AerCap Holdings N.V. (NYSE:AER) Q4 2022 Earnings Call Transcript

Aengus Kelly: Well, to the extent that you have maintenance reserve paying leases, what happens is they get adjusted each year in the contract with whatever the OEM increases the reserve rate by four for parts, etcetera LLPs. And then if you have an end of lease deal, if the engine has to come back overhaul, then the risk is with the customer. But for the most part Ron, that’s passed on. There’ll be instances, of course, where you have to take an airplane back prematurely. And if there’s some inflation there, that wasn’t covered, you’ll have to deal with us. But that’s nothing unusual. I wouldn’t see it as having any material impact one way or the other.

Ron Epstein: Okay, great. Thank you very much.

Aengus Kelly: Thank you.

Operator: We will take our next question from Mark DeVries from Barclays. Please go ahead.

Mark DeVries: Yes, thank you. The new $500 million repurchase authorization looks relatively conservative to us. Even if you bought back all of that tomorrow, I think you’d still be at 2.6 times levered below your target. And as you mentioned, it’s going to be very strong cash flows, where you’ll generate additional excess capital, even if you realize the full 6.8 billion of CapEx for the year. So how are you guys thinking about alternative uses of excess capital generation outside of the repurchase authorization?

Aengus Kelly: Well, Mark, I mean, we always look at all different alternatives out there, whether that’s buying aircraft, whether that’s M&A, although I think that’s unlikely at the moment, but M&A or, or returning capital to shareholders. And as we think about as we thought about sizing, this now we thought, Well, we do have excess capital available, it makes sense to deploy it. And this is a good way of doing it. We’ll continue to look at that over time. As you say, I expect we will generate a lot of excess capital will generate north of a billion during the course of this year. And, and we’ll look to deploy that. I mean historically, if you go back write most of our share repurchase authorizations were in the range of $250 million to $400 million.

So it’s not as though we came out with big, splashy announcements. And then it took us two years to do that. We looked at it kind of ever on a quarter-by-quarter basis, and made those decisions. So I don’t see any reason for us to change that strategy. And that’s how we’re thinking about it.

Mark DeVries: Okay, fair enough. Thank you.

Aengus Kelly: Sure.

Operator: It appears we have no further questions at this time. I would now like to hand the call back over to today’s speaker for any additional or closing remarks.

Aengus Kelly: Thank you very much, operator. And thank you all for joining us for the call and we look forward to talking to you in a few months’ time.

Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.