AerCap Holdings N.V SWOT and PESTLE Analysis

Strength

1. Leading industry position opening a broad range of opportunities: AerCap is the global industry leader in both widebody and narrowbody aircraft leasing market. With a total revenue of $4.49 billion in fiscal 2020, AerCap’s global market share stood at 13.23% in an industry with 150+ lessors. The company’s 200+ customers are spread across 80 countries. As of 31st December 2020, the company owns a fleet of 939 aircraft, making it the largest lessor by fleet size also. Its leading position gives AerCap access to a wide range of opportunities with all stakeholders. For instance, in FY20 the company has raised $8.3 billion using various sources like bank debt, revolving credit facilities and note issuances. Similarly, the company has developed extensive relationships with leading aircraft manufacturers like Boeing and Airbus. It is also one of the largest buyers of engine manufacturers like Rolls Royce, GE Aviation etc. These relationships allow the company to cooperate with manufacturers to seek mutually beneficial opportunities.

2. Diverse aircraft portfolio fulfilling multi-dimensional customer demands: AerCap owns the largest fleet of 939 aircraft in the aircraft leasing industry. The company procures both narrow-body and wide-body aircrafts according to customer demand. The company’s top 2 suppliers are Airbus and Boeing, accounting for more than 520 and 380 aircrafts respectively in AerCap’s current portfolio. Other suppliers also include major brands like Embraer, which account for around 15% of the mix. Maintaining the aircraft portfolio of the company successfully mandates assessment of aircrafts in demand, finding cost-effective sources of funds, achieving high aircraft utilization and receiving the highest possible resale values. For instance, AerCap has a total order pipeline of 286 aircrafts from Airbus, Boeing and Embraer as of 31st December 2020. Further, the company was able to finance its investments with diverse liquidity sources. In addition, the company was able to execute 179 successful leasing transactions, which resulted in a high aircraft utilization rate of 97.5%.

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Weakness

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Opportunity

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Threat

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Political

1. Exposure to political risk due to customers located in pockets: AerCap does business in almost 80 countries around the world. But the company’s lion’s share of business comes from a few concentrated pockets, with the largest being China and USA. For the financial year 2020 ending 31st December, revenue contribution of China in AerCap’s total revenues was 19.3%, while USA contributed 11.6% for the same period. Similarly, percentage of long-lived assets of the company, which includes various flight equipment and investments in different types of leases and assets, for China and USA are 20.4% and 11.6% as of 31st December 2020. Such high dependency on two geographies makes AerCap’s business vulnerable to political risk, especially in case of China. As the geopolitical tensions between US and China are worsening, the rally of tariffs and sanctions levied by both the countries has turned into a trade-war. If the situation continues and results in travel restrictions between USA and China, financial results of AerCap could be severely affected.

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Economic

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Social

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Technological

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Legal

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Environmental

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