AerCap Holdings N.V. (AER) Earnings

Management highlights

### Core Operating Performance - The 85% lease extension rate on passenger aircraft was well above the long-term industry average, reflecting strong market demand for leased aircraft - Completed 38 asset sales for $1.4 billion in total revenue in Q2, with a 20% unlevered gain on sale margin, and $2.8 billion in total asset sales in H1 2026 - Generated $1.5 billion in operating cash flow, maintaining a very strong liquidity position of ~$22 billion and a low leverage ratio of 2.05x - Repurchased more than $690 million of common shares in Q2, and over $1.4 billion in H1 2026, returning over $1.5 billion to shareholders in the first half of the year via repurchases and dividends ### Strategic Order Activity - Announced an order for 15 new Boeing 787 widebody aircraft, with deliveries scheduled from 2030 through 2033. This gives AIRCAP the largest 787 fleet and order book of any aircraft lessor globally, positioning the company to meet growing long-term demand for fuel-efficient widebody aircraft - Added 131 aircraft to the company's order book year-to-date, focused on modern, fuel-efficient aircraft from both Boeing and Airbus - Most recent direct OEM order slots were acquired via stepping into existing airline order books (from distressed carriers like Spirit and Frontier), which enables earlier delivery and more favorable pricing economics than placing new direct orders ### Market Environment - Global airline industry aggregate performance remains healthy in 2026, supported by sustained travel demand, strong load factors, and disciplined capacity growth - A persistent supply-demand imbalance exists across the global aircraft market, particularly for widebody aircraft, driven by years of production shortages and delivery delays. Over 200 fewer widebody retirements have occurred in the past five years, extending the need for new widebody leasing capacity for years to come - Narrowbody demand also remains very strong, particularly for new technology models like the A321neo, with constrained available delivery capacity

Guidance

- Full year 2026 adjusted EPS guidance was raised upward to $16.80 per share, from the prior guidance of $14.50 per share. Of this, $14.00 is core EPS excluding asset sale gains, with $2.80 reflecting realized gains from H1 2026 asset sales (no additional gains for H2 2026 are included in guidance) - Full year 2026 total asset sales are projected to be in the range of $4 billion to $5 billion, after reaching $2.8 billion in H1 - Elevated net maintenance contribution in H1 2026 is expected to return to more normal historical levels in H2 2026 - Leverage is currently expected to gradually rise over time to the target mid-2x range, but this will happen gradually as future order commitments are deployed - Aircraft returned from Spirit Aviation are still on track to return to service and be re-leased starting in Q4 2026, which will provide a modest upward lift to portfolio lease yields and net spreads over the coming quarters - More than half of the below-market COVID-era restructured leases have rolled off, with the remaining roll-off expected to continue gradually over the next five years, providing an ongoing natural lift to portfolio yields

Segment performance

The transcript does not break out financial performance into separate product segments. Consolidated Q2 2026 results are as follows: GAAP net income was $726 million ($4.59 per share), adjusted net income was $811 million ($5.14 per share), with an adjusted return on equity of 18%. Basic lease revenues were $1.677 billion. Maintenance revenue was $177 million, with a net maintenance contribution of $131 million. Net gain on sale of assets was $223 million from $1.4 billion in total asset sales, with a 20% unlevered gain on sale margin. Interest expense was $468 million, income tax expense was $123 million, with an effective tax rate of 15.5%. Operating cash flow for the quarter was $1.5 billion. As of quarter end, total liquidity was approximately $22 billion, leverage ratio was 2.05x, secured debt to total assets was 9% (a record low), and average cost of debt was 4.2%.

Risks & headwinds

- Recent geopolitical challenges have pushed up airline input costs (including fuel) and are expected to further pressure airline margins in 2026, which could impact lessor credit performance over time - For the potential aeroderivative gas turbine opportunity for converted aircraft engines for data centers: there are multiple key uncertainties, including grid capacity expansion (if grid connections become widely available for data centers, demand for on-site aeroderivative power could decline), uncertainty over the long-term efficiency of converted units relative to OEM-built units, and the requirement for specialized operational expertise that AIRCAP does not currently hold internally - Any new market opportunity (including aeroderivatives) must meet the same high risk-adjusted return hurdles as AIRCAP's core aircraft/engine leasing business to be pursued, and the opportunity currently does not clearly meet these requirements - Demand patterns for air travel vary by region, with some regions (Middle East, Asia Pacific, North America) seeing recent softness in daily flight activity - While the overall aircraft sales environment remains strong, H2 2026 asset sale volumes are not expected to match the very high levels seen in H1 2026

Analyst Q&A

• Q: With the 85% lease extension rate, what happens to the 15% of leases that do not get extended? Also, management has a current leverage ratio of ~2.0x, below the target mid-2x range. Would management consider targeting a lower leverage ratio to get a credit rating upgrade to the low A range, or is deploying excess capital to share repurchases still preferred? Finally, what is AIRCAP's assessment of using retired aircraft engines for aeroderivative power for data centers? /

  A: Most non-extended leases end with the aircraft being parted out; only rarely are aircraft taken back and re-leased to new customers. Management believes the company's consistent strong returns deserve an upgrade to the A rating category, and the current leverage ratio reflects strong operating cash generation even after large capital deployment. For aeroderivative engines for data centers, AIRCAP has done extensive due diligence, but the opportunity requires specialized partners and expertise that the company has not yet secured. Key uncertainties remain around long-term demand, reliability, and returns relative to the core leasing business, so management will only pursue the opportunity if it can deliver clear long-term shareholder value.\n\nQ: Why did AIRCAP place a direct order for 15 Boeing 787 widebodies now, after years of limited direct ordering, and when do deliveries start? / A: The order was driven by the persistent supply shortage in the widebody market, which is expected to persist into the next decade. AIRCAP secured rare available delivery slots (starting 2030 through 2033) due to its long-standing relationship with Boeing and its proven ability to place large widebody aircraft quickly. Management does not avoid direct ordering entirely, but only pursues direct orders when terms are favorable for shareholders, which was the case for this opportunity.\n\nQ: What is driving the current 20% gain on sale margins, and how durable are these elevated margins? / A: Gain on sale margins vary quarter to quarter based on what assets close in a given period, and the decision to sell is driven by improving the average quality of AIRCAP's portfolio, not chasing margins. Several structural factors underpin current strong margins: the ongoing strong aircraft demand environment, higher maintenance costs that increase the value of engines with remaining life, and inflation that supports residual values for these hard assets. Management expects these supportive conditions to continue for the foreseeable future.\n\nQ: With strong cash generation keeping leverage below target, what is the outlook for capital deployment, including M&A opportunities? / A: Current strong excess capital is a product of the core business's consistent high operating cash flow, which has generated ~$6 billion in operating cash flow over the past 12 months. AIRCAP continues to prioritize share repurchases as the most attractive current deployment, as buying back own shares at current valuations offers better risk-adjusted returns than most alternative acquisitions. While management will review any accretive M&A opportunities that arise, it will only pursue deals that deliver clear shareholder value, and will retain dry powder for future opportunities.