AerCap operating model
AerCap from its 20-F: fleet book value, lease yield, cost of debt, spread, leverage, one lease. Read a lessor’s income statement as a spread on its fleet, roll the fleet’s book value forward, rebuild the company’s adjusted leverage, cost of debt and book value per share from the GAAP lines, forecast a balance sheet funded at a target leverage, value the equity on residual income, and work one lease from both sides: the lessor’s equity IRR and the airline’s lease liability under IFRS 16 and ASC 842.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: aercap operating model.Updated 4 November 2026
Who builds it, and for whatThe model an aviation finance banker, a leasing credit analyst or an equity analyst covering lessors builds from a lessor’s annual report: the fleet at net book value, rent read as a yield on it, interest read as a cost of debt, the spread between the two, the gains made selling aircraft, and the leverage that turns a spread of a few points into a return on equity. AerCap is the subject because it is the largest aircraft lessor, files a 20-F with inline XBRL, and carries two reading problems a model must handle: maintenance rents beside basic rents, and insurance recoveries for aircraft lost in Russia booked as negative expenses.
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| A | B | C | D | E | F | G | H | I | J | K | L | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Reported | |||||||||||
| 2 | $m unless stated, as filed (the 20-F works in thousands; three decimals keep every digit). Blue cells are typed from the documents named on the Sources sheet; nothing here is adjusted, and nothing here is a forecast. | |||||||||||
| 4 | $m | Unit | FY2023A | FY2024A | FY2025A | FY2026E | FY2027E | FY2028E | FY2029E | FY2030E | Notes | |
| 5 | Consolidated income statements (Form 20-F for 2025, p.F-5) | |||||||||||
| 6 | Basic lease rents | $m | 6,249.0 | 6,377.2 | 6,679.5 | us-gaap:OperatingLeaseLeaseIncome on srt:ProductOrServiceAxis = aer:BaseLeaseRentsMember. Includes interest income from finance leases ($101m, $96m, $156m; Note 6). | ||||||
| 7 | Maintenance rents and other receipts | $m | 611.3 | 626.8 | 690.0 | us-gaap:OperatingLeaseLeaseIncome on aer:MaintenanceRentsAndOtherReceiptsMember. Supplemental maintenance rent recognised when not expected to be reimbursed, end-of-lease compensation and balances released when a lease ends. | ||||||
| 8 | Total lease revenue | $m | 6,860.3 | 7,004.0 | 7,369.5 | us-gaap:LeaseIncome (and us-gaap:OperatingLeaseLeaseIncome without a member). | ||||||
| 9 | Net gain on sale of assets | $m | 489.6 | 651.1 | 819.5 | us-gaap:GainLossOnSaleOfPropertyPlantEquipment. | ||||||
| 10 | Other income | $m | 230.5 | 341.5 | 327.7 | us-gaap:OtherIncome. Interest on cash and notes, management fees, insurance proceeds, claim and inventory sales (Note 22). | ||||||
| 11 | Total revenues and other income | $m | 7,580.4 | 7,996.6 | 8,516.7 | us-gaap:Revenues. | ||||||
| 12 | Depreciation and amortisation | $m | 2,480.6 | 2,580.0 | 2,647.2 | us-gaap:DepreciationAndAmortization. Flight equipment plus other intangibles. | ||||||
| 13 | Net (recoveries) charges related to Ukraine Conflict | $m | (1,288.0) | (194.8) | (1,490.4) | aer:NetChargesRecoveriesRelatedToUkraineConflict, a company tag read from the inline XBRL; negative = a recovery. Insurance and court settlements for aircraft and engines lost in Russia in 2022 (Note 25). | ||||||
| 14 | Asset impairment | $m | 86.9 | 49.8 | 100.8 | us-gaap:AssetImpairmentCharges. | ||||||
| 15 | Interest expense | $m | 1,806.4 | 1,990.7 | 1,981.9 | us-gaap:InterestExpenseOperating. Includes mark-to-market on interest rate derivatives and the amortisation of issuance costs; interest on prepayments is capitalised and not in it ($146m in 2025, Note 31). | ||||||
| 16 | Loss on debt extinguishment | $m | 4.1 | 13.5 | 4.9 | us-gaap:GainsLossesOnExtinguishmentOfDebt (tagged negative, a loss); shown here as the expense it is. | ||||||
| 17 | Leasing expenses | $m | 756.4 | 810.4 | 647.6 | aer:LeasingExpenses, a company tag read from the inline XBRL. Transition costs, maintenance contributions, credit losses, airline defaults and maintenance rights amortisation. | ||||||
| 18 | Selling, general and administrative expenses | $m | 464.1 | 488.9 | 545.9 | us-gaap:SellingGeneralAndAdministrativeExpense. | ||||||
| 19 | Total expenses | $m | 4,310.6 | 5,738.5 | 4,437.9 | us-gaap:OperatingExpenses. | ||||||
| 20 | Gain on investments at fair value | $m | 2.3 | 5.2 | 13.3 | us-gaap:EquitySecuritiesFvNiGainLoss. | ||||||
| 21 | Income before income taxes and income of investments under the equity method | $m | 3,272.2 | 2,263.4 | 4,092.0 | us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments. | ||||||
| 22 | Income tax expense | $m | 291.1 | 323.7 | 555.2 | us-gaap:IncomeTaxExpenseBenefit. | ||||||
| 23 | Equity in net earnings of investments under the equity method | $m | 166.7 | 159.0 | 213.8 | us-gaap:IncomeLossFromEquityMethodInvestments. | ||||||
| 24 | Net income | $m | 3,147.8 | 2,098.6 | 3,750.6 | us-gaap:ProfitLoss. | ||||||
| 25 | Net income (loss) attributable to non-controlling interest | $m | 11.8 | - | - | us-gaap:NetIncomeLossAttributableToNoncontrollingInterest. | ||||||
| 26 | Net income attributable to AerCap Holdings N.V. | $m | 3,136.1 | 2,098.6 | 3,750.6 | us-gaap:NetIncomeLoss. | ||||||
| 27 | Diluted earnings per share | $ per share | 13.78 | 10.79 | 21.30 | us-gaap:EarningsPerShareDiluted. | ||||||
| 28 | Weighted average shares outstanding, diluted | m shares | 227.66 | 194.49 | 176.12 | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding. | ||||||
| 29 | Share-based compensation | $m | 97.1 | 111.1 | 166.2 | us-gaap:ShareBasedCompensation (the cash flow statement’s add-back). Inside SG&A. | ||||||
| 31 | Flight equipment held for operating leases, net: the roll-forward (Note 5; Form 20-F for 2024, Note 5, for 2023) | |||||||||||
| 32 | Net book value at 31 December 2022 | $m | 55,220.8 | us-gaap:PropertyPlantAndEquipmentNet at 2022-12-31 (Form 20-F for 2023, p.F-4). The opening balance for FY2023. | ||||||||
| 33 | Additions | $m | 6,436.7 | 6,550.9 | 5,431.4 | us-gaap:PropertyPlantAndEquipmentAdditions on us-gaap:PropertyPlantAndEquipmentByTypeAxis = aer:FlightEquipmentHeldForOperatingLeasesMember. | ||||||
| 34 | Depreciation of flight equipment held for operating leases | $m | 2,446.8 | 2,548.2 | 2,613.5 | us-gaap:Depreciation on the flight equipment member. The rest of D&A is other intangibles and other assets. | ||||||
| 35 | Disposals and transfers to held for sale | $m | 1,877.2 | 2,210.8 | 2,838.1 | aer:PropertySubjectToOrAvailableForOperatingLeaseDisposalsDuringPeriod. Net book value leaving the fleet, sold or classified as held for sale. | ||||||
| 36 | Transfers to investment in finance leases and inventory | $m | (170.9) | (284.5) | (658.3) | aer:PropertySubjectToOrAvailableForOperatingLeaseReclassifiedToNetInvestmentInFinanceAndSalesTypeLeasesInventory, negative: book value moved out of the operating fleet. | ||||||
| 37 | Recoveries related to Ukraine Conflict, in the roll-forward | $m | 15.1 | 26.9 | - | aer:NetChargesRecoveriesRelatedToUkraineConflict on the flight equipment member, shown positive as an addition to book value. A dash in 2025. | ||||||
| 38 | Impairments, in the roll-forward | $m | (86.6) | (49.8) | (100.8) | us-gaap:AssetImpairmentCharges on the flight equipment member, negative. | ||||||
| 39 | Flight equipment held for operating leases, net, 31 December | $m | 57,091.2 | 58,575.7 | 57,796.3 | us-gaap:PropertyPlantAndEquipmentNet. The 2024 roll-forward closes $0.001m from this, the rounding of the note’s thousands. | ||||||
| 40 | Accumulated depreciation and impairment, 31 December | $m | 13,789.4 | 15,398.5 | 16,122.8 | us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment on the flight equipment member. | ||||||
| 42 | Consolidated balance sheets at 31 December (Form 20-F for 2025, p.F-4; 2023 from the Form 20-F for 2024; 2022 from the Form 20-F for 2023) | |||||||||||
| 43 | Cash and cash equivalents | $m | 1,627.2 | 1,209.2 | 1,379.2 | us-gaap:CashAndCashEquivalentsAtCarryingValue. | ||||||
| 44 | Restricted cash | $m | 198.3 | 192.4 | 100.6 | us-gaap:RestrictedCashAndCashEquivalents. | ||||||
| 45 | Investment in finance leases, net | $m | 1,254.5 | 1,208.6 | 1,807.5 | us-gaap:NetInvestmentInLeaseAfterAllowanceForCreditLoss. | ||||||
| 46 | Flight equipment held for sale | $m | 296.7 | 466.2 | 1,104.3 | us-gaap:DisposalGroupIncludingDiscontinuedOperationPropertyPlantAndEquipment. | ||||||
| 47 | Prepayments on flight equipment | $m | 3,576.2 | 3,460.3 | 4,272.8 | us-gaap:DepositsOnFlightEquipment. Deposits on aircraft on order, with capitalised interest. | ||||||
| 48 | Maintenance rights and lease premium, net | $m | 2,730.0 | 2,130.0 | 1,677.4 | aer:MaintenanceRightsIntangibleAndLeasePremiumNet, a company tag. | ||||||
| 49 | Total assets | $m | 71,274.6 | 71,442.0 | 71,671.8 | us-gaap:Assets. | ||||||
| 50 | Accrued maintenance liability | $m | 2,863.7 | 3,327.3 | 3,534.4 | aer:AccruedMaintenanceLiability, a company tag: maintenance rents received and not yet reimbursed or released. | ||||||
| 51 | Lessee deposit liability | $m | 1,018.7 | 1,092.6 | 1,185.0 | us-gaap:SecurityDepositLiability. | ||||||
| 52 | Debt | $m | 46,483.9 | 45,294.5 | 43,565.3 | us-gaap:LongTermDebt (the balance sheet’s single debt line, carrying amount). | ||||||
| 53 | Deferred tax liabilities | $m | 2,526.1 | 2,767.9 | 3,166.2 | us-gaap:DeferredIncomeTaxLiabilitiesNet. | ||||||
| 54 | Total liabilities | $m | 54,685.5 | 54,257.1 | 53,348.3 | us-gaap:Liabilities. | ||||||
| 55 | Total AerCap Holdings N.V. shareholders’ equity | $m | 16,588.8 | 17,184.6 | 18,323.3 | us-gaap:StockholdersEquity. | ||||||
| 56 | Total equity, non-controlling interest included | $m | 16,589.0 | 17,184.8 | 18,323.5 | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest. | ||||||
| 57 | Ordinary shares outstanding, unvested restricted stock included | m shares | 202.49 | 186.78 | 166.88 | us-gaap:CommonStockSharesOutstanding. | ||||||
| 58 | Shares of unvested restricted stock | m shares | 4.56 | 5.07 | 4.14 | aer:ShareBasedCompensationArrangementByShareBasedPaymentAwardRestrictedStockUnvested; the balance sheet’s caption and Item 5’s book value table. | ||||||
| 59 | Debt at 31 December 2022 | $m | 46,533.0 | us-gaap:LongTermDebt at 2022-12-31 (Form 20-F for 2023). | ||||||||
| 60 | Total equity at 31 December 2022 | $m | 16,195.1 | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest at 2022-12-31 (the statement of equity in the Form 20-F for 2025). | ||||||||
| 62 | Cash flow (consolidated statements of cash flows, Form 20-F for 2025, p.F-7) | |||||||||||
| 63 | Net cash provided by operating activities | $m | 5,261.4 | 5,436.6 | 5,393.1 | us-gaap:NetCashProvidedByUsedInOperatingActivities. | ||||||
| 64 | Purchase of flight equipment | $m | 4,662.7 | 5,062.5 | 3,653.9 | us-gaap:PaymentsForFlightEquipment, shown positive: an outflow. | ||||||
| 65 | Prepayments on flight equipment paid | $m | 1,569.7 | 1,553.9 | 2,420.4 | aer:PrepaymentsMadeOnFlightEquipment, shown positive: an outflow. | ||||||
| 66 | Proceeds from sale or disposal of assets | $m | 2,121.5 | 2,675.0 | 2,871.6 | us-gaap:ProceedsFromSaleOfPropertyPlantAndEquipment. | ||||||
| 67 | Cash proceeds from insurance claim and related settlements | $m | 1,254.4 | 172.0 | 1,488.5 | us-gaap:ProceedsFromInsuranceSettlementInvestingActivities. The Ukraine recoveries, in cash. | ||||||
| 68 | Repurchase of shares and tax withholdings on share-based compensation | $m | 2,637.6 | 1,520.3 | 2,538.2 | aer:PaymentsForRepurchaseOfEquityAndPaymentsRelatedToTaxWithholdingForShareBasedCompensation, shown positive. | ||||||
| 69 | Dividends paid on ordinary shares | $m | - | 140.0 | 192.4 | us-gaap:PaymentsOfDividendsCommonStock (a dash in 2023). | ||||||
| 70 | Interest paid, net of amounts capitalised | $m | 1,650.3 | 1,806.2 | 1,910.6 | us-gaap:InterestPaidNet. | ||||||
| 72 | Debt maturities and contracted rent at 31 December 2025 (Note 15; Note 21) | |||||||||||
| 73 | Debt principal due in 2026 | $m | 6,219.8 | us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths. | ||||||||
| 74 | Due in 2027 | $m | 7,349.7 | us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo. | ||||||||
| 75 | Due in 2028 | $m | 9,312.7 | us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree. | ||||||||
| 76 | Due in 2029 | $m | 4,836.9 | us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour. | ||||||||
| 77 | Due in 2030 | $m | 2,108.1 | us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFive. | ||||||||
| 78 | Due after 2030 | $m | 13,979.1 | us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalAfterYearFive. | ||||||||
| 79 | Debt principal, before fair value adjustments, discounts and issuance costs | $m | 43,806.3 | aer:LongTermDebtGrossExcludingFairValueAdjustments, a company tag (Note 15). | ||||||||
| 80 | Rent to be received under operating leases in 2026 | $m | 6,599.7 | us-gaap:LessorOperatingLeasePaymentsToBeReceivedNextTwelveMonths: basic rent contracted on leases in place, undiscounted. | ||||||||
| 81 | Rent to be received under operating leases, all years | $m | 43,108.3 | us-gaap:LessorOperatingLeasePaymentsToBeReceived. Contracted, undiscounted; not revenue until earned. | ||||||||
| 83 | The fleet (Item 4 and Item 5 of each Form 20-F; not XBRL-tagged) | |||||||||||
| 84 | Owned aircraft at 31 December | aircraft | 1556 | 1543 | 1501 | Item 4, "we owned 1,556 / 1,543 / 1,501 aircraft". Not XBRL-tagged. | ||||||
| 85 | Average age of the owned fleet, weighted by net book value | years | 7.30 | 7.40 | 7.30 | Item 4 of each 20-F (passenger aircraft only in 2025). Not XBRL-tagged. | ||||||
| 86 | New aircraft on order at 31 December | aircraft | 338 | 296 | 283 | Item 4. Not XBRL-tagged. | ||||||
| 87 | Owned aircraft on lease at 31 December 2025 | aircraft | 1457 | Item 5: "1,457 of our 1,501 owned aircraft were on lease"; 44 off lease. Not XBRL-tagged. | ||||||||
| 89 | AerCap’s own measures (Item 5, Book value per share and Non-GAAP measures and metrics; not XBRL-tagged) | |||||||||||
| 90 | Book value per ordinary share outstanding, excluding unvested restricted stock, as reported | $ per share | 83.81 | 94.57 | 112.59 | Item 5 (2023 from the Form 20-F for 2024). Shareholders’ equity over shares outstanding less unvested restricted stock. Not XBRL-tagged. | ||||||
| 91 | 50% equity credit for long-term subordinated debt | $m | 1,125.0 | 1,125.0 | 1,125.0 | Item 5, adjusted debt-to-equity reconciliation, in $m as printed. Not XBRL-tagged. | ||||||
| 92 | Adjusted debt, as reported | $m | 43,732.0 | 42,960.0 | 41,061.0 | Debt less cash less the equity credit, in $m as printed (2023 from the Form 20-F for 2024; the 2025 report prints 2024 as $42,960m, the 2024 report $42,961m). Not XBRL-tagged. | ||||||
| 93 | Adjusted equity, as reported | $m | 17,714.0 | 18,310.0 | 19,448.0 | Total equity plus the equity credit. Not XBRL-tagged. | ||||||
| 94 | Adjusted debt to equity, as reported | x | 2.5x | 2.4x | 2.1x | "2.11 to 1", "2.35 to 1", "2.47 to 1". Not XBRL-tagged. | ||||||
| 95 | Interest expense excluding mark-to-market, issuance costs, upfront fees and other impacts | $m | 1,625.0 | 1,838.0 | 1,851.0 | Item 5, average cost of debt, $m as printed. Not XBRL-tagged. | ||||||
| 96 | Mark-to-market on interest rate derivatives, as adjusted | $m | 37.0 | 34.0 | 25.0 | Item 5. Not XBRL-tagged. | ||||||
| 97 | Debt issuance costs, upfront fees and other impacts, as adjusted | $m | 144.0 | 119.0 | 106.0 | Item 5. Not XBRL-tagged. | ||||||
| 98 | Average debt balance, as reported | $m | 46,720.0 | 46,405.0 | 45,430.0 | Item 5. AerCap’s own average, not the mean of the year ends. Not XBRL-tagged. | ||||||
| 99 | Average cost of debt, as reported | % | 3.5% | 4.0% | 4.1% | Item 5: 3.5%, 4.0%, 4.1%. Not XBRL-tagged. | ||||||
Select a cell to see its row, its schedule and the type of cell. Font colours: blue for inputs, black for formulas, green for links to other sheets. Scroll sideways to see every period.
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AerCap operating model: the workbook
An Excel workbook with working formulas, no macros and no external links: the same model you can work with on this page.
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- The worked model
- 10 sheets and 997 live formulas, all 13 schedules built and linked, every check reading zero. Change an input in Excel and the whole model moves.
- The starter
- The same inputs and layout with the aircraft leases, lease liability and EBITDAR left blank for you to build, each blank cell marked. The worked model is its answer.
What the base case says
- Flight equipment held for operating leases, 31 December 2025
- $57,796.3m
- FY2025A lease yield
- 11.5%
- FY2025A net spread
- 7.0%
- FY2030E net spread, selected case
- 6.8%
- Value per share the forecast implies
- 119.53
- Hypothetical lease: lessor’s equity IRR
- 10.6%
Read from the workbook as served, every input at its default. Periods: FY2023A, FY2024A, FY2025A, FY2026E, FY2027E, FY2028E, FY2029E, FY2030E. Built from AerCap Holdings N.V.’s Forms 20-F for 2023, 2024 and 2025, each figure cited with its XBRL tag on the Reported sheet; the forecast, the leverage and the cost of equity are editorial judgements, labelled on the Forecast sheet, and the One Lease sheet is an invented contract with no counterparty. Everything moves with whatever you type in. Company guidance is not used.
What this model is
An operating model of AerCap Holdings N.V., the aircraft lessor, from its filed results for 2023 to 2025, carried to 2030 in three editorial cases. It reads a lessor as a spread: rent as a yield on the fleet’s book value, against the interest on the debt that funds it.
Reported holds only what AerCap filed, each row with its document and XBRL tag; Derived is arithmetic on those alone; Forecast is where judgement enters, and says so on every row. One Lease sets one invented lease beside it, from the lessor’s side and the airline’s.
Seats: Investment banking, Equity research and hedge funds, Private equity.
Careers that do this work: infrastructure & real assets, debt capital markets, private credit.
How the schedules connect
Every row in the workbook is tagged with the schedule it belongs to; the inspector above shows the tag when you click a row. These are the schedules this model is made of and where each one lives.
Lessor lease revenue and re-leasing
Lease rate factor, straight-line rent, downtime
Reported, rows 6–29 · Derived, rows 6–15 · Forecast, rows 20–30 · P&L & Cash Flow, rows 17–38 · P&L & Cash Flow, rows 53–58 · One Lease, row 9
Book depreciation, residual value and sale
Book value against market value at exit
Reported, rows 32–40 · Reported, rows 84–87 · Derived, rows 18–20 · Forecast, rows 10–17 · P&L & Cash Flow, rows 6–14 · One Lease, rows 16–19
Maintenance reserves and security deposits
Restricted cash held for the lessee
One Lease, rows 12–15
Operating costs and margins
Cost of sales, opex, EBITDA
Derived, rows 32–37 · Forecast, rows 33–39
Balance sheet
Every line from a schedule, and the check
Reported, rows 43–60 · Reported, rows 90–99 · Derived, rows 40–51 · P&L & Cash Flow, rows 41–49
Cash flow statement
Indirect method, closing on balance-sheet cash
Reported, rows 63–70
Debt schedule
Tranches, interest, amortisation and the sweep
Derived, rows 23–29 · Forecast, rows 42–46 · P&L & Cash Flow, row 46 · One Lease, rows 22–25
Maturity profile and refinancing
What falls due when, and whether it can be refinanced
Reported, rows 73–81
Equity roll-forward
Share capital and retained earnings
P&L & Cash Flow, row 50
Residual income valuation and the justified P/TBV
Profit above the cost of equity, on tangible book
Forecast, rows 49–50 · Valuation, rows 6–21
Project and equity returns
Gearing, project IRR, equity IRR and multiple
Forecast, rows 53–69 · One Lease, rows 6–8 · One Lease, rows 28–37
Aircraft leases, lease liability and EBITDAR
Rent by vintage, lease liability, lease-adjusted debt
One Lease, rows 40–54
Sensitivity tables
Two assumptions at once, without a data table
Sensitivity, rows 5–6 · Sensitivity, rows 9–16
What you should be able to explain
- Why a lessor’s rent is best read as a yield on the book value of its fleet, and why basic rents and maintenance rents are kept apart.
- How the net spread, the lease yield less the cost of debt, and leverage together make the return on equity.
- Why gains on sale depend on the gap between what aircraft fetch and their book value, and why that gap is not a forecastable stream on its own.
- How a company’s adjusted debt to equity, average cost of debt and book value per share are rebuilt from the balance sheet and income statement.
- Why one lease is an operating lease on the lessor’s books and a lease liability with a right-of-use asset on the airline’s, and how IFRS 16 and ASC 842 split the same rent differently.
What a reviewer looks for
- Counting maintenance rents as rent, so the yield includes cash the lessee paid toward its own maintenance.
- Leaving one-off insurance recoveries in the earnings a forecast grows from.
- Dividing interest expense by year-end debt, or mixing GAAP interest with the company’s adjusted cost of debt in one spread.
- Treating gains on sale as recurring revenue rather than as the gap between market value and book value at the time of sale.
- Valuing a lessor’s equity without a cost of equity charged on its book value, so any positive earnings look like value created.
- Reading an airline’s IFRS 16 lease cost as its rent: depreciation plus interest is front-loaded, and the principal sits in financing cash flow.
Conventions this workbook uses
Stated on the cover sheet too. A model is only as trustworthy as the decisions it tells you it made.
- The lease yield is basic lease rents over the mean of the year-end net book values of flight equipment held for operating leases; the net spread is that yield less interest expense over the mean of the year-end debt. Both are this page’s measures.
- The forecast rolls the fleet’s book value: additions and disposals as shares of the opening fleet, depreciation on the opening fleet plus half the net additions, impairment on the opening fleet.
- Debt and equity fund the assets at a target leverage; other assets and other liabilities stay at their 31 December 2025 level. Capital returned is earnings less the equity the fleet needs, so nothing is circular.
- The valuation is residual income at 31 December 2025 at the cost of equity on the Forecast sheet. It is not a target, a fair value or a recommendation and is never compared with the share price.
- The One Lease sheet is a hypothetical contract in yearly totals, discounted as if rent were paid at each year end. It has no counterparty.
Build it yourself
The starter workbook
The airline’s side of the hypothetical lease has been cleared on the One Lease sheet. Rebuild it: the lease liability at commencement as the rent discounted at the airline’s borrowing rate, interest and principal each year, the right-of-use asset depreciated over the term, and the lease cost and cash flows under IFRS 16 and ASC 842.
Blanks: Aircraft leases, lease liability and EBITDAR. Download it beside the worked model.
The path around this model
Understand it, drill it, read the build, then apply it to a real company.
Build · Lab · ~3 min
IRR by Eye
Say the IRR for any multiple and hold before the interviewer finishes the sentence, and the multiple for any IRR.
Build · Lab · ~10 min
Covenant Headroom
Compute the three maintenance ratios from a certificate, find the binding test and its EBITDA cushion, and say whether a given downside breaches.
Read · Guide · 12 min
Project Finance Modelling: Cash Flow Waterfalls, DSCR Sizing and the Debt Sculpt
Read · Guide · 11 min
Credit and Covenant Modelling: What a Lender Actually Tests
Read · Guide · 11 min
Financial Modelling Best Practices: The Conventions That Make a Model Auditable
Apply · Skill
Model Audit
Find the errors in a financial model before someone senior does.
Apply · Skill
Company Profile
Build a banker-grade one-pager on any company, fast.
Vocabulary: Operating Lease, Straight-Line Rent, Loan-to-Value (LTV), IRR, Cost of Equity, Covenant, Depreciation & Amortisation (D&A).
Questions about this model
Which figures are AerCap’s and which are the page’s?
Every figure on the Reported sheet is AerCap’s, from its Forms 20-F for 2023, 2024 and 2025, each with its XBRL tag or the statement that it is untagged, as the fleet counts and AerCap’s own leverage, cost of debt and book value per share are. The Derived sheet is arithmetic on those alone, the lease yield and the net spread among it. Everything on the Forecast sheet is a judgement of this page, and the One Lease sheet is invented throughout. AerCap’s guidance and the net spread its results releases quote are not used.
What is the net spread?
Here, the lease yield less the cost of debt: basic lease rents over the average net book value of the fleet, 11.48% in 2025, less interest expense over average debt, 4.46%, so 7.02%. It is the page’s arithmetic on GAAP lines, before leasing expenses, overheads and tax. Against AerCap’s own average cost of debt of 4.1%, which strips out mark-to-market and issuance costs, the spread reads 7.38%. Leverage of about 2.4 times equity is what turns it into a return on equity.
What are the Ukraine recoveries in the income statement?
Insurance and court settlements for aircraft and engines AerCap lost in Russia in 2022, when it wrote them off. They appear as a negative expense: $1,288m in 2023, $195m in 2024 and $1,490m in 2025, so pre-tax income without them was $1,984m, $2,069m and $2,602m against the $3,272m, $2,263m and $4,092m filed. The forecast assumes no more of them.
Is the lease in the model AerCap’s?
No. The One Lease sheet is a hypothetical contract for one new narrowbody bought for $50m and leased for ten years at 0.75% of its price a month, invented to show both sides of one operating lease. AerCap is not a party to it and neither is any airline. In it the lessor earns a 10.6% equity IRR, and the airline books a $32.3m lease liability whose IFRS 16 cost in the first year, $5.34m, is above the $4.50m of rent it pays.
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