Markets

AerCap says aircraft delivery delays boosting leases, sales

Lessor sold 32 planes between January and March, its third busiest quarter by value in the last four years

AerCap chief executive Aengus Kelly said first quarter demand, in particular for engine leases and the purchase of older aircraft, showed airlines “simply do not believe” under pressure manufacturers will be able deliver new planes on time. Photograph: Dara Mac Dónaill / The Irish Times

Padraic Halpin
Tue May 2 2023 - 20:06

AerCap expects to deliver full-year earnings at the higher end of its guidance as a broadening travel recovery and shortage of new aircraft boosts demand for plane leases and sales, the world’s largest aircraft lessor said on Tuesday.

Chief executive Aengus Kelly said first quarter demand, in particular for engine leases and the purchase of older aircraft, showed airlines “simply do not believe” under pressure manufacturers will be able deliver new planes on time.

The constrained supply of jets - which Kelly predicted will last several years - helped the Dublin-based lessor increase its first quarter revenue by 4 per cent to $1.87 billion and forecast full year adjusted earnings per share at the higher end of the $7 to $7.50 range provided in March.

Its New York-listed shares were 2 per cent higher in early trading.

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"The real interesting trend is the amount of purchases airlines are making," Kelly told an analyst call, saying customers would extend leases rather than buy planes outright if they thought there was a quick fix to delivery delays from the likes of Airbus and Boeing.

"This supports our view that airlines simply do not believe the production rates announced by the OEMs (original equipment manufacturer) and are planning accordingly."

AerCap, which has a portfolio of 3,500 aircraft, engines and helicopters, sold 32 planes between January and March, its third busiest quarter by value in the last four years.

Kelly added the lease rates on some engine types were up as much as 30% year-on-year as airlines seek to keep as many aircraft in the sky as possible with global traffic moving towards the pre-pandemic levels of 2019.

"It is clear that the tone of the airline industry continues to be positive and unlike recent years, this is now reflected in all major regions of the world," he said.

“Demand is robust. From discussions with airlines recently, their main concerns is around securing enough capacity to address the growing demand they see coming their way over the next several years.” --Reuters

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