Aercap NYSE: AER reported record first-quarter 2026 earnings and raised its full-year adjusted earnings outlook, citing robust demand for aviation assets amid persistent supply constraints and sustained consumer demand for air travel.
Record quarterly earnings and higher full-year guidance
Chief Executive Officer Aengus Kelly said the quarter marked “another record quarter of earnings,” with GAAP net income of $818 million, or $4.96 per share, and record adjusted net income of $889 million, or $5.39 per share. Kelly said the results equated to an 18% GAAP return on equity and a 19% adjusted return on equity for the quarter.
Chief Financial Officer Peter Juhas said purchase-accounting adjustments reduced GAAP results by $84 million, or $0.51 per share, net of tax. He said adjusted ROE was 19.4%, which he also described as a record.
On the back of the quarter’s performance and share repurchases, Kelly said AerCap increased full-year adjusted EPS guidance to $14.50 per share, “not including any additional gains on sale.” Juhas added that the updated guidance includes approximately $13 of EPS excluding gains on sale—“the top end of our previous range”—and includes $1.50 of gains on sale recorded in the first quarter, with no gains on sale assumed for the remainder of the year.
Leasing activity, lease extensions, and asset sales
Kelly said the company’s multiyear fleet-planning discussions with customers continued during the quarter, producing an 87% lease extension rate and 286 total transactions. He said AerCap signed 202 lease agreements and sold 41 owned assets, generating $1.5 billion of sales revenue.
Kelly also pointed to timing as an indicator of customer behavior amid geopolitical uncertainty, noting that 57 of the lease agreements were signed in March and suggesting “little change in airline behavior.” In the question-and-answer session, Kelly reiterated that since the start of the war referenced by analysts, AerCap had not seen buyers pull out of aircraft sales or attempt to renegotiate terms.
Juhas said basic lease rents were $1.682 billion, slightly lower than the prior quarter, primarily due to aircraft sales and downtime from aircraft AerCap took back from Spirit Airlines. Maintenance revenue was $190 million, and Juhas said net maintenance contribution was $138 million, higher than typical due to timing of revenue, transition expenses, and claims. He said AerCap expects maintenance contribution to remain elevated through the first half of the year before trending back toward “more normal levels” in the second half.
The company posted a net gain on sale of assets of $291 million. Juhas said the quarter’s asset sales produced an unlevered gain-on-sale margin of 24%, “equivalent to a multiple of 1.9x book value.” As of March 31, AerCap had $899 million of assets held for sale. Juhas said the company’s earlier full-year asset sales guidance was $2 billion to $3 billion, but given first-quarter volume and the held-for-sale balance, AerCap now expects sales “will be over $3 billion” for 2026, weighted toward the first half.
Capital allocation: buybacks, liquidity, and leverage
AerCap emphasized financial flexibility and share repurchases. Kelly said the company repurchased $745 million of shares in the first quarter and announced authorization for a new $1 billion share-repurchase program. Juhas said AerCap bought back 5.4 million shares during the quarter.
Management highlighted the balance sheet. Kelly said AerCap entered the second quarter with a “below-target leverage ratio” of 2.1x net debt to equity, $21 billion of liquidity, and more than $3 billion of excess capital. Juhas said liquidity included “just under” $1.5 billion of cash and $10 billion of revolvers and other committed facilities, alongside estimated sales and operating cash flow. He said the sources-to-uses coverage ratio was 2x, reflecting around $10 billion of excess cash coverage.
Juhas said operating cash flow was $1.4 billion for the quarter. He also said AerCap’s secured debt to total assets ratio fell to 9%, “an all-time low,” and that the average cost of debt was 4.1%, unchanged from the prior quarter.
Market environment: fuel prices, fleet decisions, and leasing opportunities
Kelly said AerCap continues to see strong demand for assets despite geopolitical events, while also warning that if jet fuel prices persist at current levels for three to six months, it would pressure the airline industry. He said the impact would vary by region, business model, balance sheet strength, and fuel hedging, adding that airlines have so far been able to pass a “significant portion” of higher fuel costs to consumers.
Looking beyond six months, Kelly said elevated fuel costs would pressure airline profitability and increase focus on balance sheet resilience. Over time, he said this could accelerate retirements of older-technology aircraft, though he said that dynamic is “not…playing out just yet,” emphasizing that fleet-planning decisions are made over multi-year horizons.
Kelly said a prolonged period of elevated fuel costs could create “additional growth opportunities” for AerCap, particularly through increased sale-leaseback activity as airlines look to fund growth while preserving cash. He also highlighted that “the global order book remains heavily skewed to airlines,” noting that four airlines have a combined order book larger than the entire lessor community.
In response to questions about airline activity since the start of the conflict, Kelly said the number of flights had seen a minimal year-over-year change based on April figures he cited. He said average daily flights in April 2025 were 102,833 versus 102,131 in April 2026, a reduction of 0.068%, which he described as “de minimis.”
Kelly also said the company had not yet agreed to any material concessions for airline customers related to higher fuel costs, though he expected requests could emerge if conditions persist, and said any assistance would be evaluated “case-by-case.”
Fleet strategy and orders: A320neo backlog and engine leasing
Management also discussed investments in new-technology aircraft and AerCap’s engine leasing platform. Kelly said AerCap added 110 aircraft to its backlog in the first quarter and referenced a “100-aircraft order” executed in March, which he described as a complex transaction supported by AerCap’s “infrastructure, industrial capability, and scale.” He said the order included a delivery stream starting in 2028.
During Q&A, Kelly said AerCap was able to access earlier Airbus A320neo family delivery positions than typical by leveraging its position as the largest engine lessor and addressing a shortage of CFM LEAP engines. He described moving engines out of Frontier and into AerCap’s leasing pool to support the in-service A320neo fleet, which in turn reduced pressure on the production line and helped free up aircraft slots that AerCap could access through exercised Airbus options.
When asked about lease rates on engines moved into the engine leasing pool, Kelly said the lease rates were “basically the same” as what they generated when part of the aircraft lease economics.
Juhas said net spread was 8% in the quarter, consistent with recent quarters, and he expects it to remain consistent for “another couple of quarters” before expanding later in the year. He attributed potential second-half uplift partly to assets currently on the ground returning to service and additional freighter deliveries late in the year.
Regarding aircraft taken back from Spirit Airlines, Juhas said the company continues to expect the first of those aircraft to return to service in the latter part of the year after going through shop visits as planned.
About Aercap NYSE: AER
AerCap Holdings N.V. NYSE: AER is a global aircraft leasing and aviation finance company that acquires, leases, sells and manages commercial aircraft and engines. Its core services include operating leases, finance leases, sale-and-leaseback transactions, aircraft trading and remarketing, and asset management for airline customers. The company also provides related commercial and technical support services designed to optimize fleet utilization and residual values over the life cycle of aircraft and engines.
Operating with a broad global footprint, AerCap serves airlines and other aviation customers across North America, Europe, Asia-Pacific, Latin America, the Middle East and Africa.
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