Q4 2016 Real-Time Call Brief

Highlights

We had a record fourth quarter with net after tax income of $365 million and $1.47 billion for the full year net after tax income.

This equates to reported earnings per share $2.01 for the quarter and $5.52 for the full year.

The strong performance of the AerCap platform, which drove a fleet utilization rate of 99.5% for the full year.

In 2016, the breadth and depth of our platform, enable us to capture increasing demand for aircraft, by executing a record 458 transactions, which includes the signing of 279 leased agreements.

During the fourth quarter alone, we completed 116 aircraft transaction, including 56 new lease agreements, 19 new aircraft purchases, and 41 aircraft sales.

We now 78% of new aircraft deliveries to 2019 lease.

We continue to actively manage our portfolio during the fourth quarter resulting in over$3 billion of sales for the full year, 44% of which for widebody.

Based on the same market data, we estimate this accounts for approximately 23% of all used aircraft traded globally in 2016.

As far as AerCap's own financing activities are concerned, we singed financing transactions for $1.7 billion, during the fourth quarter.

We maintained over $9.5 billion of available liquidity.

Our debt-to-equity ratio remained to 2.721.

In the fourth quarter, we repurchased 5.7 million shares for $241 million.

This brings a full year total of share repurchases to 25 million shares for $966 million equating to 12% of the outstanding share counts.

The level of visibility we have in the future earning and the substantial excess capital we are able to generate provides us with the confidence to increase our share buyback program by $350 million through June 30.

Our reported net income for the fourth quarter was $364.7 million, and was $1,046.6 million for full year 2016.

Our return on equity for the full year was approximately 12.5% on a reported basis.

Fourth quarter 2016 reported net income was up 38% over the fourth quarter of 2015, driven impart by higher gains on sales, and other non-recurring items, as well as lower AeroTurbine losses.

The decrease in year-over-year net income was due to a few items including sales of older aircraft during 2015 and ‘16, which reduced average lease assets by approximately $1.6 billion.

Gains on the sales of aircraft and other non-recurring items provided $115.4 million of net income in the fourth quarter of 2016.

We incurred a loss of $13.6 million in our AeroTurbine business, during fourth quarter, which consisted primarily of operating expenses and further severance related costs.

The maintenance rights amortization impact of fourth quarter was a reduction to net income of $33.6 million, and all other earnings in fourth quarter were $296.5 million.

Our earnings per share for the fourth quarter on a reported basis were $2.01, and for the full year 2016 earnings per share were $5.52.

Fourth quarter 2016 earnings per share were up 51%, over the fourth quarter of 2015, driven by the same factors that those impacting net income and were also favorably impacted our share repurchase Our book value per share at the end of the fourth quarter was $49.33.

Over the past year, we have grown book value per share by 17% and since the end of 2014 book value per share has grown by 33%.

Since the beginning of 2015 and 2016, we have reduced our share count by 40.7 million shares or approximately $0.19 of our total shares outstanding.

Including the share repurchase to-date in 2017, we have repurchased 20% of total shares outstanding.

In doing so, we have returned over $1.8 billion to shareholders during this time period.

Our total revenue for the fourth quarter was $1,368.6 million, an increase of $30.6 million from the fourth quarter of 2015.

Our aircraft sales during 2015 and 2016 reduced our average lease assets by about $1.6 billion.

This led to a reduction in basic lease rent from $1,148.8 million in the fourth quarter of 2015 to $1,061.8 million in 2016.

Our maintenance revenues for the fourth quarter were $159.1 million, an increase of of $22.4 million from the prior year period, primarily due to lease termination and amendment along with the higher amount of end of lease payments during the fourth quarter of 2016.

Our net gain on sales was $58.7 million for the quarter, compared to $43.4 million a the year ago.

Our other income was $89 million for the quarter, which included $73 million of non-recurring income from a combination of leased terminations, and a gain related to the repayment of our note receivable earlier than we had expected.

The reduction on average lease assets, due to assets sales, resulted in lower basic lease rents and net interest margin of $790.5 million of fourth quarter, compared to $874.3 million in the prior year period.

Our annualized net spread for the fourth quarter was 9.3% compared to 9.8% in the fourth quarter of 2015.

Our average cost of debt increased from 3.7% in the fourth quarter of 2015 to 3.9% this past quarter, primarily due to the issuance of new longer term bonds that replaced shorter term ILFC notes that had lower interest expense as a result of purchase accounting.

In the fourth quarter we sold 37 aircraft with an average age of 15 year's.

For the full year, we had a net gain of $138.5 million, resulting in a sales margin of approximately 5% for the full year.

On the purchase side, we took delivery of 19 new aircraft during the fourth quarter.

Our leasing expenses were $143.3 million for the fourth quarter, versus $126.3 million in 2015.

The increase was primarily due to cost associated with the lease termination, during the fourth quarter of 2016.

Our SG&A expenses were $96.8 million, down from $103.6 million, in the fourth quarter of 2015.

We reported assets impairments of $11.4 million in the fourth quarter, which related the lease termination of two aircraft.

This was more than offset by the release of $13.4 million of maintenance reserves related to this aircraft.

We had transaction and restructuring expenses of $8.3 million during the quarter, which were primarily severance costs related to AeroTurbine downsizing.

We continue to maintain a very strong liquidity position and in the year with available liquidity of $9.5 billion.

Together with our estimated operating cash flows, that gives us 1.5 times coverage of our next 12 months cash needs or excess cash coverage of $4 billion.

So far this year, we have already completed a number of significant financing transactions these include the amendment, extension and up sizing of our revolving credit facility from $3 billion to $3.75 billion, the amendment and extension of over $2 billion of term loan facilities and the $600 million of bond offering we did in January.

We have leased 279 aircraft during the year, and average of more than one every business day.

We sold over $3 billion worth of assets, significantly improving the quality of our portfolio.

We use the excess capital we generate to buyback 25 million shares for $966 million worth of stock.