DAVY VIEW

There are a number of positives in AerCap’s Q2 results – strong cash collections and a decreasing deferrals balance indicate healthy airline credit and brought leverage down to 2.81x at end-Q2, within touching distance of its 2.7x target despite the $2.4bn Russia-related impairment in Q1. Similarly, we note a strong gain on sale figure ($35m) and margin (10%) as indicative of a positive downstream market for aircraft assets, which will be critical as AerCap likely releases more aging assets in the coming years. The results themselves are broadly in-line but improve upon closer examination. Management’s mention of a “favourable leasing environment” is encouraging on a look-forward basis.