ILFC’s fleet also includes more than 150 out-of-production aircraft, helping push the average fleet age to 8.6 years.
Kelly says the combined age of the fleet at closing would be about 7.6 years.
Kelly says AerCap expects to write down the combined fleet by about $6 billion as part of the transaction, attaching “fair value” to each aircraft based on current market conditions. The projected combined fleet value post-closing is $35 billion, he says.
He notes that “more than 100” ILFC aircraft out on lease are destined for part-out when their current deals expire, but these aircraft combined are only valued at about $1 billion based on the overall price AerCap is paying.
AerCap’s aggressive strategy of moving assets to keep its fleet young—it has sold 270 aircraft in the last “several” years, Kelly notes—positions it well to work with ILFC’s aftermarket experts to “optimize” the combined asset base. Kelly points to part-out and surplus parts specialist AeroTurbine, which AerCap sold to ILFC for $228 million in 2011, as a key cog in the newly created aircraft life-cycle management machine.
“We are very focused on opportunities to dispose of airplanes where it meets our asset objective,” Kelly says, noting that plans call for about $1 billion per year in disposals, with a focus on older or out-dated technology, such as A340s, MD-80s, 737 Classics, 747s, 757s, and MD-11s in ILFC’s portfolio.
AerCap’s brisk portfolio management efforts see it buy, sell or place an aircraft every three days, while ILFC moves an airframe every two days. Kelly is confident that the combined team be able to keep pace in the asset value maximization game.
“We’re extremely comfortable with the capabilities of this platform, along with the addition of AeroTurbine to deal with the older aircraft, to very efficiently deal with this number of airplanes,” Kelly says.
AerCap will pay $3 billion in cash plus 97.6 million shares—valued at about $2 billion—for ILFC and assume $21 billion in debt, placing the value of deal at about $26 billion.