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    AER
    Earnings call· Jun 2026(Q2 FY26)

    AerCap Holdings N.V. Q2 FY26 earnings call AER

    Jul 29, 2026 Source

    Executive summary

    AerCap Q2 FY26 — Strong Financials and Strategic Wide-Body Order

    AerCap delivered a strong second quarter, marked by robust financial performance, disciplined capital deployment, and a strategic order for 15 Boeing 787 aircraft. The company raised its full-year EPS guidance, reflecting confidence in its business model and the supportive industry backdrop of constrained aircraft and engine availability. Management continues to evaluate new opportunities, such as aeroderivatives, while prioritizing shareholder returns and maintaining financial flexibility.

    Highlights

    5

    • Reported adjusted earnings per share of $5.14, representing an adjusted return on equity of 18%.

    • Generated $1.5 billion of cash flow from operations in the quarter.

    • Repurchased over $690 million of shares in Q2, contributing to over $1.4 billion in H1 FY26.

    • Completed $1.4 billion of asset sales during the quarter, generating a gain on sale margin of 20%.

    • Raised full-year 2026 adjusted EPS guidance to $16.80.

    Concerns

    4

    • Geopolitical challenges are expected to lead to higher input costs for airlines, potentially pressuring airline margins this year.

    • Middle East, Asia Pacific, and North America experienced some weakness in daily flight activity.

    • There is a perception that converted aeroderivative units may be less efficient than OEM-produced ones in the long term.

    • Uncertainty exists regarding the adverse impact on aeroderivative demand if grid capacity expands materially or alternative technologies improve.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Adjusted EPS
    $16.80
    high materiality
    High
    Full-year 2026 Estimated EPS excluding gains on sale
    approximately $14
    medium materiality
    High
    Full-year 2026 Asset Sales
    $4 billion to $5 billion
    medium materiality
    High
    Net maintenance contribution
    return to more normal levels
    low materiality
    High
    Fleet growth
    grow slightly
    low materiality
    Medium
    Spirit aircraft return to service
    returning in the fourth quarter
    medium materiality
    High
    Lease yield and net spread
    upward for lease yield and slightly up for net spread
    medium materiality
    High
    Roll-off of less favorable leases
    over the next 5 years
    medium materiality
    High
    Next-gen narrowbody significant deliveries
    not happening before the end of the next decade
    low materiality
    High

    Operational metrics

    33
    Adjusted Earnings Per Share
    $5.14
    Q2 FY26

    Represents an adjusted return on equity of 18%.

    Adjusted Return on Equity
    18%
    Q2 FY26

    Based on adjusted EPS of $5.14.

    Asset Sales
    $1.4 billion
    Q2 FY26

    Generated a gain on sale margin of 20%.

    Gain on Sale Margin (unlevered)
    20%
    Q2 FY26

    Resulted from $1.4 billion of asset sales.

    Share Repurchases
    $691 million
    Q2 FY26

    Part of over $1.4 billion repurchased in H1 FY26.

    Share Repurchases (H1 FY26)
    $1.4 billion
    H1 FY26

    Represents over 6% of shares outstanding at the beginning of the year.

    Total Share Repurchases (since 2023)
    $8 billion
    since 2023

    Significant capital return program.

    Excess Capital Available to Deploy
    approximately $3 billion
    current

    After adding 131 aircraft to order book and returning $1.5 billion to shareholders.

    Lease Extension Rate (passenger aircraft)
    85%well above the long-term average
    Q2 FY26

    Reflects strong demand and supply/demand imbalance.

    GAAP Net Income
    $726 million
    Q2 FY26
    GAAP EPS
    $4.59
    Q2 FY26
    Purchase Accounting Adjustments Impact
    $129 million
    Q2 FY26

    Includes lease premium amortization ($26M), maintenance rights amortization related to maintenance revenue ($36M), and maintenance rights amortization related to leasing expenses ($67M).

    Recoveries related to Ukraine conflict
    $28 million
    Q2 FY26
    Net Tax Effect of Adjustments
    $15 million
    Q2 FY26
    Basic Lease Rents
    $1.67 billion
    Q2 FY26
    Maintenance Revenues
    $177 millionremained elevated
    Q2 FY26
    Net Maintenance Contribution
    $131 millionhigher than usual
    Q2 FY26

    Maintenance revenue less leasing expenses after purchase accounting adjustments; expected to return to normal levels in H2.

    Net Gain on Sale of Assets
    $223 million
    Q2 FY26

    From sales of 38 owned assets for $1.4 billion.

    Assets Held for Sale
    just over $400 million
    as of June 30
    Interest Expense
    $468 million
    Q2 FY26
    Income Tax Expense
    $123 million
    Q2 FY26
    Total Sources of Liquidity
    approximately $22 billion
    as of June 30
    Cash Balance
    just under $1.7 billion
    as of June 30

    Part of total liquidity.

    Revolver Capacity
    $10 billion
    as of June 30

    Part of total liquidity.

    Other Committed Facilities
    $3 billion
    as of June 30

    Part of total liquidity.

    Sources to Uses Coverage Ratio
    1.9x
    Q2 FY26
    Leverage Ratio
    2.0:1about the same as last quarter
    as of June

    Well below target, providing significant firepower.

    Secured Debt to Total Assets Ratio
    9%record low level reported last quarter
    Q2 FY26
    Average Cost of Debt
    4.2%
    Q2 FY26
    Asset Sales (H1 FY26)
    $2.8 billion
    H1 FY26

    Contributed to outperformance relative to guidance.

    Lease Yield (YoY)
    up about 30 basis points
    YoY
    Net Spread (YoY)
    up 50 basis points
    YoY
    Net Spread (sequential)
    flat
    last few quarters

    Despite Spirit aircraft downtime.

    Orderbook & backlog

    2
    Total aircraft added to order book131 aircraftYTD FY26

    Includes Airbus and Boeing orders.

    Boeing 787 order booklargest of any lessorQ2 FY26

    increased by 15 aircraft

    Deliveries 2030-2033.

    Product announcements

    1
    ProductTypeDetails
    Boeing 787 aircraftexpansion

    Deals & partnerships

    2
    BoeingOrder for 15 new Boeing 787 aircraft

    Deliveries will start in 2030 and run through 2033. AerCap has the largest 787 fleet and order book among lessors. Secures scarce delivery positions due to long-standing relationship and scale.

    AirbusOrders for almost 200 aircraft (A320neo family)

    Orders taken over from airlines (e.g., Spirit, Frontier) in return for assistance. Delivery slots begin as early as late 2027, 2028, 2029, 2030, 2031, 2032, providing significant economic advantage due to earlier delivery compared to direct OEM orders.

    Capital programs

    1
    Boeing 787 aircraft orderunderway
    Start: Q2 FY26

    Benefit: 15 new wide-body aircraft

    Reflects conviction in long-term fundamentals of the wide-body market and ability to secure scarce delivery positions.

    Risks & headwinds

    5
    Higher input costs for airlines due to geopolitical challengesthis year

    will no doubt put further pressure on airline margins this year

    Mitigation: industry's ability to adapt to changing market conditions

    Potential for converted aeroderivative units to be less efficient than OEM-produced oneslong term

    perception in the market that converted units may in the long term, be less efficient

    Mitigation: remain prudent and will only pursue opportunities where we believe we have the right partners, sufficient operational capabilities and a clear path to generating shareholder value

    Adverse impact on aeroderivative demand from grid capacity expansion or alternative technologiesover time

    Demand for aero derivatives could be adversely effective

    Mitigation: evaluating against industry-leading returns in core business; will only pursue with right partners and clear value path

    Weakness in daily flight activity in certain regionscurrent

    Middle East, Asia Pacific and North America have experienced some weakness in daily flight activity

    Mitigation: Europe, Africa and Latin America have continued to see growth; overall resilience of travel demand

    Impaired profitability for some airlines if high oil prices persistif they're to last

    some airlines will feel that, and we'll definitely see impaired profitability

    Mitigation: AerCap's ability to move assets rapidly around the world from underperforming to performing airlines and regions

    What to watch in Q3 FY26

    5

    Spirit aircraft return to service

    Q4 FY26
    CurrentOriginal aircraft expected Q4 FY26, incremental 10 aircraft later this year.
    TargetAircraft successfully returned to service and generating revenue.

    Why it matters

    This will positively impact lease yields and net spread, contributing to portfolio performance.

    Yes. So that's still our expectation that we'll see💬 returning in the fourth quarter. And on the other 10 aircraft, those should go out later this year as well. So that should be a positive for lease yields, positive for net spread, some of those free tes coming in as well.

    Q&A highlights

    7

    What happens to the 15% of aircraft not extended (out of 85% extension rate)? Are they sold, parted out, or re-leased?

    Non-extended aircraft are mostly parted out, with re-leasing being rare. The 85% extension rate applies to aircraft either re-leased or extended, excluding those sold.

    “Just to be clear on that percentage, Jamie, so the way we calculate that is that's 85%. So of everything that is either going out on lease again to a new customer or being extended, that's the denominator. 85% extended, 15% re-leased, and we've excluded aircraft that are being sold.”

    asked by Jamie Baker · answered by Peter Juhas

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q2 Performance & Capital Deployment

    AerCap reported a strong Q2 FY26, driven by robust financial results and disciplined capital allocation. The company generated $1.5 billion in operating cash flow and repurchased over $690 million of shares, contributing to $1.4 billion in buybacks for the first half of the year. Asset sales totaled $1.4 billion with a 20% gain on sale margin, reflecting a healthy market and active portfolio management.

    02

    Strategic Wide-Body Investment

    The company placed an order for 15 new Boeing 787 aircraft, with deliveries scheduled between 2030 and 2033. This strategic investment leverages AerCap's strong relationship with Boeing and its scale to secure scarce delivery positions, capitalizing on the pronounced supply-demand imbalance in the wide-body market and the anticipated long-term fleet renewal cycle.

    03

    Industry Dynamics & Supply-Demand Imbalance

    The aviation industry continues to benefit from strong travel demand and disciplined capacity growth, despite geopolitical challenges🌐 and higher input costs for airlines. Aircraft and engine availability remain constrained, particularly for wide-body aircraft, supporting strong leasing activity, lease extensions, and asset values for AerCap.

    04

    Aeroderivative Market Evaluation

    AerCap has conducted extensive diligence on the aeroderivative opportunity for data centers, engaging with OEMs and supply chain participants. While strong demand for gas-powered turbines exists, the company notes the need for strategic partners, specialized expertise, and clear paths to shareholder value, given concerns about long-term efficiency of converted units and potential grid expansion.

    05

    Leverage and Shareholder Returns

    Despite significant share repurchases and new aircraft orders, AerCap's leverage ratio remains low at 2.0:1, reflecting strong cash generation. Management continues to prioritize returning capital to shareholders and seeking accretive growth opportunities, while also maintaining financial flexibility for potential larger opportunistic deals.

    06

    Lease Portfolio Outlook

    The company expects lease yields and net spread to trend upwards over the next couple of quarters, driven by the return to service of Spirit aircraft and the ongoing roll-off of less favorable leases from the COVID-19 period, which is more than halfway complete and expected to continue over the next five years.

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