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    AER
    Earnings call· Mar 2026(Q1 FY26)

    AerCap Holdings N.V. Q1 FY26 earnings call AER

    Apr 29, 2026 Source

    Executive summary

    AerCap Q1 FY26 — Record Earnings and Increased EPS Guidance Amid Strong Demand

    AerCap delivered record Q1 FY26 earnings and raised full-year adjusted EPS guidance, driven by robust demand for aviation assets and strategic capital deployment. The company capitalized on a strong sales environment and expanded its order book with new technology aircraft, while maintaining a disciplined approach to capital allocation including significant share repurchases. Management acknowledges potential pressure on airlines from elevated fuel prices but sees opportunities for lessors.

    Highlights

    5

    • Record GAAP net income of $818 million or $4.96 per share.

    • Record adjusted net income of $889 million or $5.39 per share, representing a 19.4% adjusted ROE.

    • Strong sales environment with 41 owned assets sold for $1.5 billion, generating an unlevered gain on sale margin of 24%.

    • Full year adjusted EPS guidance increased to $14.50 per share.

    • New $1 billion share repurchase program authorized.

    Concerns

    3

    • Persistent high jet fuel prices for 3 to 6 months will place pressure on the airline industry.

    • Elevated fuel costs beyond 6 months will pressure airline profitability and could accelerate retirement of older technology aircraft.

    • Basic lease rents were slightly lower compared to last quarter due to aircraft sales and downtime on aircraft taken back from Spirit Airlines.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full year 2026 Adjusted EPS
    $14.50 per share
    high materiality
    High
    Full year 2026 EPS excluding gains on sale
    approximately $13
    medium materiality
    High
    Full year 2026 asset sales
    over $3 billion
    medium materiality
    High

    Operational metrics

    49
    GAAP net income
    $818 millionrecord
    Q1 FY26
    GAAP EPS
    $4.96
    Q1 FY26
    Purchase accounting adjustments
    $84 million
    Q1 FY26
    Purchase accounting adjustments per share
    $0.51
    Q1 FY26
    Lease premium amortization
    $26 million
    Q1 FY26
    Maintenance rights amortization related to maintenance revenue
    $37 million
    Q1 FY26
    Maintenance rights amortization related to leasing expenses
    $21 million
    Q1 FY26
    Net tax effect of purchase accounting adjustments
    $13 million
    Q1 FY26
    Net tax effect of purchase accounting adjustments per share
    $0.08
    Q1 FY26
    Adjusted net income
    $889 millionrecord
    Q1 FY26
    Adjusted EPS
    $5.39
    Q1 FY26
    GAAP Return on Equity
    18%
    Q1 FY26
    Adjusted Return on Equity
    19.4%record
    Q1 FY26

    Also stated as 19% by Aengus Kelly.

    Lease extension rate
    87%
    Q1 FY26
    Total transactions closed
    286
    Q1 FY26
    Lease agreements signed
    202
    Q1 FY26
    Lease agreements signed in March
    57%
    March 2026

    Of total lease agreements signed in Q1.

    Owned assets sold
    41
    Q1 FY26
    Sales revenue from asset sales
    $1.5 billion
    Q1 FY26
    Share repurchases
    $745 million
    Q1 FY26
    Net debt to equity leverage ratio
    2.1xsame as last quarter
    Q1 FY26

    Below target.

    Total liquidity
    $21 billion
    as of March 31
    Cash balance
    $1.5 billion
    as of March 31
    Revolvers and other committed facilities
    $10 billion
    as of March 31
    Excess capital
    $3 billion
    as of March 31
    Sources-to-uses coverage ratio
    2x
    as of March 31
    Excess cash coverage
    $10 billion
    as of March 31
    Aircraft added to backlog
    110
    Q1 FY26

    Airbus A320neo aircraft.

    Basic lease rents
    $1.682 billionslightly lower compared to last quarter
    Q1 FY26

    Primarily due to aircraft sales and downtime on aircraft taken back from Spirit Airlines.

    Maintenance revenues
    $190 millionelevated
    Q1 FY26
    Net maintenance contribution
    $138 millionhigher than usual
    Q1 FY26

    Due to timing of maintenance revenue, transition expenses, and claims. Expected to remain elevated through H1 FY26 before trending back to normal levels in H2 FY26.

    Net gain on sale of assets
    $291 million
    Q1 FY26
    Unlevered gain on sale margin
    24%
    Q1 FY26
    Multiple of book value (asset sales)
    1.9x
    Q1 FY26
    Assets held for sale
    $899 million
    as of March 31
    Interest expense
    $467 million
    Q1 FY26
    Leasing expenses
    $110 millionsignificant decrease from Q4
    Q1 FY26

    Q4 included majority of restructuring costs related to Spirit Airlines bankruptcy.

    Income tax expense
    $139 million
    Q1 FY26
    Effective tax rate
    15.5%
    Q1 FY26
    Secured debt to total assets ratio
    9%decrease from 10% last quarter
    as of March 31

    All-time low.

    Average cost of debt
    4.1%same as last quarter
    Q1 FY26
    Shares repurchased
    5.4 million
    Q1 FY26
    Average daily number of flights (April 2025)
    102,833
    April 2025
    Average daily number of flights (April 2026)
    102,131
    April 2026
    Reduction in daily flights YoY
    0.068%
    April 2026 vs April 2025

    De minimis impact.

    New technology aircraft in fleet
    over 80%
    current
    GAAP ROE above 5-year treasury (long-term)
    9.5%
    2007 to current

    Average over 19 years.

    Fuel as percentage of airline cost base
    30%
    current

    Generally.

    Fuel cost pass-through by airlines
    40-50%
    current

    Significant percentage passed on in fare increases.

    Orderbook & backlog

    1
    Airbus A320neo aircraft110 unitsQ1 FY26

    Added in Q1 FY26

    Deliveries starting in 2028.

    Deals & partnerships

    2
    AirbusOrder for 110 A320neo aircraft.Deliveries starting in 2028

    Leveraged engine leasing leadership to secure attractive terms and delivery slots by exercising options.

    Frontier AirlinesArrangement to take aircraft and engines from Frontier and place engines into AerCap's engine leasing pool.

    Helped solve issues for business partners (CFM and Frontier) by rapidly moving engines, supporting the in-service fleet of Airbus Neo equipment.

    Risks & headwinds

    3
    Persistent high jet fuel pricesNext 3-6 months

    If persist for 3 to 6 months, will place pressure on the airline industry.

    Mitigation: Airlines passing on 40-50% of costs, reducing flying, voluntary staff leave. AerCap expects increased sale-leaseback opportunities if sustained beyond 6 months.

    Pressure on airline profitabilityBeyond 6 months

    Elevated fuel costs beyond 6 months will pressure airline profitability.

    Mitigation: Could contribute to acceleration in retirement of older technology aircraft, creating growth opportunities for AerCap.

    Downtime on aircraftQ1 FY26

    Basic lease rents slightly lower due to downtime on aircraft taken back from Spirit Airlines.

    Mitigation: Aircraft are going into the shop as planned, with revenue expected late this year.

    What to watch in Q2 FY26

    4

    Impact of elevated fuel prices on airline demand and fleet decisions

    Next quarter (Q2 FY26 earnings call)
    CurrentDaily flights down 0.068% YoY; no sales fallen through; no material concessions agreed.
    TargetObserve if flight reductions increase, if sales are renegotiated, or if concession requests become material.

    Why it matters

    Sustained high fuel prices could pressure airline profitability and accelerate older aircraft retirements, impacting AerCap's sales and lease rates.

    That being said, if jet fuel prices persist at current levels for the next 3 to 6 months, it will place pressure on the airline industry.

    Q&A highlights

    7

    When would elevated fuel prices and geopolitical events start impacting residual values of older aircraft?

    Aengus Kelly stated that daily flights are down a de minimis 0.068% year-on-year, and airlines take years to adjust fleet plans. Older technology aircraft are on long leases, and AerCap's fleet is over 80% new technology, so significant impact is not expected for a "quite significant period of time."

    “So the average daily number of flights in April of 2025 was 102,833. In April 2026, the average number of flights is 102,131. So Ron, I give that number because the amount of daily flights, the reduction year-on-year for the same period is 0.068 of 1%.”

    asked by Ron Epstein · answered by Aengus Kelly

    2 min read5 chapters

    Detailed Narrative

    01

    Record Financial Performance

    AerCap reported record GAAP net income of $818 million ($4.96/share) and adjusted net income of $889 million ($5.39/share) for Q1 2026, achieving a 19.4% adjusted ROE. This strong performance was supported by a robust sales environment, with 41 owned assets sold for $1.5 billion, yielding a 24% unlevered gain on sale margin. The net maintenance contribution was $138 million, higher than usual due to timing, and is expected to normalize📎 in the second half of the year.

    02

    Strategic Capital Allocation and Shareholder Returns

    The company repurchased 5.4 million shares for $745 million in Q1 and authorized a new $1 billion share repurchase program, demonstrating confidence in its valuation and commitment to shareholder returns. AerCap also increased its full-year adjusted EPS guidance to $14.50 per share and expects asset sales to exceed $3 billion for FY26, weighted towards the first half.

    03

    Market Environment and Fuel Price Impact

    Management noted continued strong demand for aviation assets despite geopolitical events, with daily flights down a de minimis 0.068% year-on-year in April. However, persistent high jet fuel prices for 3-6 months could pressure airlines, potentially accelerating the retirement of older aircraft and increasing sale-leaseback opportunities for AerCap beyond 6 months. Airlines are currently passing on 40-50% of fuel costs.

    04

    Fleet Modernization and Order Book Expansion

    AerCap added 110 Airbus A320neo aircraft to its order book, with deliveries starting in 2028. This strategic move leveraged the company's engine leasing leadership to address a shortage of CFM LEAP engines and free up Airbus production capacity, allowing AerCap to secure attractive terms and enhance portfolio quality, aligning with a positive long-term outlook for the aviation sector.

    05

    Liquidity and Leverage

    AerCap maintains a strong financial position with a below-target leverage ratio of 2.1x net debt to equity, $21 billion of liquidity (including $1.5 billion cash and $10 billion revolvers), and over $3 billion of excess capital. This provides significant flexibility for organic growth, share repurchases, and opportunistic investments, with a secured debt to total assets ratio at an all-time low of 9%.

    AI-generated summary of the company’s earnings call. Not investment advice.