
Accrued maintenance liability at beginning of period | $ | 2,237,494 |
| | $ | 2,461,799 |
|
Maintenance payments received | 564,374 |
| | 567,511 |
|
Maintenance payments returned | (249,382 | ) | | (364,319 | ) |
Release to income upon sale | (141,465 | ) | | (204,783 | ) |
Release to income other than upon sale | (111,631 | ) | | (177,265 | ) |
Lessor contribution, top ups and other | (18,166 | ) | | (12,812 | ) |
Accrued maintenance liability at end of period | $ | 2,281,224 |
| | $ | 2,270,131 |
|
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
13. Debt
As of September 30, 2019, the principal amount of our outstanding indebtedness totaled $29.3 billion, which excluded fair value adjustments of $112.8 million and debt issuance costs, debt discounts and debt premium of $138.9 million, and our undrawn lines of credit were approximately $6.9 billion, availability of which is subject to certain conditions, including compliance with certain financial covenants. As of September 30, 2019, we remained in compliance with the financial covenants across our various debt obligations. All of our debt is redeemable by AerCap, unless otherwise stated.
The following table provides a summary of our indebtedness as of September 30, 2019 and December 31, 2018: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2019 | | December 31, 2018 |
Debt obligation | | Collateral (Number of aircraft) | | Commitment | | Undrawn amounts | | Amount outstanding | | Weighted average interest rate (a) | | Maturity | | Amount outstanding |
Unsecured | | | | | | | | | | | | | | |
ILFC Legacy Notes | | | | $ | 2,900,000 |
| | $ | — |
| | $ | 2,900,000 |
| | 7.09 | % | | 2020 - 2022 | | $ | 4,900,000 |
|
AGAT/AICDC Notes | | | | 12,500,000 |
| | — |
| | 12,500,000 |
| | 4.13 | % | | 2020 - 2028 | | 10,749,864 |
|
Asia Revolving Credit Facility | | | | 950,000 |
| | 950,000 |
| | — |
| | — |
| | 2022 | | 200,000 |
|
Citi Revolving Credit Facility | | | | 4,000,000 |
| | 4,000,000 |
| | — |
| | — |
| | 2021 | | — |
|
Other unsecured debt | | | | 2,024,000 |
| | — |
| | 2,024,000 |
| | 3.40 | % | | 2020 - 2023 | | 1,160,000 |
|
Fair value adjustment | | | | NA |
| | NA |
| | 115,442 |
| | NA |
| | NA | | 177,450 |
|
TOTAL UNSECURED | | | | $ | 22,374,000 |
| | $ | 4,950,000 |
| | $ | 17,539,442 |
| | | | | | $ | 17,187,314 |
|
Secured | | | | | | | | | | | | | | |
Export credit facilities | | 21 |
| | 646,447 |
| | — |
| | 646,447 |
| | 2.54 | % | | 2021 - 2030 | | 849,372 |
|
Institutional secured term loans & secured portfolio loans | | 262 |
| | 8,072,199 |
| | 355,000 |
| | 7,717,199 |
| | 3.77 | % | | 2020 - 2030 | | 7,533,028 |
|
AerFunding Revolving Credit Facility | | 16 |
| | 2,500,000 |
| | 1,612,997 |
| | 887,003 |
| | 4.05 | % | | 2022 | | 919,484 |
|
Other secured debt | | 42 |
| | 1,087,460 |
| | — |
| | 1,087,460 |
| | 4.15 | % | | 2021 - 2037 | | 1,633,099 |
|
Fair value adjustment | | | | NA |
| | NA |
| | (2,458 | ) | | NA |
| | NA | | (2,103 | ) |
TOTAL SECURED | | | | $ | 12,306,106 |
| | $ | 1,967,997 |
| | $ | 10,335,651 |
| | | | | | $ | 10,932,880 |
|
Subordinated | | | | | | | | | | | | | | |
ECAPS Subordinated Notes | | | | 1,000,000 |
| | — |
| | 1,000,000 |
| | 3.87 | % | | 2065 | | 1,000,000 |
|
Junior Subordinated Notes | | | | 500,000 |
| | — |
| | 500,000 |
| | 6.50 | % | | 2045 | | 500,000 |
|
Subordinated debt issued by joint ventures | | | | 47,521 |
| | — |
| | 47,521 |
| | — |
| | 2019 - 2020 | | 48,234 |
|
Fair value adjustment | | | | NA |
| | NA |
| | (223 | ) | | NA |
| | NA | | (225 | ) |
TOTAL SUBORDINATED | | | | $ | 1,547,521 |
| | $ | — |
| | $ | 1,547,298 |
| | | | | | $ | 1,548,009 |
|
Debt issuance costs, debt discounts and debt premium | | | | NA |
| | NA |
| | (138,869 | ) | | NA |
| | NA | | (160,616 | ) |
| | 341 |
| | $ | 36,227,627 |
| | $ | 6,917,997 |
| | $ | 29,283,522 |
| | | | | | $ | 29,507,587 |
|
| |
(a) | The weighted average interest rate for our floating rate debt is calculated based on the U.S. dollar LIBOR rate as of the last interest payment date of the respective debt, and excludes the impact of related derivative financial instruments which we hold to hedge our exposure to floating interest rates, as well as any amortization of debt issuance costs, debt discounts and debt premium. The institutional secured term loans and secured portfolio loans also contain base rate alternatives. |
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
13. Debt (Continued)
Additional details of the principal terms of our indebtedness can be found in our Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on March 8, 2019, our quarterly report on Form 6-K for the first quarter ended March 31, 2019, filed with the SEC on May 1, 2019 and our quarterly report on Form 6-K for the second quarter ended June 30, 2019, filed with the SEC on July 30, 2019. There have been no material changes to our indebtedness since the filing of those reports, except for scheduled repayments and as described below.
AGAT/AICDC Notes
In August 2019, AerCap Trust and AICDC co-issued $750.0 million aggregate principal amount of 2.875% senior notes due 2024. The proceeds from the offering were used for general corporate purposes.
Junior Subordinated Notes
In October 2019, AerCap Holdings N.V. issued $750.0 million aggregate principal amount of 5.875% fixed-rate reset junior subordinated notes due 2079 (the “Junior Subordinated Notes”). The Junior Subordinated Notes are fully and unconditionally guaranteed on a junior subordinated basis by certain subsidiaries of AerCap Holdings N.V. The proceeds from the Junior Subordinated Notes will be used for general corporate purposes.
Citi Revolving Credit Facility
In October 2019, AerCap completed the amendment and extension of the $4.0 billion Citi Revolving Credit Facility. The maturity date was extended to February 2024.
14. Income taxes
Our effective tax rate was 13.0% for the three and nine months ended September 30, 2019 and 2018. Our effective tax rate in any period can be impacted by revisions to the estimated full year rate.
15. Leases
We lease office space in several locations globally under operating lease arrangements, and in limited instances may enter into finance leases for flight equipment. Our leases have remaining lease terms of one year to 18 years, and in some cases we have options to extend the lease terms for up to ten years. Our finance lease arrangements may be terminated prior to their original expiration date at our discretion.
As of September 30, 2019, operating lease ROU assets net of lease incentives included in other assets were $45.3 million, and operating lease liabilities included in accounts payable, accrued expenses and other liabilities were $51.3 million. Finance lease liabilities included in debt were $128.3 million.
As of September 30, 2019, supplemental balance sheet information related to leases was as follows:
|
| | | | | |
| Operating leases | | Finance leases |
Weighted average remaining lease term (years) | 9.2 |
| | 16.5 |
|
Weighted average discount rate | 6.4 | % | | 6.5 | % |
AerCap Holdings N.V. and Subsidiaries
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(U.S. Dollars in thousands or as otherwise stated, except share and per share data)
15. Leases (Continued)
As of September 30, 2019, maturities of operating and finance lease liabilities were as follows:
|
| | | | | | | |
| Operating leases | | Finance leases |
2019 - remaining | $ | 2,363 |
| | $ | 3,565 |
|
2020 | 8,664 |
| | 10,946 |
|
2021 | 8,164 |
| | 10,946 |
|
2022 | 8,231 |
| | 10,946 |
|
2023 | 8,293 |
| | 10,946 |
|
Thereafter | 33,143 |
| | 186,723 |
|
Total lease payments | $ | 68,858 |
| | $ | 234,072 |
|
Less: Imputed interest | (17,515 | ) | | (105,814 | ) |
Present value of lease liabilities | $ | 51,343 |
| | $ | 128,258 |
|
16. Equity
The following table presents our share repurchase programs from January 1, 2018 through September 30, 2019:
|
| | | | | | | | |
Program approval date | | Program end date | | Authorized amount | | Program completion date |
February 2018 | | June 30, 2018 | | $ | 200,000 |
| | May 14, 2018 |
April 2018 | | December 31, 2018 | | 200,000 |
| | November 2, 2018 |
October 2018 | | March 31, 2019 | | 200,000 |
| | January 9, 2019 |
|