Company of the Month September 2019: AerCap is a world leader with 10% of the world global market in aircraft

Company of the Month | Wed 2 Oct | Author – Business & Finance
Pictured: An Airbus A321LR aircraft, on lease from AerCap, delivered to Canadian airline Air Transat in May 2019.

Company of the Month for September 2019, AerCap is a global leader in the aircraft leasing industry, with a fleet accounting for 10% of the global market.

Speaking on Bloomberg TV at the start of the month, CEO Aengus Kelly discussed the company’s pipeline, explaining that their aircraft are leased a year to two in advance. “The average expiry of our fleet is in 2026,” he stated.

We will buy, sell or lease an aircraft every 24 hours. We’ve moved 2,000 aircraft in the last five years, that’s more than anyone in the world.”

Aengus Kelly, CEO, AerCap

Mr Kelly asserted that trade is generally robust around the world, with some pockets of exceptions. AerCap‘s portfolio of owned and managed aircraft currently numbers 1,042 airplanes, with 331 aircraft on order.

In light of the ongoing trade tensions between the US and China, a slowing global economy, and other headwinds, the company remains forward-looking. Mr Kelly explained that when a customer orders an airplane from AerCap, they are projecting two years’ down the line, which is when the delivery of the airplane will be expected. “The trade war is out there for sure,” he averred. “But it has yet to have a discernible effect on demand, particularly in China, because the Chinese market is highly protected and highly regulated.”

Portfolio management

Mr Kelly also shared some of the details behind the company’s very defined portfolio management strategy. He pointed out:

What you want to make sure is that you have assets your customers want. You have to really make sure you listen to where the market is going, where it’s trending.”

In fact, AerCap’s fleet makes up almost 10% of the world global market in aircraft. “That gives us enormous information,” Mr Kelly revealed. “For example, what are airlines doing with the interiors of aircraft? That’s a key driver of your decision-making. We see more of that than anyone in the world. Are airlines densifying airplanes? Unfortunately for the consumer, they are. Are they putting money into First Class? Are they flying longer haul missions? We see every month how our portfolio of aircraft is used so we can see what is happening to each individual type.

“Are they lengthening the average emission? Are they shortening it? Where are they flying to? So you use all that information and you’re collating it every day to make all those decisions about the aircraft that you feel will be in demand for the longer term and also to make sure that you are pruning your portfolio of assets you may feel that may suffer because of the trends that are happening out there,” he continued.

Pictured: Embraer aircraft

September news

The latest deal announced during this September was for long-term lease agreements with Air Macau for three new Airbus A321neo aircraft. The agreement was signed during a ceremony in Macau to celebrate the airline’s 25th anniversary. The first aircraft is scheduled to deliver in November 2020 with the two remaining units delivering through October 2021.

Also in September AerCap delivered the first Embraer E195-E2 on operating lease to Brazilian carrier, Azul Airlines. The aircraft, powered by Pratt & Whitney GTF™ engines, will be the first of its type to enter into commercial service next month.

AerCap is the launch lessor customer of Embraer’s E-Jets E2, with a total of 50 Embraer E190-E2s and E195-E2s owned and on order. The lessor has placed 47 of the 50 aircraft.

In addition, AerCap announced in early September that it has signed an agreement to sell a 19-aircraft portfolio to Dara Aviation (“Dara”), an Irish entity established by NCB Capital. NCB Capital has $40bn of assets under management and is the brokerage arm of the National Commercial Bank, the largest bank in Saudi Arabia.

This is the second portfolio acquired by NCB Capital from AerCap following their purchase of 21 aircraft in 2017, which AerCap services.

The 19-aircraft portfolio consists of a mix of wide-body and narrow-body aircraft on lease to airlines around the world. As part of the sale, Dara has appointed AerCap as exclusive Servicer. AerCap will provide lease management services including aircraft technical management, lease administration and marketing services.

Business & Finance, Company of the Month

Business Person the MonthBusiness & Finance, in association with KPMG, recognises excellence in business through the ‘Company of the Month’ award. The Company of the Month award recognises the company which best demonstrates outstanding business leadership, sustainable growth, innovative strategy, strong financial returns and employee development.