AerCap (AER) Q3 2026 earnings review
AerCap raises its profit outlook, while rental revenue stays flat
AerCap, the world's largest aircraft lessor, is earning record profits from selling older planes and engines even as its rental revenue stands still. Profit per share, excluding one-offs, jumped 32% from a year ago, more than double what the company's own prior plan pointed to. Chief executive Aengus Kelly raised the full-year profit outlook for a third time after third-quarter asset sales brought a 45% gain over book value. Because the forecast leaves out future sales gains and assumes maintenance windfalls fade, by our math the plan has fourth-quarter profit dropping 9% from a year ago.
| Profit per share, excluding one-offs | $6.56 +32% from a year ago |
|---|---|
| Net gain on asset sales | $353M 45% margin on $1.1B of sales |
| Book value per share | $124.89 +14% from a year ago |
| Full-year profit per share outlook | Raised $3.90 to ~$20.70, before Q4 sale gains |
⚖️ Verdict: 🟢 Bullish
The story got better because secondary-market buyers paid 2.6 times book equity for AerCap's planes and engines, while insurer settlements cut the Russian court appeal risk by $200 million to $1 billion. The company also locked in leases on all new aircraft delivering through 2027 and 80% through 2028. One caution: finance chief Pete Juhas warned that net maintenance income will drop from $184 million this quarter to $50 million a quarter next year, and asset sales will return to normal levels.
The question now is whether rising aircraft deliveries and lease rates can replace this year's unusual trading and maintenance windfalls in 2027. Bulls see newly ordered planes and expiring cheap leases lifting rental income, while skeptics expect lower asset sales, delayed maintenance bills and high jet fuel costs to pull earnings down. Initial 2027 profit targets on the fourth-quarter call in February will settle it.
🐂 Bull Case
Aircraft Sales Drove a Third Straight Outlook Raise
AerCap makes money both by leasing aircraft and by selling older planes and engines from its fleet. Finance chief Pete Juhas raised the full-year outlook for profit per share, excluding one-offs, to $20.70 from $16.80 after third-quarter sales gains reached a record $352.6 million. The lessor sold 70 owned assets for $1.1 billion, partly by "reducing our Chinese exposure" and selling engines to power-generation buyers, chief executive Aengus Kelly said.
- Gain-on-sale margin: 45% of asset book value, up from 20% last quarter
- Sale price multiple: 2.6 times book equity, up from 1.7 times in the second quarter
- Nine-month sales proceeds: $4.0 billion across 149 assets, up from $2.6 billion a year ago
- Full-year sales plan: raised to over $5 billion from $4–5 billion
The company does not include future sales gains in its profit forecast, so every quarter of strong asset trading forces the annual target higher. Critics worry that selling planes shrinks the rental base and that a 45% profit margin on sales cannot last. Juhas agreed that yearly sales will drop back to a normal $2.5–3.0 billion next year, which means trading profits will shrink in 2027.
What to watch: fourth-quarter asset sales proceeds and gain margins in the full-year report. With at least $1 billion of sales implied by the outlook for the fourth quarter, any gain will push full-year profit above the $20.70 target.
New Orders Lock In Growth Through 2028
Because AerCap sold 128 aircraft and bought 67 over the first nine months of 2026, its owned fleet shrank by 61 planes to 1,440. Basic lease rents barely grew as a result, rising 0.5% from a year ago to $1.70 billion. To rebuild its future fleet, the Dublin-based group added 131 aircraft to its order book this year, including 116 Airbus A320neo narrowbody planes and 15 widebody Boeing 787s.
Airlines have already signed leases for all of AerCap's new aircraft delivering through 2027 and 80% of those arriving through 2028, Kelly said. While Boeing recently won regulatory approval for its 737 MAX 10 jet, Kelly noted that delivering the plane in large numbers will take four to five years. That delay keeps aircraft supply tight and protects the value of the 347 planes AerCap has on order.
What to watch: cash capital spending in 2027, which Juhas estimated at $5.5 billion against $2.5–3.0 billion of asset sales. When deliveries exceed sales next year, the owned fleet and basic lease rents will start growing again.
Buybacks Cut Shares 12% While Leverage Stayed Low
AerCap spent $783 million in the third quarter to buy back 5.3 million shares at an average price of $147.12, and the board approved another $1 billion repurchase programme in September. Over the past year, buybacks reduced the diluted share count by 11.6% to 153.9 million. That smaller share count turned a 12% rise in pre-tax profit, excluding Ukraine insurance recoveries, into a 32% jump in profit per share excluding one-offs.
Skeptics point out that the bargain is narrowing because the company bought shares at 1.18 times book value this quarter, up from below book value a year ago. Even after spending $2.2 billion on buybacks this year, strong earnings kept net debt at 2.0 times equity, well below the 2.7 times target. Kelly said that leaves $3.7 billion of excess equity that can fund up to $14 billion of aircraft purchases.
What to watch: the adjusted debt-to-equity ratio at year-end. Juhas said the company does not expect leverage to fall below 2.0 times, meaning excess cash will keep flowing into buybacks unless large aircraft deals appear.
🐻 Bear Case
Maintenance Timing Pushed Costs Into Next Year
Management highlighted record third-quarter earnings, but a large part of the beat came from maintenance fees that will not repeat. Airlines pay AerCap maintenance rents to cover wear and tear, or make one-off payments when they return planes or end leases early. Maintenance rents rose 31.4% from a year ago to $267.4 million, while leasing expenses rose 42.1% to $131.5 million (5.4% of total revenue, up 1.4 percentage points).
After removing purchase-accounting write-offs, net maintenance income reached $184 million in the quarter and $453 million over the first nine months. Juhas admitted that leasing costs stayed low partly because "some maintenance events being pushed out into 2027" delayed the bills. He expects net maintenance income to "return to a more normal level of $50 million a quarter in 2027", which will cut quarterly pre-tax profit by $134 million from third-quarter levels.
What to watch: fourth-quarter leasing expenses and net maintenance income. By our math, the full-year profit outlook already builds in a drop to $3.61 per share in the fourth quarter as maintenance windfalls fade.
High Fuel Costs Pressure Budget Airlines
"While higher fuel prices are impacting airline profitability, the fundamental supply-demand dynamics in commercial aviation remain favorable for AerCap," chief executive Aengus Kelly said. Military conflict involving Iran has disrupted Middle East shipping routes and lifted jet fuel prices since February. In its risk disclosures, the lessor warned that prolonged high fuel prices could weaken airline credit, increase defaults and force "revisions to residual value expectations" on older planes.
Kelly noted that budget airlines flying three-and-a-half to five-hour routes face the most stress because fuel is a major cost and their passengers resist higher fares. If oil stays expensive over the next year, he expects airlines to fly older, fuel-heavy planes less often. Still, Kelly argued that airline stress will push carriers to "seek proactive measures to strengthen liquidity and protect their balance sheets" through sale-and-leaseback deals with AerCap.
What to watch: trade receivables, which rose 33.1% over the first nine months to $64.6 million, and default costs in the fourth quarter. Rising unpaid rent would show that fuel prices are hurting customer payments before new sale-and-leaseback deals arrive.
Insurers Reduced the Russian Appeal Risk
Since 2023, AerCap has collected $3.0 billion of insurance money for aircraft lost in Russia after the invasion of Ukraine, including $28 million in the first half of 2026 and nothing in the third quarter. In June 2025, a London court awarded the lessor $1.0 billion plus interest under its own War and Allied Perils policy, but the court allowed insurers to appeal that ruling in a hearing set for February 2027.
If the insurers win, AerCap must pay back their share of the award and interest. That potential repayment dropped to $1.0 billion in October from $1.2 billion last quarter because several insurers settled their claims and quit the appeal. Meanwhile, a separate London trial against Russian airlines' reinsurers began in October 2026 and runs through December, and management said further settlements could cut the appeal risk or resolve the trial claims.
What to watch: settlement announcements before the December end of the London reinsurance trial and the February 2027 appeal hearing. Any further insurer settlements will shrink the remaining $1.0 billion repayment risk.
💲 Other KPIs
Annualised net spread — lease yield minus the average cost of debt — edged up to 8.1% from 8.0% last quarter and 8.0% a year ago. Average borrowing costs held steady at 4.2% from the second quarter, up from 4.0% a year earlier. Juhas expects the spread to stay near 8.1% over the next two quarters.
Shareholders' equity per share, excluding unvested stock, rose 14.3% from $109.22 a year ago and 4.8% from $119.21 in June. Retained earnings from asset sales and share buybacks below market multiples drove the increase, lifting book value at an 18% yearly pace since 2022.
Cash generated from operations reached $1.8 billion in the third quarter, up from $1.5 billion in both the second quarter and a year ago. Across the first nine months, operating cash flow grew 13.2% to $4.72 billion, helped by $747 million of finance lease collections.
🔮 Guidance
Raised. The full-year target moved up by $3.90 per share, pointing to 34.7% growth over 2025. It is the third raise this year, and each increase has grown larger: +$2.00, +$2.30, +$3.90. By our math, the plan leaves $3.61 for the fourth quarter, down 45.0% from the third quarter because the forecast excludes fourth-quarter asset sale gains and assumes maintenance income drops.
Raised. Juhas lifted the full-year asset sales outlook above $5.0 billion after the aviation lessor closed $4.0 billion of sales in the first nine months. It is the third raise from the initial $2.0–3.0 billion plan set in February. By our math, that leaves at least $1.0 billion of sales for the fourth quarter, compared with $1.1 billion in the third quarter.
❓ Key Questions
How many former Spirit aircraft returned to service this quarter?
Last quarter, Juhas said the first planes taken back from Spirit Airlines would start flying for new customers in the fourth quarter, with ten more placed by year-end. Management did not give an exact count of delivered Spirit planes on this call.
How much of the 45% sale margin came from engines?
Unlevered profit margins on asset sales jumped from 20% in the second quarter to 45% in the third, and Kelly mentioned selling engines to buyers building power plants. Knowing the split between engine sales and Chinese aircraft exits would show how repeatable that margin is.
How much maintenance cost shifted from 2026 into 2027?
Juhas explained that leasing and overhead expenses are running well below the initial $1.2 billion annual plan because some maintenance shop visits moved into 2027. Quantifying that deferred bill would clarify whether 2027 quarterly net maintenance income could dip below $50 million.
Which insurers settled in the London War Perils appeal?
Potential repayment exposure on the June 2025 London court judgment fell from $1.2 billion in July to $1.0 billion in October after certain insurers settled. Management has not disclosed whether it gave those insurers a discount on their share of the award to close the claims.