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
For the month of November 2020
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.
Form 20-F x
Form 40-F o
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 10, 2020, AerCap Holdings N.V. filed its interim financial report for the quarter ended September 30, 2020.
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, 333-234028 and 333-235323 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.


2


INDEX
Item 1.
Financial Statements (Unaudited)
Signature

3


PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
Notes to the Unaudited Condensed Consolidated Financial Statements
4


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
As of September 30, 2020 and December 31, 2019
NoteSeptember 30, 2020December 31, 2019
(U.S. Dollars in thousands, except share data)
Assets
Cash and cash equivalents4$3,244,433 $1,121,396 
Restricted cash4281,353 178,951 
Trade receivables189,950 47,935 
Flight equipment held for operating leases, net534,735,697 35,870,781 
Net investment in finance and sales-type leases6, 19922,297 1,011,549 
Flight equipment held for sale3,575 336,592 
Prepayments on flight equipment232,710,270 2,954,478 
Maintenance rights and lease premium, net7682,968 809,615 
Other intangibles, net7229,928 307,394 
Deferred income tax assets14105,447 95,077 
Other assets (includes investment at fair value of $71.3 million)8, 91,315,200 1,015,476 
Total Assets$44,421,118 $43,749,244 
Liabilities and Equity
Accounts payable, accrued expenses and other liabilities11$1,147,571 $1,032,623 
Accrued maintenance liability121,828,246 2,190,159 
Lessee deposit liability594,631 747,790 
Debt1331,087,112 29,486,131 
Deferred income tax liabilities14884,069 910,336 
Commitments and contingencies23
Total Liabilities35,541,629 34,367,039 
Ordinary share capital, €0.01 par value, 350,000,000 ordinary shares authorized as of September 30, 2020 and December 31, 2019; 138,847,345 and 141,847,345 ordinary shares issued and 129,756,613 and 131,583,489 ordinary shares outstanding (including 2,163,670 and 2,354,318 shares of unvested restricted stock) as of September 30, 2020 and December 31, 2019, respectively
15, 201,721 1,754 
Additional paid-in capital2,089,932 2,209,462 
Treasury shares, at cost (9,090,732 and 10,263,856 ordinary shares as of September 30, 2020 and December 31, 2019, respectively)
15(492,033)(537,341)
Accumulated other comprehensive loss(168,946)(93,587)
Accumulated retained earnings7,380,699 7,734,609 
Total AerCap Holdings N.V. shareholders’ equity8,811,373 9,314,897 
Non-controlling interest68,116 67,308 
Total Equity8,879,489 9,382,205 
Total Liabilities and Equity$44,421,118 $43,749,244 
Supplemental balance sheet informationamounts related to assets and liabilities of consolidated Variable Interest Entities (VIE) for which creditors do not have recourse to our general credit:
Restricted cash$176,073 $78,187 
Flight equipment held for operating leases and held for sale4,172,388 2,091,022 
Other assets72,303 64,908 
Accrued maintenance liability$113,313 $42,603 
Debt2,654,016 1,395,022 
Other liabilities286,019 81,335 

The accompanying notes are an integral part of these Unaudited Financial Statements.

5


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Income Statements
For the Three and Nine Months Ended September 30, 2020 and 2019

Three Months Ended September 30,Nine Months Ended September 30,
Note2020201920202019
(U.S. Dollars in thousands, except share and per share data)
Revenues and other income
Lease revenue:
Basic lease rents$897,358 $1,066,584 $2,876,278 $3,218,934 
Maintenance rents and other receipts90,743 72,600 449,252 268,506 
Total lease revenue988,101 1,139,184 3,325,530 3,487,440 
Net gain on sale of assets7,151 40,519 75,519 140,217 
Other income1731,304 14,382 60,963 52,731 
Total Revenues and other income1,026,556 1,194,085 3,462,012 3,680,388 
Expenses
Depreciation and amortization5, 7415,970 415,313 1,243,586 1,260,255 
Asset impairment18972,921 31,168 1,060,289 54,018 
Interest expense307,316 312,311 937,691 978,931 
Loss on debt extinguishment 42,835 — 42,835 — 
Leasing expenses51,211 44,080 232,082 201,045 
Selling, general and administrative expenses1660,918 64,712 178,415 196,128 
Total Expenses1,851,171 867,584 3,694,898 2,690,377 
Unrealized loss on investment at fair value9(128,363)— (114,421)— 
(Loss) income before income taxes and income of investments accounted for under the equity method
(952,978)326,501 (347,307)990,011 
Benefit (provision) for income taxes14106,077 (42,445)24,311 (128,701)
Equity in net earnings of investments accounted for under the equity method
(3,901)(12,065)(397)(8,028)
Net (loss) income$(850,802)$271,991 $(323,393)$853,282 
Net loss (income) attributable to non-controlling interest
873 (1,701)(3,651)(17,346)
Net (loss) income attributable to AerCap Holdings N.V.
$(849,929)$270,290 $(327,044)$835,936 
Basic (loss) earnings per share20$(6.66)$2.03 $(2.56)$6.16 
Diluted (loss) earnings per share20$(6.66)$2.01 $(2.56)$6.10 
Weighted average shares outstanding - basic127,589,905 133,182,744 127,771,182 135,732,923 
Weighted average shares outstanding - diluted127,589,905 134,175,597 127,771,182 136,990,028 






The accompanying notes are an integral part of these Unaudited Financial Statements.

6


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30, 2020 and 2019

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(U.S. Dollars in thousands)
Net (loss) income$(850,802)$271,991 $(323,393)$853,282 
Other comprehensive income (loss):
Net change in fair value of derivatives (Note 10), net of tax of $(1,600), $1,748, $10,766 and $15,188, respectively
11,200 (12,239)(75,359)(106,315)
Total other comprehensive income (loss)11,200 (12,239)(75,359)(106,315)
Comprehensive (loss) income(839,602)259,752 (398,752)746,967 
Comprehensive loss (income) attributable to non-controlling interest873 (1,701)(3,651)(17,346)
Total comprehensive (loss) income attributable to AerCap Holdings N.V.$(838,729)$258,051 $(402,403)$729,621 



































The accompanying notes are an integral part of these Unaudited Financial Statements.

7


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30,
20202019
(U.S. Dollars in thousands)
Net (loss) income$(323,393)$853,282 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization1,243,586 1,260,255 
Asset impairment1,060,289 54,018 
Amortization of debt issuance costs, debt discount, debt premium and lease premium45,802 61,297 
Amortization of fair value adjustments on debt(41,418)(62,361)
Maintenance rights write-off (a)101,791 174,544 
Maintenance liability release to income(297,815)(143,316)
Net gain on sale of assets(75,519)(140,217)
Deferred income taxes(21,737)131,708 
Collections of finance and sales-type leases47,117 72,775 
Unrealized loss on investment at fair value114,421 — 
Loss on debt extinguishment 42,835 — 
Other200,450 134,416 
Changes in operating assets and liabilities:
Trade receivables(148,184)(15,424)
Other assets(382,914)(7,053)
Accounts payable, accrued expenses and other liabilities(87,468)(36,561)
Net cash provided by operating activities1,477,843 2,337,363 
Purchase of flight equipment(306,048)(2,396,722)
Proceeds from sale or disposal of assets379,518 1,171,886 
Prepayments on flight equipment(564,927)(1,015,332)
Other— (17)
Net cash used in investing activities(491,457)(2,240,185)
Issuance of debt10,165,837 5,339,455 
Repayment of debt(8,451,299)(5,523,401)
Debt issuance and extinguishment costs paid, net of debt premium received(145,260)(18,524)
Maintenance payments received266,654 564,374 
Maintenance payments returned(312,136)(249,382)
Security deposits received53,915 199,091 
Security deposits returned(216,975)(194,841)
Dividend paid to non-controlling interest holders and others(2,843)(4,837)
Repurchase of shares and tax withholdings on share-based compensation(119,779)(425,609)
Net cash provided by (used in) financing activities1,238,114 (313,674)
Net increase (decrease) in cash, cash equivalents and restricted cash2,224,500 (216,496)
Effect of exchange rate changes939 (1,926)
Cash, cash equivalents and restricted cash at beginning of period1,300,347 1,415,035 
Cash, cash equivalents and restricted cash at end of period$3,525,786 $1,196,613 




The accompanying notes are an integral part of these Unaudited Financial Statements.

8


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30,
20202019
(U.S. Dollars in thousands)
Supplemental cash flow information:
Interest paid, net of amounts capitalized$946,322 $971,055 
Income taxes (refunded), net paid(7,286)303 

(a)Maintenance rights write-off consisted of the following:
      End of Lease (EOL) and Maintenance Reserved (MR) contract maintenance rights expense
$39,719 $51,431 
      MR contract maintenance rights write-off due to maintenance liability release18,117 11,338 
      EOL contract maintenance rights write-off due to cash receipt43,954 111,775 
      Maintenance rights write-off$101,790 $174,544 





































The accompanying notes are an integral part of these Unaudited Financial Statements.

9


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 30, 2020 and 2019

Non-Cash Investing and Financing Activities

Nine Months Ended September 30, 2020:
Flight equipment held for operating leases in the amount of $37.7 million was reclassified to net investment in finance and sales-type leases.
Flight equipment held for operating leases in the amount of $81.0 million was reclassified to flight equipment held for sale.
Accrued maintenance liability in the amount of $95.0 million was settled with buyers upon sale or disposal of assets.
Other assets and Accounts payable, accrued expenses and other liabilities each increased by $185.7 million due to the Norwegian Air Shuttle ASA (“NAS”) recapitalization. Please refer to Note 9Investments for further details.

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.































The accompanying notes are an integral part of these Unaudited Financial Statements.

10


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity
For the Three Months Ended September 30, 2020 and 2019

Number of ordinary shares issuedOrdinary share capitalAdditional
paid-in
capital
Treasury
shares
Accumulated other comprehensive lossAccumulated retained earningsAerCap Holdings N.V. shareholders’ equityNon-controlling interestTotal equity
(U.S. Dollars in thousands, except share data)
Balance as of
June 30, 2020
138,847,345 $1,721 $2,076,149 $(496,217)$(180,146)$8,232,470 $9,633,977 $69,086 $9,703,063 
Dividends paid— — — — — — — (97)(97)
Ordinary shares
issued, net of
tax withholdings
— — (3,221)4,184 — (1,842)(879)— (879)
Share-based
compensation
— — 17,004 — — — 17,004 — 17,004 
Total comprehensive
income (loss)
— — — — 11,200 (849,929)(838,729)(873)(839,602)
Balance as of
September 30, 2020
138,847,345 $1,721 $2,089,932 $(492,033)$(168,946)$7,380,699 $8,811,373 $68,116 $8,879,489 

Number of ordinary shares issuedOrdinary share capitalAdditional
paid-in
capital
Treasury
shares
Accumulated other comprehensive lossAccumulated retained earningsAerCap Holdings N.V. shareholders’ equityNon-controlling interestTotal 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 









The accompanying notes are an integral part of these Unaudited Financial Statements.

11


AerCap Holdings N.V. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity
For the Nine Months Ended September 30, 2020 and 2019

Number of ordinary shares issuedOrdinary share capitalAdditional
paid-in
capital
Treasury
shares
Accumulated other comprehensive lossAccumulated retained earningsAerCap Holdings N.V. shareholders’ equityNon-controlling interestTotal equity
(U.S. Dollars in thousands, except share data)
Balance as of
December 31, 2019
141,847,345 $1,754 $2,209,462 $(537,341)$(93,587)$7,734,609 $9,314,897 $67,308 $9,382,205 
Dividends paid— — — — — — — (2,843)(2,843)
Repurchase of
shares
— — — (117,302)— — (117,302)— (117,302)
Share cancellation(3,000,000)(33)(149,203)149,236 — — — — — 
Ordinary shares
issued, net of
tax withholdings
— — (19,840)13,374 — (1,088)(7,554)— (7,554)
Share-based
compensation
— — 49,513 — — — 49,513 — 49,513 
Cumulative effect due
to adoption of new
accounting standard
— — — — — (25,778)(25,778)— (25,778)
Total comprehensive
income (loss)
— — — — (75,359)(327,044)(402,403)3,651 (398,752)
Balance as of
September 30, 2020
138,847,345 $1,721 $2,089,932 $(492,033)$(168,946)$7,380,699 $8,811,373 $68,116 $8,879,489 


Number of ordinary shares issuedOrdinary share capitalAdditional
paid-in
capital
Treasury
shares
Accumulated other comprehensive lossAccumulated retained earningsAerCap Holdings N.V. shareholders’ equityNon-controlling interestTotal 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 





The accompanying notes are an integral part of these Unaudited Financial Statements.

12


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
AerCap Holdings N.V. and its subsidiaries (“AerCap”, “we”, “us”, the “Company”) are the global leader in aircraft leasing. 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, The Boeing Company (“Boeing”) in Seattle and Airbus S.A.S. (“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 Accounting Principles Generally Accepted in the United States of America (“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 Primary Beneficiary (“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. For one investment we have elected the fair value method of accounting. Please refer to Note 9 —Investments for further details.
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 U.S. Securities and Exchange Commission (“SEC”) and U.S. GAAP for interim financial reporting, and reflect all 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, 2019, filed with the SEC on March 5, 2020. The results of operations for the three and nine months ended September 30, 2020 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.     

13


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
Revenue Recognition
We periodically evaluate the collectability of our operating lease contracts to determine the appropriate revenue recognition and measurement model to apply to each lessee. We cease accrual-based revenue recognition on an operating lease contract when the collection of the rental payments is no longer probable and we then recognize rental revenues using a cash accounting method (“Cash Accounting”). In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease income. Subsequently, we recognize revenues based on the lesser of the straight-line rental income or the lease payments collected from the lessee until such time that collection is probable.
Our other significant accounting policies are described in our Annual Report on Form 20-F for the year ended December 31, 2019, filed with the SEC on March 5, 2020.
Recent accounting standards and policy elections adopted during 2020:
Allowance for credit losses
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (“ASC 326”). ASC 326 replaces the incurred loss methodology with an expected loss methodology referred to as the current expected credit loss (“CECL”) methodology. The CECL methodology utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for most financial assets measured at amortized cost and certain other instruments, including loan and other receivables and net investment in finance and sales-type leases. Our net investment in finance and sales-type leases and notes receivable are the primary financial assets within the scope of ASC 326. Our trade receivables related to aircraft operating leases are not within the scope of ASC 326.
On January 1, 2020, we adopted ASC 326 under a modified retrospective approach. As a result of adopting ASC 326, our allowance for credit losses will reflect our estimate of credit losses over the remaining expected life of the financial assets measured at amortized cost. Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, will be recognized in earnings and classified within leasing expenses. These expected credit losses will be measured based on historical loss data, current conditions and forecasts that affect the collectability of the reported amount. Results for reporting periods after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with the previously applicable U.S. GAAP.
The cumulative effect of measuring the allowance for credit losses under the CECL methodology, as a result of adopting ASC 326 on January 1, 2020, was an increase to the allowance for credit losses of $30.3 million and a decrease to retained earnings of $25.8 million, net of tax.
Current expected credit loss provisions are recognized in our income statement and are classified as leasing expenses, with a corresponding allowance for credit loss amount reported as a reduction in the carrying amount of the related net investment in finance and sales-type leases and notes receivable balance sheet amount. A write-off is made when all or part of the net investment in finance and sales-type leases or notes receivable asset is deemed uncollectable. Write-offs are charged against previously established allowances for credit losses. Partial or full recoveries of amounts previously written off are generally recognized as a reduction in the provision for credit losses. Please refer to Note 19—Allowance for credit losses for further details.
14


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 (Continued)


Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASC 848”). ASC 848 provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to reduce the financial reporting burden in light of the market transition from London Interbank Offered Rates (“LIBOR”) and other reference interest rates to alternative reference rates.
Under ASC 848 companies can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform if certain criteria are met. An entity that makes this election would not be required to remeasure the contracts at the modification date or reassess a previous accounting determination. The amendments of ASC 848 apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective from March 12, 2020 through December 31, 2022 and can be adopted prospectively for any interim period that includes or is subsequent to March 12, 2020. We have not adopted ASC 848 for this interim period and are currently evaluating the adoption impact the standard may have on our financial statements.
Accounting for lease concessions related to the effects of the Covid-19 pandemic
In April 2020, the FASB issued an interpretive guidance Staff Q&A Accounting for lease concessions related to the effects of the Covid-19 pandemic (the “Q&A”). The Q&A is applicable to companies whose leases are affected by the economic disruptions caused by the Covid-19 pandemic. The Q&A provides that a company may elect to account for lease concessions as though those concessions existed regardless of whether the enforceable rights and obligations for the concessions explicitly exist in the contract. As a result, an entity is not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842, Leases, to those contracts. This election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.
Effective beginning in the period ended March 31, 2020, we have elected to account for lease concessions related to the effects of the Covid-19 pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). This election is available for concessions related to the effects of the Covid-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee.


15


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 (Continued)


Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The standard also clarifies the treatment of the income tax effect of tax-deductible goodwill when measuring goodwill impairment loss. This standard is effective for annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019. We adopted ASU 2017-04 on January 1, 2020 and it did not have an impact on our consolidated financial statements.
We recognized goodwill in connection with our acquisition of International Lease Finance Corporation (“ILFC”). Goodwill is not amortized, but is tested at least annually, as of December 31 of each year, for impairment, or more frequently if indicators of impairment are present.
We qualitatively assess whether it is more likely than not that our goodwill is impaired. If we conclude based on the qualitative assessment that it is more likely than not that the fair value of AerCap is less than its equity carrying amount, we are required to perform a quantitative impairment test.
The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of AerCap with its equity carrying amount, including goodwill. If the carrying amount of AerCap’s equity exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

16


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 $281.4 million and $179.0 million as of September 30, 2020 and December 31, 2019, respectively, and was primarily related to our Export Credit Agency (“ECA”) financings and Export-Import Bank of the United States (“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, 2020, December 31, 2019 and September 30, 2019:
September 30, 2020December 31, 2019September 30, 2019
Cash and cash equivalents$3,244,433 $1,121,396 $1,036,919 
Restricted cash281,353 178,951 159,694 
Total cash, cash equivalents and restricted cash$3,525,786 $1,300,347 $1,196,613 

5. Flight equipment held for operating leases, net
Movements in flight equipment held for operating leases during the nine months ended September 30, 2020 and 2019 were as follows:
Nine Months Ended September 30,
20202019
Net book value at beginning of period$35,870,781 $35,052,335 
Additions1,168,219 3,369,748 
Depreciation(1,224,638)(1,240,975)
Disposals and transfers to held for sale(81,025)(1,781,765)
Transfers to net investment in finance and sales-type leases/other assets(37,678)(114,602)
Impairment (Note 18)(959,962)(53,252)
Net book value at end of period$34,735,697 $35,231,489 
Accumulated depreciation as of September 30, 2020 and 2019$(9,525,280)$(7,242,465)

6. Net investment in finance and sales-type leases
Components of net investment in finance and sales-type leases as of September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020December 31, 2019
Future minimum lease payments to be received
$631,925 $715,085 
Estimated residual values of leased flight equipment
588,504 577,353 
Less: Unearned income
(241,859)(280,889)
Allowance for credit losses
(56,273)— 
$922,297 $1,011,549 
During the three months ended September 30, 2020 and 2019, we recognized interest income from net investment in finance and sales-type leases of $14.6 million and $15.3 million, respectively, included in basic lease rents. During the nine months ended September 30, 2020 and 2019, we recognized interest income from net investment in finance and sales-type leases of $41.8 million and $46.5 million, respectively, included in basic lease rents.


17


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
Maintenance rights and lease premium, net
Maintenance rights and lease premium, net consisted of the following as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Maintenance rights$674,148 $794,798 
Lease premium, net8,820 14,817 
$682,968 $809,615 
Movements in maintenance rights during the nine months ended September 30, 2020 and 2019 were as follows:
Nine Months Ended September 30,
20202019
Maintenance rights at beginning of period
$794,798 $1,088,246 
EOL and MR contract maintenance rights expense
(39,719)(51,431)
MR contract maintenance rights write-off due to maintenance liability release
(18,117)(11,338)
EOL contract maintenance rights write-off due to cash receipt
(43,954)(111,775)
EOL and MR contract maintenance rights write-off due to sale of aircraft and impairment(18,860)(13,771)
Maintenance rights at end of period
$674,148 $899,931 

Other intangibles
Other intangibles consisted of the following as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Goodwill (a)$— $58,094 
Customer relationships, net224,883 240,765 
Contractual vendor intangible assets5,045 8,535 
$229,928 $307,394 
(a)Please refer to Note 18—Asset Impairment.
The following tables present details of customer relationships and related accumulated amortization as of September 30, 2020 and December 31, 2019:
September 30, 2020
Gross carrying amountAccumulated
amortization
Net carrying amount
Customer relationships$360,000 $(135,117)$224,883 
December 31, 2019
Gross carrying amountAccumulated
amortization
Net carrying amount
Customer relationships$360,000 $(119,235)$240,765 
During the three months ended September 30, 2020 and 2019, we recorded amortization expense for customer relationships of $5.3 million. During the nine months ended September 30, 2020 and 2019, we recorded amortization expense for customer relationships of $15.9 million.

18


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. Other assets
Other assets consisted of the following as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Notes receivable, net of allowance for credit losses (a) (b)$514,693 $87,745 
Lease incentives195,435 239,607 
Investments (Note 9)194,313 123,279 
Straight-line rents, prepaid expenses and other90,277 98,443 
Operating lease right of use assets40,590 43,668 
Other tangible fixed assets23,326 26,018 
Debt issuance costs16,360 26,393 
Derivative assets (Note 10)1,212 11,664 
Other receivables238,994 358,659 
$1,315,200 $1,015,476 
(a)Notes receivable as of September 30, 2020 and December 31, 2019 included $485 million and $49 million, respectively, related to agreements we have executed with customers to reschedule certain lease payments under our leases that are due at the reporting dates. Notes receivable as of September 30, 2020 and December 31, 2019 also included $29 million and $39 million, respectively, related to aircraft sale transactions.
(b)As of September 30, 2020, we had an $8 million allowance for credit losses on notes receivable. As of December 31, 2019, we did not have an allowance for credit losses on notes receivables. Please refer to Note 19—Allowance for credit losses for further details.

19


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)
9. Investments
Investment, at fair value
We participated in the Norwegian Air Shuttle ASA “NAS” recapitalization completed on May 20, 2020, which included providing certain concessions related to our operating leases with NAS in exchange for NAS ordinary shares and perpetual bonds (the “NAS Investment”). The perpetual bonds can be converted into NAS ordinary shares on a one-for-one basis as follows: (i) up to one-third may be converted into NAS shares as of August 2020; (ii) up to two-thirds may be converted into NAS shares as of October 2020; and (iii) all may be converted into NAS shares as of December 2020. As of October 26, 2020, we held NAS ordinary shares representing approximately 13% of the share capital of NAS and perpetual bonds representing approximately 6% of the share capital of NAS.
We have elected to account for the NAS Investment using the fair value option, whereby the changes in its fair value are recognized as a gain or loss in our Condensed Consolidated Income Statement. As of September 30, 2020, the fair value was $71.3 million based on the quoted market price of NAS ordinary shares, with unrealized losses of $128.4 million and $114.4 million (including unrealized foreign currency loss of $1.5 million and gain of $4.1 million) recognized in our Condensed Consolidated Income Statements for three and nine months ended September 30, 2020, respectively.
On November 9, 2020, NAS announced that the Norwegian government had rejected its request for further government support. As a result, NAS said it would significantly reduce the scale and scope of its operations and that a bankruptcy could not be ruled out. As of November 9, 2020, the fair value of our NAS Investment was $43.8 million based on the quoted market price of NAS ordinary shares.
Other investments
Investments accounted for under the equity method of accounting consisted of the following as of September 30, 2020 and December 31, 2019:
% Ownership as of As of
September 30, 2020September 30, 2020December 31, 2019
AerDragon16.771,236 $68,673 
AerLift39.330,908 35,188 
ACSAL19.417,615 16,118 
$119,759 $119,979 
We also have an investment in Peregrine Aviation Company and its subsidiaries (“Peregrine”) of $3.3 million as of September 30, 2020 and December 31, 2019, which is accounted for in accordance with the cost method of accounting. Please refer to Note 21—Variable interest entities for further details.

20


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
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, 2020, 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, 2020 and December 31, 2019, we had cash collateral of $0.1 million and $0.6 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, 2020 or December 31, 2019.
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.
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, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Notional amount (a)Fair valueNotional amount (a)Fair value
Derivative assets not designated as accounting hedges:
Interest rate caps$3,001,500 $774 $2,442,000 $3,727 
Derivative assets designated as accounting cash flow hedges:
Interest rate swaps$— $— $488,616 $1,578 
Interest rate caps400,000 438 400,000 6,359 
Total derivative assets$1,212 $11,664 
(a)The notional amount is excluded for caps and swaps which are not yet effective.
September 30, 2020December 31, 2019
Notional amount (a)Fair valueNotional amount (a)Fair value
Derivative liabilities not designated as cash flow hedges:
Interest rate swaps$300,000 $15,993 $— $— 
Derivative liabilities designated as accounting cash flow hedges:
Interest rate swaps$3,594,760 $170,700 $3,776,000 $97,066 
Total derivative liabilities$186,693 $97,066 
(a)The notional amount is excluded for swaps which are not yet effective.
21


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 recorded the following in other comprehensive income (loss) related to derivative financial instruments for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Gain (Loss)
Effective portion of change in fair market value of derivatives designated as accounting cash flow hedges:
Interest rate swaps$12,662 $(13,992)$(81,297)$(121,508)
Interest rate caps(291)(5,922)
Derivative premium and amortization429 — 1,094 — 
Income tax effect(1,600)1,748 10,766 15,188 
Net changes in cash flow hedges, net of tax$11,200 $(12,239)$(75,359)$(106,315)
We expect to reclassify approximately $67 million from accumulated other comprehensive income (loss) (“AOCI”) as an increase in interest expense in our Condensed Consolidated Income Statements over the next 12 months. The following table presents the effect of derivatives recorded as reductions to or (increases) in interest expense in our Condensed Consolidated Income Statements for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Gain (Loss)
Derivatives not designated as accounting hedges:
Interest rate caps and swaps$(11)$(3,365)$(14,665)$(29,073)
Reclassification to Condensed Consolidated Income Statements:
Reclassification of amounts previously recorded within AOCI(20,618)(86)(35,699)6,080 
Effect from derivatives on interest expense$(20,629)$(3,451)$(50,364)$(22,993)


22


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)
11. Accounts payable, accrued expenses and other liabilities
Accounts payable, accrued expenses and other liabilities consisted of the following as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Deferred revenue$462,928 $389,958 
Accrued interest225,665 255,369 
Accounts payable and accrued expenses223,143 239,086 
Derivative liabilities (Note 10)186,693 97,066 
Operating lease liabilities49,142 51,144 
$1,147,571 $1,032,623 

12. Accrued maintenance liability
Movements in accrued maintenance liability during the nine months ended September 30, 2020 and 2019 were as follows:
Nine Months Ended September 30,
20202019
Accrued maintenance liability at beginning of period$2,190,159 $2,237,494 
Maintenance payments received266,654 564,374 
Maintenance payments returned(312,136)(249,382)
Release to income upon sale(95,042)(141,465)
Release to income other than upon sale(291,232)(111,631)
Lessor contribution, top-ups and other69,843 (18,166)
Accrued maintenance liability at end of period$1,828,246 $2,281,224 

23


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, 2020, the principal amount of our outstanding indebtedness totaled $31.2 billion, which excluded fair value adjustments of $25.5 million and debt issuance costs, debt discounts and debt premium of $181.7 million, and our undrawn lines of credit and other available secured debt were approximately $5.9 billion, availability of which is subject to certain conditions, including compliance with certain financial covenants. As of September 30, 2020, we remained in compliance with the financial covenants across our various debt obligations.
The following table provides a summary of our indebtedness as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Debt obligationCollateral (Number of
aircraft)
CommitmentUndrawn amountsAmount outstandingWeighted average interest rate (a)MaturityAmount outstanding
Unsecured
ILFC Legacy Notes$1,456,791 $— $1,456,791 6.69 %2020-2022$2,900,000 
AerCap Trust (b) & AICDC (c)
    Notes
15,000,000 — 15,000,000 4.28 %2021-202812,500,000 
Asia Revolving Credit Facility950,000 950,000 — — 2022— 
Citi Revolving Credit Facility4,000,000 4,000,000 — — 2024— 
Other unsecured debt1,759,000 — 1,759,000 1.94 %2021-20232,024,000 
Fair value adjustmentNANA27,809 NANA99,093 
TOTAL UNSECURED$23,165,791 $4,950,000 $18,243,600 $17,523,093 
Secured
Export credit facilities18 712,107 131,552 580,555 2.11 %2021-2032565,312 
Institutional secured term loans
   & secured portfolio loans
180 7,189,676 123,000 7,066,676 2.56 %2022-20307,303,496 
AerFunding Revolving Credit
    Facility
53 2,500,000 324,252 2,175,748 2.16 %2022875,145 
Other secured debt 40 1,264,889 353,900 910,989 3.22 %2021-20371,062,756 
Fair value adjustmentNANA(2,059)NANA(2,835)
TOTAL SECURED$11,666,672 $932,704 $10,731,909 $9,803,874 
Subordinated
Subordinated Notes
2,250,000 — 2,250,000 4.77 %2025-20792,250,000 
Subordinated debt issued by joint
    ventures
43,521 — 43,521 — 2021-202347,521 
Fair value adjustmentNANA(220)NANA(222)
TOTAL SUBORDINATED$2,293,521 $ $2,293,301 $2,297,299 
Debt issuance costs, debt discounts and debt premium
NANA(181,698)NANA(138,135)
291 $37,125,984 $5,882,704 $31,087,112 $29,486,131 
(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.
(b)AerCap Global Aviation Trust, a Delaware Statutory Trust (“AerCap Trust”).
(c)AerCap Ireland Capital Designated Activity Company, a designated activity company with limited liability incorporated under the laws of Ireland (“AICDC”).

24


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, 2019, filed with the SEC on March 5, 2020. The material changes to our indebtedness since the filing of that report, except for scheduled repayments, are described below.
AerCap Trust & AICDC Notes and ILFC Legacy Notes
On June 4, 2020, AerCap Trust and AICDC completed the redemption of all $500.0 million outstanding aggregate principal amount of their 4.25% Senior Notes due 2020.
On June 8, 2020, AerCap Trust and AICDC co-issued $1.25 billion aggregate principal amount of 6.5% Senior Notes due 2025 (the “June Notes Offering”). On July 2, 2020, AerCap Trust and AICDC co-issued $1.25 billion aggregate principal amount of 4.5% Senior Notes due 2023 (the “July Notes Offering”). The proceeds from the June Notes Offering and the July Notes Offering were used for general corporate purposes.
On July 13, 2020, AerCap Trust commenced offers to purchase for cash, for its own account as successor to ILFC, or for its own account and on behalf of AICDC, as applicable, any and all of certain series of outstanding ILFC Legacy Notes and AerCap Trust & AICDC Notes (the “July Tender Offer”). Pursuant to the July Tender Offer, AerCap Trust repurchased and retired (i) $742.1 million aggregate principal amount of 8.25% Senior Notes due 2020, (ii) $365.7 million aggregate principal amount of 8.625% Senior Notes due 2022 and (iii) $334.5 million aggregate principal amount of 4.625% Senior Notes due 2021 for an aggregate total consideration of approximately $1.5 billion. In each case, such notes were originally issued by ILFC and assumed by AerCap Trust.
On August 19, 2020, AerCap Trust and AICDC completed the redemption of all $999.0 million outstanding aggregate principal amount of their 4.625% Senior Notes due 2020.
On September 23, 2020, AerCap Trust commenced offers to purchase for cash, for its own account and on behalf of AICDC, certain series of AerCap Trust & AICDC Notes (the “September Tender Offer”). On October 8, 2020, pursuant to the September Tender Offer, AerCap Trust repurchased and retired (i) $556.0 million aggregate principal amount of 4.5% Senior Notes due 2021, (ii) $513.7 million aggregate principal amount of 5.0% Senior Notes due 2021 and (iii) $398.9 million aggregate principal amount of 4.45% Senior Notes due 2021 for an aggregate total consideration of approximately $1.5 billion.
On September 25, 2020, AerCap Trust and AICDC co-issued $900.0 million aggregate principal amount of 3.150% Senior Notes due 2024 and $600.0 million aggregate principal amount of 4.625% Senior Notes due 2027 (the “September Notes Offering”). The proceeds from the September Notes Offering were used to fund the September Tender Offer.
Institutional secured term loans and secured portfolio loans
During the three months ended June 30, 2020 we signed a $500.0 million, full recourse secured facility to finance a portfolio of aircraft, which will mature in 2027.

14. Income taxes
Our effective tax rate for the full year 2020 is expected to be 7.0%, compared to the effective tax rate of 12.5% for the full year 2019. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions as well as the amount of permanent tax differences relative to pre-tax income.
Our effective tax rate was 11.1% and 7.0% for the three and nine months ended September 30, 2020, respectively and 13.0% for the three and nine months ended September 30, 2019. Our effective tax rate in any period can be impacted by revisions to the estimated full year rate.


25


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. Equity
The following table presents our share repurchase programs from January 1, 2019 through September 30, 2020:
Program approval dateProgram end dateAuthorized amountProgram completion date
February 2019September 30, 2019$200,000 July 22, 2019
June 2019December 31, 2019200,000 December 5, 2019
November 2019June 30, 2020200,000 Expired
January 2020June 30, 2020250,000 Expired
During the nine months ended September 30, 2020, we repurchased an aggregate of 2,130,509 of our ordinary shares under our share repurchase programs at an average price, including commissions, of $55.06 per ordinary share.
As of June 30, 2020, our share repurchase programs have expired.
During the nine months ended September 30, 2020, we cancelled 3,000,000 ordinary shares which were acquired through the share repurchase programs in accordance with authorizations obtained from the Company’s shareholders.
16. Selling, general and administrative expenses
Selling, general and administrative expenses consisted of the following for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Personnel expenses$28,602 $30,163 $77,983 $89,654 
Share-based compensation17,004 15,701 49,513 51,729 
Travel expenses1,445 4,138 6,725 12,997 
Professional services5,084 5,305 16,586 16,644 
Office expenses3,195 3,512 9,677 10,307 
Other expenses5,588 5,893 17,931 14,797 
$60,918 $64,712 $178,415 $196,128 


26


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)
17. Other income
Other income consisted of the following for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Management fees$1,917 $2,345 $7,733 $8,152 
Interest and other income29,387 12,037 53,230 44,579 
$31,304 $14,382 $60,963 $52,731 

18. Asset Impairment
Our long-lived assets include flight equipment held for operating lease and definite-lived intangible assets. We test long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. We perform event-driven impairment assessments of our flight equipment held for operating lease each quarter.
The Covid-19 pandemic and responsive government actions have had a significant impact on both domestic and international travel. While both domestic and international air travel have increased since the low points experienced earlier this year, in general domestic travel has been faster to recover, and the timeframe for the recovery of domestic travel is generally expected to be more rapid than for international travel. During the third quarter, an increase in Covid-19 cases in many countries has led governments to impose new restrictions on international travel or to delay the relaxation of existing restrictions. As a result, the expected recovery time for international air traffic has become longer. In addition, during the third quarter we have observed an increased number of airlines shifting away from current technology widebody aircraft in favor of new technology widebody aircraft such as the Boeing 787 and Airbus A350. We expect these factors to impact the future lease rates and long-term values of our Boeing 777 and Airbus A330 aircraft.
During the three and nine months ended September 30, 2020, we recognized impairment charges of $972.9 million and $1,060.3 million, respectively. During the three and nine months ended September 30, 2019, we recognized impairment charges of $31.2 million and $54.0 million, respectively.
During the three months ended September 30, 2020, we recognized impairment charges of $914.8 million related to the impairment of our flight equipment held for operating lease, primarily Airbus A330 and Boeing 777 aircraft. We also assessed our indefinite-lived goodwill assets for impairment and recognized impairment charges of $58.1 million related to goodwill. Please refer to Note 24—Fair Value Measurements for the method of determining the fair value of our flight equipment held for operating leases.



27


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)
19. Allowance for credit losses
We are exposed to credit losses on our net investments in finance and sales-type leases (“Finance Leases”) and notes receivable related to the sale of aircraft and rescheduled operating lease payment amounts, which are included as notes receivable in other assets. Our Finance Lease credit exposure reflects the risk that our Finance Lease customers fail to meet their payment obligations and the risk that aircraft value is less than the unguaranteed residual value assumed in the Finance Leases receivable balance.
We estimate the expected risk of loss over the remaining life of our Finance Leases and notes receivable using a probability of default and net exposure analysis. The probability of default is estimated based on historical cumulative default data, adjusted for current conditions, of similarly risk-rated counterparties over the contractual term. The net exposure is estimated based on the Finance Lease or notes receivable balance exposure, net of the estimated aircraft value, in the case of a Finance Lease, and other cash collateral, including security deposits and maintenance-related deposits, over the contractual term. The expected loss provision for each individual contractual exposure is calculated by multiplying the probability of default by the net exposure over the contractual term.
Movements in the allowance for credit losses during the nine months ended September 30, 2020 were as follows:
Nine Months Ended September 30, 2020
Allowance for credit losses at beginning of period$— 
Cumulative effect due to adoption of new accounting standard30,264 
Current period provision for expected credit losses33,999 
Write-offs charged against the allowance— 
Allowance for credit losses at end of period$64,263 
During the nine months ended September 30, 2020, we increased our credit provision, classified in leasing expenses, by $34.0 million to reflect the increased credit risk due to the Covid-19 pandemic.


28


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)
20. Earnings per share
Basic Earnings Per Share (“EPS”) is calculated by dividing net income by the weighted average of our ordinary shares outstanding, which excludes 2,163,670 and 2,229,371 shares of unvested restricted stock as of September 30, 2020 and 2019, respectively. In general, for the calculation of diluted EPS, the weighted average of our ordinary shares outstanding for basic EPS is adjusted by the effect of dilutive securities provided under our equity compensation plans. However, due to the reported loss for the three and nine months ended September 30, 2020, basic EPS is not adjusted by the effect of dilutive securities. The number of shares under our equity compensation plans which could dilute EPS in the future was 2,731,545 for the three and nine months ended September 30, 2020. The number of shares excluded from diluted shares outstanding was 32,692 for the three and nine months ended September 30, 2019 because the effect of including these shares in the calculation would have been anti-dilutive.
Basic and diluted EPS for the three and nine months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net (loss) income for the computation of basic EPS$(849,929)$270,290 $(327,044)$835,936 
Weighted average ordinary shares outstanding - basic127,589,905 133,182,744 127,771,182 135,732,923 
Basic EPS$(6.66)$2.03 $(2.56)$6.16 
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net (loss) income for the computation of diluted EPS$(849,929)$270,290 $(327,044)$835,936 
Weighted average ordinary shares outstanding - diluted127,589,905 134,175,597 127,771,182 136,990,028 
Diluted EPS$(6.66)$2.01 $(2.56)$6.10 
Ordinary shares outstanding, excluding shares of unvested restricted stock, as of September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020December 31, 2019
Number of ordinary shares
Ordinary shares issued138,847,345 141,847,345 
Treasury shares(9,090,732)(10,263,856)
Ordinary shares outstanding129,756,613 131,583,489 
Shares of unvested restricted stock(2,163,670)(2,354,318)
Ordinary shares outstanding, excluding shares of unvested restricted stock127,592,943 129,229,171 

29


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)


21. Variable interest entities
We use many forms of entities to achieve our leasing and financing business objectives and we have participated to varying degrees in the design and formation of these entities. Our involvement in VIEs varies and includes being a passive investor in the VIE with involvement from other parties, managing and structuring all of the VIE’s activities, or being the sole shareholder of the VIE.
During the nine months ended September 30, 2020, we did not provide any financial support to any of our VIEs that we were not contractually obligated to provide.
Consolidated VIEs
As of September 30, 2020 and December 31, 2019, substantially all assets and liabilities presented in our Condensed Consolidated Balance Sheets were held in consolidated VIEs.
We have determined that we are the primary beneficiary (“PB”) of these entities because we control and manage all aspects of these entities, including directing the activities that most significantly affect the entities’ economic performance, absorb the majority of the risks and rewards of these entities and guarantee the activities of these entities.
The assets of our consolidated VIEs that can only be used to settle obligations of these entities, and the liabilities of these VIEs for which creditors do not have recourse to our general credit, are disclosed in our Condensed Consolidated Balance Sheets under Supplemental balance sheet information. Further details of debt held by our consolidated VIEs are disclosed in Note 13—Debt.
Wholly-owned ECA and Ex-Im financing vehicles
We have created certain wholly-owned subsidiaries for the purpose of purchasing aircraft and obtaining financing secured by such aircraft. The secured debt is guaranteed by the European ECAs and the Export-Import Bank of the United States. These entities meet the definition of a VIE because they do not have sufficient equity to operate without subordinated financial support from us in the form of intercompany notes.
Other secured financings
We have created a number of wholly-owned subsidiaries for the purpose of obtaining secured financings. These entities meet the definition of a VIE because they do not have sufficient equity to operate without subordinated financial support from us in the form of intercompany notes.
Wholly-owned leasing entities
We have created wholly-owned subsidiaries for the purpose of facilitating aircraft leases with airlines. These entities meet the definition of a VIE because they do not have sufficient equity to operate without subordinated financial support from us in the form of intercompany notes, which serve as equity.
Limited recourse financing structures
We have established entities to obtain secured financings for the purchase of aircraft in which we have variable interests. These entities meet the definition of a VIE because they do not have sufficient equity to operate without subordinated financial support from us in the form of intercompany notes. The loans of these entities are non-recourse to us except under limited circumstances.
AerCap Partners I Holding Limited (“AerCap Partners I”), AerCap Partners 767 Limited (“AerCap Partners 767”) and AerFunding are entities where we have determined we are the PB of the entity because we direct the activities that most significantly affect the economic performance of the entity and we absorb a significant portion of the risks and rewards of the entity. We provide lease management, insurance management and aircraft asset management services to AerCap Partners I, AerCap Partners 767 and AerFunding for a fee.

30


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)
21. Variable interest entities (Continued)

AerCap Partners I and AerCap Partners 767
AerCap Partners I and AerCap Partners 767 are 50%-50% joint ventures owned by us and Deucalion Aviation Funds.
As of September 30, 2020, AerCap Partners I had $54.4 million of subordinated debt outstanding, consisting of $27.2 million due to us and $27.2 million due to our joint venture partner.
As of September 30, 2020, AerCap Partners 767 had $32.6 million of subordinated debt outstanding, consisting of $16.3 million due to us and $16.3 million due to our joint venture partner.
AerFunding
We hold a 5% equity investment and 100% of the subordinated notes (“AerFunding Class E-1 Notes”) in AerFunding.
As of September 30, 2020, AerFunding had $2,175.7 million outstanding under a secured revolving credit facility and $917.1 million of AerFunding Class E-1 Notes outstanding due to us.
Non-consolidated VIEs
The following table presents our maximum exposure to loss in non-consolidated VIEs as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Carrying value of debt and equity investments
$123,059 $123,279 
Debt guarantees
7,674 68,901 
Maximum exposure to loss
$130,733 $192,180 
The maximum exposure to loss represents the amount that would be absorbed by us in the event that all of our assets held in the VIEs, for which we are not the PB, had no value and outstanding debt guarantees were called upon in full.
AerDragon Aviation Partners Limited and its subsidiaries (“AerDragon”), AerLift Leasing Limited (“AerLift”), Acsal Holdco, LLC (“ACSAL”) and Peregrine are investments that are VIEs in which we have determined that we do not have control and are not the PB. We do have significant influence and, accordingly, we account for our investments in AerDragon, AerLift and ACSAL under the equity method of accounting. We account for our equity investment in Peregrine under the cost method of accounting. Please refer to Note 9 —Investments for further details.
We have variable interests in other entities in which we have determined we are not the PB because we do not have the power to direct the activities that most significantly affect the entities’ economic performance.


31


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)
22. Related party transactions
The following tables present amounts received from related parties for management fees and dividends for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,
20202019
Management feesDividendsManagement feesDividends
AerDragon$136 $— $147 $— 
ACSAL120 83 120 285 
AerLift188 — 366 — 
$444 $83 $633 $285 

Nine Months Ended September 30,
20202019
Management feesDividendsManagement feesDividends
AerDragon$404 $— $527 $— 
ACSAL360 177 360 780 
AerLift440 — 1,135 197 
$1,204 $177 $2,022 $977 
We lease aircraft to, and have ordinary share and debt investments in NAS, a related party. The percentage of 2019 annual lease revenue attributable to NAS was approximately 3.4%. During the three months ended September 30, 2020, we sold two of our forward order aircraft to Arctic Aviation Assets DAC, which is a wholly owned subsidiary of NAS. No gain or loss was recognized on these sales. Please refer to Note 9 —Investments for details of our ordinary share and debt investments.
23. Commitments and contingencies
Aircraft on order
As of September 30, 2020, we had commitments to purchase 304 new aircraft scheduled for delivery through 2027. These commitments are based upon purchase agreements with Boeing, Airbus and Embraer S.A. (“Embraer”). These agreements establish the pricing formulas (including adjustments for certain contractual escalation provisions) and various other terms with respect to the purchase of aircraft. Under certain circumstances, we have the right to alter the mix of aircraft types ultimately acquired.
Prepayments on flight equipment include prepayments of our forward order flight equipment and other balances held by the aircraft manufacturers. Movements in prepayments on flight equipment during the nine months ended September 30, 2020 and 2019 were as follows:
Nine Months Ended September 30,
20202019
Prepayments on flight equipment at beginning of period$2,954,478 $3,024,520 
Prepayments during the period, net451,466 939,613 
Interest paid and capitalized during the period42,751 78,552 
Prepayments and capitalized interest applied to the purchase of flight equipment(738,425)(1,111,714)
Prepayments on flight equipment at end of period$2,710,270 $2,930,971 

32


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)
23. Commitments and contingencies (Continued)

Legal proceedings
General
In the ordinary course of our business, we are a party to various legal actions, which we believe are incidental to the operations of our business. The Company regularly reviews the possible outcome of such legal actions, and accrues for such legal actions at the time a loss is probable and the amount of the loss can be estimated. In addition, the Company also reviews indemnities and insurance coverage, where applicable. Based on information currently available, we believe the potential outcome of those cases where we are able to estimate reasonably possible losses, and our estimate of the reasonably possible losses exceeding amounts already recognized, on an aggregated basis, is immaterial to our Condensed Consolidated Financial Statements.
VASP Litigation
We are party to a group of related cases arising from the leasing of 13 aircraft and three spare engines to Viação Aerea de São Paulo (“VASP”), a Brazilian airline. In 1992, VASP defaulted on its lease obligations and we commenced litigation against VASP to repossess our equipment and obtained a preliminary injunction for the repossession and export of 13 aircraft and three spare engines from VASP. We repossessed and exported the aircraft and engines. VASP appealed and, in 1996, the Appellate Court of the State of São Paulo (“TJSP”) ruled that the aircraft and engines should be returned or that VASP could recover proven damages arising from the repossession.
We have defended this case in the Brazilian courts through various motions and appeals. In 2004, the Superior Court of Justice (the “STJ”) dismissed our then-pending appeal. In 2005, we filed an extraordinary appeal with the Federal Supreme Court (the “STF”). On June 24, 2020, the STF reversed its earlier contrary rulings and granted our extraordinary appeal, ordering a new panel of the STJ to review the merits of our challenge against TJSP’s original order. VASP has appealed the STF’s latest order.
In 2006, VASP commenced a related proceeding to calculate the amount of alleged damages owed under the TJSP’s 1996 judgment. In 2017, the court decided that VASP had suffered no damages even if the TJSP’s 1996 judgment regarding liability were affirmed. On April 20, 2018, VASP appealed this decision. We believe, however, and we have been advised, that it is not probable that VASP will ultimately be able to recover damages from us even if VASP prevails on the issue of liability. The outcome of the legal process is, however, uncertain. The ultimate amount of damages, if any, payable to VASP cannot reasonably be estimated at this time. We continue to actively pursue all courses of action that may reasonably be available to us and intend to defend our position vigorously.
In 2006, we brought actions against VASP in English and Irish courts seeking damages arising from the 1992 lease defaults. These actions resulted in judgments by the English court in the aggregate amount of approximately $40 million plus interest and judgments by the Irish court in the aggregate amount of approximately $36.9 million, all in our favor. VASP had meanwhile in 2008 been adjudicated as insolvent by a Brazilian bankruptcy court, which commenced bankruptcy proceedings. We have caused the English and Irish judgments to be domesticated in Brazil and submitted them as claims in the bankruptcy proceeding. The bankruptcy court has allowed the claims in the amount of $40 million in respect of the English judgments and $24 million in respect of the Irish judgments. We have been advised that it is not probable that VASP’s bankruptcy estate will have funds to pay its creditors but our court-approved claims may be used to offset any damages that VASP might be awarded in the Brazilian courts if for any reason we are not successful in defending ourselves against VASP’s claim for damages.

33


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)
23. Commitments and contingencies (Continued)

Transbrasil Litigation
We are party to a group of related actions arising from the leasing of an aircraft and two engines to Transbrasil S/A Linhas Areas (“Transbrasil”), a now-defunct Brazilian airline. By 1998, Transbrasil had defaulted on various obligations under its leases with two AerCap-related companies (the “AerCap Lessors”), along with other leases it had entered into with General Electric Capital Corporation (“GECC”) and certain of its affiliates (collectively, with GECC, the “GE Lessors”). General Electric Capital Aviation Services Limited (“GECAS”) was the servicer for all these leases at the time. Subsequently, Transbrasil issued promissory notes (the “Notes”) to the AerCap Lessors and GE Lessors (collectively, the “Lessors”) in connection with restructurings of the leases. Transbrasil defaulted on the Notes and the AerCap Lessors and the GE Lessors, individually brought enforcement actions against Transbrasil in 2001 (GECC also filed an action for the involuntary bankruptcy of Transbrasil).
Transbrasil brought a lawsuit against the Lessors in February 2001 (the “Transbrasil Lawsuit”), claiming that the Notes had in fact been paid at the time the Lessors brought the enforcement actions. In 2007, the trial judge ruled in favor of Transbrasil and the Lessors appealed. In April 2010, the appellate court published a judgment (the “2010 Judgment”) rejecting the Lessors’ appeal, ordering them to pay Transbrasil statutory penalties equal to double the face amount of the Notes (plus interest and monetary adjustments) as well as damages for any losses incurred as a result of the attempts to collect on the Notes. The 2010 Judgment provided that the amount of such losses would be calculated in separate proceedings in the trial court (the “Indemnity Claim”). In June 2010, the AerCap Lessors and GE Lessors separately filed special appeals before the STJ in Brazil. In October 2013, the STJ granted the special appeals filed by the GE Lessors, effectively reversing the 2010 Judgment in most respects as to all of the Lessors. Transbrasil appealed this order, but the appellate panel in November 2016 rejected Transbrasil’s appeal, preserving the 2013 reversal of the 2010 Judgment. All appeals in respect of the Transbrasil Lawsuit based on the merits of the dispute have now concluded.
However, in July 2011, while the various appeals of the 2010 Judgment were pending, Transbrasil brought three actions for provisional enforcement of the 2010 Judgment (the “Provisional Enforcement Actions”): one to enforce the award of statutory penalties; a second to recover attorneys’ fees related to that award, and a third to enforce the Indemnity Claim. Transbrasil submitted its alleged calculation of statutory penalties, which, according to Transbrasil, amounted to approximately $210 million in the aggregate against all defendants, including interest and monetary adjustments. Transbrasil also initiated proceedings to determine the amount of its alleged Indemnity Claim.
In light of the STJ’s ruling in October 2013, the trial court has ordered the dismissal of two of Transbrasil’s Provisional Enforcement Actions—those seeking statutory penalties and attorneys’ fees. The TJSP has since affirmed the dismissals of those actions and Transbrasil has appealed that order. Transbrasil’s Provisional Enforcement Action with respect to the Indemnity Claim remains pending. We believe we have strong arguments to convince the court that Transbrasil suffered no material damage as a result of the defendants’ attempts to collect on the Notes.
In February 2012, AerCap brought a civil complaint against GECAS and GECC in the State of New York (the “New York Action”), alleging, among other things, that GECAS and GECC had violated certain duties to AerCap in connection with their attempts to enforce the Notes and their defense of Transbrasil’s lawsuit. In November 2012, AerCap, GECAS, and the GE Lessors entered into a settlement agreement resolving all of the claims raised in the New York Action. The terms of the settlement agreement are confidential.


34


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)

24. Fair value measurements
The Company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy as described below. Where limited or no observable market data exists, fair value measurements for assets and liabilities are primarily based on management’s own estimates and are calculated based upon the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results may not be realized in actual sale or immediate settlement of the asset or liability.
The degree of judgment used in measuring the fair value of a financial and non-financial asset or liability generally correlates with the level of pricing observability. We classify our fair value measurements based on the observability and significance of the inputs used in making the measurement, as provided below:
Level 1 — Quoted prices available in active markets for identical assets or liabilities as of the reported date.
Level 2 — Observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.
Level 3 — Unobservable inputs from our own assumptions about market risk developed based on the best information available, subject to cost-benefit analysis. Inputs may include our own data.
Fair value measurements are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
Assets and liabilities measured at fair value on a recurring basis
As of September 30, 2020 and December 31, 2019, our derivative portfolio consisted of interest rate swaps and caps. The fair value of derivatives is based on dealer quotes for identical instruments. We have also considered the credit rating and risk of the counterparty of the derivative contract based on quantitative and qualitative factors. As such, the valuation of these instruments was classified as Level 2.
The following tables present our financial assets and liabilities that we measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2020 and December 31, 2019:
September 30, 2020
TotalLevel 1Level 2Level 3
Assets
Derivative assets$1,212 $— $1,212 $— 
Liabilities
Derivative liabilities$186,693 $— $186,693 $— 
December 31, 2019
TotalLevel 1Level 2Level 3
Assets
Derivative assets$11,664 $— $11,664 $— 
Liabilities
Derivative liabilities$97,066 $— $97,066 $— 
35


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)
24. Fair value measurements (Continued)

Assets and liabilities measured at fair value on a non-recurring basis
We measure the fair value of certain definite-lived intangible assets and our flight equipment on a non-recurring basis, when U.S. GAAP requires the application of fair value, including when events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Additional details of recoverability assessments performed on certain definite-lived intangible assets and our flight equipment are described in our Annual Report on Form 20-F for the year ended December 31, 2019, filed with the SEC on March 5, 2020.
Management develops the assumptions used in the fair value measurements. Therefore, the fair value measurements of definite-lived intangible assets and flight equipment are classified as Level 3 valuations.
Flight equipment
Inputs to non-recurring fair value measurements categorized as Level 3
We use the income approach to measure the fair value of flight equipment, which is based on the present value of estimated future cash flows. Key inputs to the income statement approach include the discount rate, current contractual lease cash flows, projected future non-contractual lease or sale cash flows, extended to the end of the aircraft’s estimated holding period in its highest and best use, and a contractual or estimated disposition value.
The current contractual lease cash flows are based on the in-force lease rates. The projected future non-contractual lease cash flows are estimated based on the aircraft type, age, and the airframe and engine configuration of the aircraft. The projected non-contractual lease cash flows are applied to follow-on lease terms, which are estimated based on the age of the aircraft at the time of re-lease and are assumed through the estimated holding period of the aircraft. The estimated holding period is the period over which future cash flows are assumed to be generated. Shorter holding periods can result when a potential sale or future disassembly of an aircraft for the sale of its parts (“part-out”) of an individual aircraft has been contracted for, or is likely. In instances of a potential sale or part-out, the holding period is based on the estimated sale or part-out date. The disposition value is generally estimated based on aircraft type. In situations where the aircraft will be disposed of, the disposition value assumed is based on an estimated part-out value or the contracted sale price.
The estimated future cash flows, as described above, are then discounted to present value. The discount rate used is based on the aircraft type and incorporates assumptions market participants would use regarding the likely debt and equity financing components, and the required returns of those financing components.
For flight equipment that we measured at fair value on a non-recurring basis, as a result of aircraft that were impaired, during the period ended September 30, 2020, the following table presents the fair value of such flight equipment that were impaired as of the measurement date, the valuation technique and the related unobservable inputs:
Fair valueValuation techniqueUnobservable inputWeighted average
Flight equipment$1,382,297 Income approachDiscount rate%
Non-contractual cash flows69 %
The significant unobservable inputs utilized in the fair value measurement of flight equipment are the discount rate, the remaining estimated holding period and the non-contractual cash flows. The discount rate is affected by movements in the aircraft funding markets, including fluctuations in required rates of return in debt and equity, and loan to value ratios. The remaining estimated holding period and non-contractual cash flows represent management’s estimate of the remaining service period of an aircraft and the estimated non-contractual cash flows over the remaining life of the aircraft. An increase in the discount rate would decrease the fair value measurement of the aircraft, while an increase in the remaining estimated holding period or the estimated non-contractual cash flows would increase the fair value measurement of the aircraft.

36


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)
24. Fair value measurements (Continued)

Fair value disclosures of financial instruments
The fair value of restricted cash and cash and cash equivalents approximates their carrying value because of their short-term nature (Level 1). The fair value of our long-term unsecured debt is estimated using quoted market prices for similar or identical instruments, depending on the frequency and volume of activity in the market. The fair value of our long-term secured debt is estimated using a discounted cash flow analysis based on current market interest rates and spreads for debt with similar characteristics (Level 2). Derivatives are recognized in our Condensed Consolidated Balance Sheets at their fair value. The fair value of derivatives is based on dealer quotes for identical instruments. We have also considered the credit rating and risk of the counterparties of the derivative contracts based on quantitative and qualitative factors (Level 2).
All of our financial instruments are measured at amortized cost, other than derivatives which are measured at fair value on a recurring basis. The carrying amounts and fair values of our most significant financial instruments as of September 30, 2020 and December 31, 2019 were as follows:
September 30, 2020
Carrying valueFair valueLevel 1Level 2Level 3
Assets
Cash and cash equivalents$3,244,433 $3,244,433 $3,244,433 $— $— 
Restricted cash281,353 281,353 281,353 — — 
Derivative assets1,212 1,212 — 1,212 — 
$3,526,998 $3,526,998 $3,525,786 $1,212 $ 
Liabilities
Debt$31,268,810 (a)$30,537,984 $— $30,537,984 $— 
Derivative liabilities186,693 186,693 — 186,693 — 
$31,455,503 $30,724,677 $ $30,724,677 $ 
(a)Excludes debt issuance costs, debt discounts and debt premium.  
December 31, 2019
Carrying valueFair valueLevel 1Level 2Level 3
Assets
Cash and cash equivalents$1,121,396 $1,121,396 $1,121,396 $— $— 
Restricted cash178,951 178,951 178,951 — — 
Derivative assets11,664 11,664 — 11,664 — 
$1,312,011 $1,312,011 $1,300,347 $11,664 $ 
Liabilities
Debt$29,624,266 (a)$30,219,588 $— $30,219,588 $— 
Derivative liabilities 97,066 97,066 — 97,066 — 
$29,721,332 $30,316,654 $ $30,316,654 $ 
(a)Excludes debt issuance costs, debt discounts and debt premium.  

37


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)
25. Subsequent events
On October 8, 2020, pursuant to the September Tender Offer, AerCap Trust repurchased and retired (i) $556.0 million aggregate principal amount of 4.5% Senior Notes due 2021, (ii) $513.7 million aggregate principal amount of 5.0% Senior Notes due 2021 and (iii) $398.9 million aggregate principal amount of 4.45% Senior Notes due 2021 for an aggregate total consideration of approximately $1.5 billion. During the three months ending December 31, 2020, we expect to recognize a loss on debt extinguishment related to the September Tender Offer of approximately $46 million.

38


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read this discussion in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes included in this Interim Report. Our financial statements are presented in accordance with U.S. GAAP, and are presented in U.S. dollars. 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.
Special note about forward looking statements
This report includes “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward looking statements largely on our current beliefs and projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed in this report, could cause our actual results to differ substantially from those anticipated in our forward looking statements, including, among other things:
the severity, extent and duration of the Covid-19 pandemic and the rate of recovery in air travel, the aviation industry and global economic conditions; the potential impacts of the pandemic and responsive government actions on our business and results of operations, financial condition and cash flows, as well as the effect of remote working arrangements on our operations;
the availability of capital to us, to our suppliers and to our customers, and changes in interest rates;
the ability of our lessees and potential lessees to make operating lease payments to us;
our ability to successfully negotiate aircraft purchases, sales and leases, to collect outstanding amounts due and to repossess aircraft under defaulted leases, and to control costs and expenses;
changes in the overall demand for commercial aircraft leasing and aircraft management services;
the effects of terrorist attacks on the aviation industry and on our operations;
the economic condition of the global airline and cargo industry and economic and political conditions;
development of increased government regulation, including travel restrictions, regulation of trade and the imposition of import and export controls, tariffs and other trade barriers;
competitive pressures within the industry;
the negotiation of aircraft management services contracts;
regulatory changes affecting commercial aircraft operators, aircraft maintenance, engine standards, accounting standards and taxes; and
the risks set forth or referred to in “Part II. Other Information—Item 1A. Risk Factors” included below.
The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward looking statements. Forward looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward looking statements speak only as of the date they were made and we undertake no obligation to update publicly or to revise any forward looking statements because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward looking events and circumstances described in this report might not occur and are not guarantees of future performance.
Aircraft portfolio
We are the global leader in aircraft leasing. We focus on acquiring in-demand aircraft at attractive prices, funding them efficiently, hedging interest rate risk prudently and using our platform to deploy these assets with the objective of delivering superior risk-adjusted returns. We believe that by applying our expertise, we will be able to identify and execute on a broad range of market opportunities that we expect will generate attractive returns for our shareholders. We are an independent aircraft lessor, and, as such, we are not affiliated with any airframe or engine manufacturer. This independence provides us with purchasing flexibility to acquire aircraft or engine models regardless of the manufacturer.

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As of September 30, 2020, we owned 933 aircraft and we managed 105 aircraft. As of September 30, 2020, we had commitments to purchase 304 new aircraft scheduled for delivery through 2027. As of September 30, 2020, the weighted average age of our 933 owned aircraft fleet, weighted by net book value, was 6.3 years, and as of September 30, 2019, the weighted average age of our 946 owned aircraft fleet, weighted by net book value, was 6.2 years. We operate our business on a global basis. As of September 30, 2020, 873 of our 933 owned aircraft were on lease and 60 aircraft were off-lease. As of November 5, 2020, of the 60 aircraft, 34 aircraft were designated for sale or part-out (which represented less than 1% of the aggregate net book value of our fleet), 14 aircraft were being marketed for re-lease (which represented approximately 1% of the aggregate net book value of our fleet), seven were re-leased or under commitments for re-lease and five aircraft were sold. During the three and nine months ended September 30, 2020 our owned aircraft utilization rate was 97% and 98%, respectively, calculated based on the number of days each aircraft was on lease, weighted by the net book value of the aircraft.
The following table presents our aircraft portfolio by type of aircraft as of September 30, 2020:
Aircraft typeNumber of
owned
aircraft
Percentage of
total
net book value
Number of
managed
aircraft
Number of on
order aircraft
Total owned,
managed and on
order aircraft
Airbus A320 Family276 13 %44 — 320 
Airbus A320neo Family153 21 %169 327 
Airbus A33060 %— 69 
Airbus A35027 10 %— — 27 
Boeing 737NG230 16 %43 — 273 
Boeing 737 MAX%— 71 76 
Boeing 76725 — — — 25 
Boeing 777-200ER16 %— 18 
Boeing 777-300/300ER22 %— 23 
Boeing 78790 29 %24 115 
Embraer E190/195-E210 %— 40 50 
Other19 — — —