12-Oct-2009 12:45 PM

AerCap releases 3Q2009 trading update, aircraft lessors trading flat – Suppliers Share Wrap

AerCap is due to acquire Genesis Lease in 4Q2009, but it is still pushing ahead with organic growth in what it continues to view as a difficult market.

CEO of AerCap, Klaus Heinemann, stated that the coming Winter will “remain challenging for the entire aviation industry”, echoing concerns that airlines have failed to build up sufficient reserves to ensure survival over the lean Winter period. Mr Heinemann added there are no indications that the situation will “deteriorate beyond last Winter's challenges, which were managed well by AerCap and most of our competitors."

In 3Q2009, AerCap signed new lease agreements for six aircraft (four new A320s for Frontier Airways and two new A319s for Adria Airways of Slovenia).

The company also signed LoIs for five used aircraft. During the quarter, AerCap executed an LoI to purchase 13 aircraft from GECAS, with two A320 aircraft from this portfolio acquired in 3Q2009, taking its portfolio to 304 aircraft. AerCap also entered into 14 engine lease agreements in 3Q2009, increasing its portfolio to 82 engines. AerCap completed eight aircraft deliveries in the third quarter under previously contracted lease agreements:

Aeroflot: Two A330s
TAP: One A320:
GOL: One B737-800
Strategic Airlines: Two A320s;
Garuda Indonesia: One B737-800;
TAME: One A320.

Later 2010 and 2011 will be better

Beyond the near term, the outlook for the company is improving, with Mr Heinemann stating AerCap has seen increasing signs of improvement in Asia and Latin America, as well as resilience in the LCC sector. As a result AerCap is witnessing more positive demand for 2010 and 2011.

AerCap also praised the “remarkable skill” shown by both manufacturers and export credit guarantee agencies in managing the tight funding situation for new aircraft deliveries, “thus protecting the solvency of their significant clients."

AerCap's shares were down 0.9% at the close of Friday trading, as was Genesis Lease. After gaining approximately 5% respectively after the takeover announcement in Sep-2008, the two companies have not made any further gains over the past month.

Other lessors were mixed, with Babcock & Brown Air flat and Aircastle gaining 1.2% on Friday.

The biggest mover on the day was Aero Inventory, which gained 11.4%, recouping Thursday's 9.1% fall.

Selected Aviation suppliers’ daily share price movements (% change): 09-Oct-09