AerCap Hits $8.5B Revenue, But 2026 Earnings Drop Below 2025 Peak

Date of Call: Feb 6, 2026

Financials Results

• Revenue: Full year revenues reached an all-time high of $8.5 billion.
• EPS: Record GAAP EPS of $21.30 per share for the full year (includes $1.5B Ukraine recoveries); Adjusted EPS of $15.37 per share for the full year.
• Gross Margin: Not explicitly provided. Unlevered gain on sale margin was 27% for the full year.
• Operating Margin: Not explicitly provided. GAAP ROE for the full year was 21%; Adjusted ROE was 15%.

Guidance:

• Adjusted EPS for 2026 expected to be $12 to $13, not including any gains on asset sales.
• Full year 2026 lease rents projected around $6.7B, maintenance revenues around $700M, other income around $200M, total revenue around $7.6B.
• Cash CapEx for 2026 forecasted around $5.2B.
• Asset sales for 2026 forecasted between $2B to $3B.
• Effective tax rate projected at 15.5% for 2026.
• Projected GAAP net income around $1.7B; Adjusted net income around $2B for 2026.
• Earnings from equity investments expected around $200M, primarily from engine leasing joint venture SES.

Business Commentary:

Record Financial Performance:

• AerCap Holdings N.V. reported record GAAP net income of $3.8 billion or $21.30 per share, and adjusted net income of $2.7 billion or $15.37 per share for 2025.
• Full year revenues reached an all-time high of $8.5 billion, with sales volumes totaling a record $3.9 billion.
• The strong performance was driven by disciplined execution across business lines, robust demand for aviation assets, and high-volume sales with strong margins.

Shareholder Returns and Capital Allocation:

• The company returned $2.6 billion of capital to shareholders in 2025 through the repurchase of approximately 22.1 million shares and the payment of quarterly dividends.
• It also announced a new $1 billion share repurchase program and increased its quarterly dividend to $0.40 per share.
• These actions reflect the company's confidence in its value and outlook, supported by strong cash flows and a strengthened balance sheet.

Supply and Demand Dynamics:

• Ongoing secular trends in aviation underpinned by robust demand and constrained supply were highlighted, with delivery delays and maintenance backlogs keeping supply constrained.
• AerCap expects the structural shortage of aircraft to persist at least through the end of this decade, supported by OEM production rate increases that have not yet normalized supply-demand imbalance.

Asset Management and Gains:

• AerCap executed 705 transactions in 2025, including the sale of 189 assets, with a gain on sale margin of 27%.
• The elevated sales of aircraft, particularly 108 owned aircraft at an average age of 15 years, underscore persistent demand and conservative book values, enhancing portfolio quality.

Strategic Growth and Partnerships:

• The company strengthened its engine offering by expanding its partnership with GE Aerospace, enhancing its value proposition for airline customers.
• It also received certification for the 777-300ERSF passenger to freighter conversion program, delivering the first 8 converted 777 aircraft to meet growing air cargo demand, showcasing strategic growth outside traditional OEM channels.

Sentiment Analysis:

Overall Tone: Positive

• CEO Aengus Kelly stated: 'This was a record year for AerCap with exceptional financial and operating performance.' He also said: 'Our outlook remains strong... we are announcing an adjusted EPS range of $12 to $13 per share for 2026.' CFO Peter Juhas noted: 'AerCap continued to perform very strongly during the fourth quarter, concluding a record year for the company across many fronts.'

Q&A:

• Question from Jamie Baker (JPMorgan Chase & Co, Research Division): Is there a point where the backlog window would grow so significant that you might feel you have no choice but to get in with an incremental sizable order?
  Response: Management is confident in its platform's capability to secure opportunities without direct OEM orders, citing recent growth in order book and engine commitments via bilateral deals.

• Question from Ronald Epstein (BofA Securities, Research Division): What is your take on the A220-500 airplane and how do you think about it as a large fleet owner?
  Response: CEO believes Airbus is cannibalizing its own market share with the A220-500, as there is no apparent need for the aircraft in the market.

• Question from Moshe Orenbuch (TD Cowen, Research Division): How do you see the deployment of excess capital, and is that embedded in your 2026 guidance?
  Response: Guidance assumes share buybacks using remaining authorization; management focuses on deploying capital where it can get the most value, whether in buybacks, order book additions, or engines.

• Question from Terry Ma (Barclays Bank PLC, Research Division): What is the timing for Spirit aircraft downtime to be released and go back into service?
  Response: Some aircraft are expected to return in the second half of 2026, with others bleeding into early 2027.

• Question from Catherine O'Brien (Goldman Sachs Group, Inc., Research Division): Should the current leverage level be interpreted as seeking more unique asset acquisition opportunities, and if not, how quickly will you pivot to shareholder returns?
  Response: Management sees no urgency to chase growth by doing the wrong deal; capital will be deployed in attractive opportunities like buybacks or acquisitions that increase company value.

• Question from Kristine Liwag (Morgan Stanley, Research Division): How much value did you get from the Spirit order book compared to ordering on your own?
  Response: Management assessed significant value in the Spirit order book versus OEM alternatives due to proximity in time and price level, but declined to quantify.

• Question from Arren Cyganovich (Truist Securities, Inc., Research Division): What technology investments are improving company efficiency?
  Response: Primary investment is in enhancing data and IT systems to better assess asset values and maintenance costs, not in massive AI initiatives.

• Question from Shannon Doherty (Deutsche Bank AG, Research Division): Do you foresee systemic risk to aircraft lessors from financially weaker airlines failing to meet contractual return conditions due to high maintenance costs?
  Response: Such instances are managed as part of daily business; AerCap uses its scale and engine business to provide alternatives and cooperate with partner airlines.

• Question from Christopher Stathoulopoulos (Susquehanna Financial Group, LLLP, Research Division): Has your view on normalization of supply-demand imbalance changed, and can you speak to engine OEMs' lack of incentive to produce excess units?
  Response: Supply-demand imbalance is expected to persist well into the 2030s due to technology-driven higher maintenance needs. Engine OEMs have no incentive to overproduce as oversupply would lead to early retirement of older, more profitable assets.

Contradiction Point 1

Outlook on Supply-Demand Normalization and Structural Supply Shortage

Conflicting statements on the timeline for aircraft supply to catch up with demand.

Has the outlook for supply-demand normalization changed, and when is it expected to occur? - Christopher Stathoulopoulos (Susquehanna Financial Group)

2025Q4: Structural supply shortage expected well into the 2030s due to OEM production ramp delays and reduced asset durability from newer technology. - Aengus Kelly(CEO)

What are your expectations for extension rates in 2026, given geopolitical and economic uncertainties? - Christopher Stathoulopoulos (Susquehanna Financial Group)

2025Q3: Airlines plan fleets with long horizons (5-7 years for older aircraft, 20+ for new), so short-term geopolitical issues are unlikely to impact their plans. Underlying supply/demand dynamics remain the primary driver. - Aengus Kelly(CEO)

Contradiction Point 2

Progression of Lease Renewal (Extension) Rates

Contradiction on whether elevated lease extensions are a persistent structural issue or a temporary phase.

When will lease renewal rates decline, and what percentage of the fleet consists of pandemic-related leases? - Shannon Doherty (Deutsche Bank AG)

2025Q4: Elevated extensions will persist due to structural OEM delivery delays and reduced time-on-wing for newer aircraft. - Aengus Kelly(CEO)

What are your expectations for 2026 extension rates given geopolitical and economic uncertainties? - Christopher Stathoulopoulos (Susquehanna Financial Group)

2025Q3: No change is expected. Airlines plan fleets with long horizons... Underlying supply/demand dynamics remain the primary driver. - Aengus Kelly(CEO)

Contradiction Point 3

Capital Deployment Priorities

Contradiction on the primary use of remaining buyback authorization.

How will excess capital be deployed, and is this included in your 2026 guidance? - Moshe Orenbuch (TD Cowen)

2025Q4: Guidance assumes using remaining share repurchase authorization and additional buybacks. Excess capital will be deployed based on opportunities (buybacks, adding to order book, engines, M&A) that offer the most value. - Peter Juhas(CFO)

Rank the attractiveness of new sale-leaseback opportunities, engine investments, and share buybacks under low leverage? - Catherine Maureen O'Brien (Goldman Sachs)

2025Q2: The remaining $800 million in buyback authorization will be utilized first. All opportunities (buybacks, sale-leasebacks, engines) are in the mix... - Peter L. Juhas(CFO)

Contradiction Point 4

Risk Mitigation Approach

Contradiction on the company's stance regarding liability side concerns and growth limits.

Is there a size at which individual lessors become too large? - Jamie Baker (JPMorgan Chase & Co)

2025Q4: Size is not inherently a problem... Liability side concerns have eased as more institutional investors understand aviation assets as a safe store of value. - Aengus Kelly(CEO)

Have we reached peak returns, and when is the expected timeline? - Jamie Nathaniel Baker (JPMorgan)

2025Q2: The company targets 8-10% returns over the treasury rate and exercises discipline in capital allocation, avoiding unprofitable deals. - Aengus Kelly(CEO)

Contradiction Point 5

Outlook on Aircraft Supply-Demand Normalization

Contradiction on the timing of a structural aviation supply shortage.

Has the outlook on supply-demand normalization changed, and when is it expected to occur? - Christopher Stathoulopoulos (Susquehanna Financial Group, LLLP, Research Division)

2025Q4: Structural supply shortage expected well into the 2030s due to OEM production ramp delays and reduced asset durability... - Aengus Kelly(CEO)

What metrics would raise concerns about future demand trends as U.S. airlines reduce capacity and domestic bookings decline? - Hillary Cacanando (Deutsche Bank)

2025Q1: Airlines make long-term (15–20 year) capacity decisions, not short-term adjustments. - Aengus Kelly(CEO)