AerCap beats Covid-19, ends 2020 with strong balance sheet, liquidity

By Devika Patel

Knoxville, Tenn., March 2 – AerCap Holdings NV ended the last year with plenty of liquidity and lower funding costs than at the end of the prior year. The company was affected by the Covid-19 pandemic’s significant impact on the aviation industry, but still managed to end the year with a strong balance sheet and maintain its investment-grade rating.

“2020 was the most challenging year in the history of aviation, and we’ve seen the impact of those challenges come through our results,” chief financial officer Peter Juhas said on the company’s fourth quarter and year ended Dec. 31, 2020 earnings conference call on Tuesday.

“Despite this, we ended the year with a strong balance sheet, with a debt to equity ratio that’s the same as where we began the year, with a liquidity position that is higher than where we began the year and with funding costs that are lower than where we began the year,” Juhas said.

Leverage is below the company’s target ratio.

“We continue to maintain a very strong balance sheet,” Juhas said.

“Our leverage ratio is currently 2.6 to 1, which is below our target ratio of 2.7 to 1, and is in line with where we began 2020,” Juhas said.

The company had $9.1 billion of liquidity as of Dec. 31, 2020.

“As a result of all the actions we’ve taken to date and the improvement in our cash flows, we ended the year with a very healthy liquidity position,” Juhas said.

The company snagged the lowest coupon in its history with a January 2021 sale of $1 billion 1.75% five-year senior notes.

“This reflects the prudent actions we’ve taken and will continue to take in managing our balance sheet,” Juhas said.

The company has also maintained its investment-grade ratings through the pandemic.

“We’ve an especially strong balance sheet,” chief executive officer Aengus Kelly said on the call.

“We’ve gained this position by taking a series of deliberate steps over the course of 2020.

“These included extending the duration of our debt, accessing very competitive financings from multiple sources and maintaining our investment-grade ratings with all three major ratings agencies,” Kelly said.

On Jan. 6, AerCap Ireland Capital DAC and AerCap Global Aviation Trust priced $1 billion of 1.75% five-year guaranteed senior notes (Baa3/BBB/BBB-) at 99.876 to yield 1.985%.

The notes will have a make-whole call at Treasuries plus 25 basis points until Dec. 30, 2025 and a par call thereafter.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, SG Americas Securities LLC, TD Securities (USA) LLC, Truist Securities Inc., Barclays, J.P. Morgan Securities LLC, Mizuho Securities USA LLC, Santander Investment Securities Inc. and Wells Fargo Securities, LLC were the bookrunners.

The notes are guaranteed by AerCap Holdings.

AerCap earmarked the proceeds for general corporate purposes, including to acquire, finance or refinance aircraft assets and to repay debt.

AerCap is an independent aircraft leasing company based in Amsterdam.

© 2015 Prospect News.
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