Netherlands-based lessor AerCap posted a second-quarter net profit of $254.2 million, down 10% year-over-year. The decline stemmed in part from lower net gains on aircraft sales. 

AerCap sold 30 aircraft last quarter, with an average age of 13 years, while taking delivery of 20 new aircraft.

Demand overall remains strong, Kelly said, pointing to IATA’s full-year outlook of 7% traffic growth as a sign of the market’s condition.

“At a macro level, we continue to see a broadly healthy environment for our airline customers, notwithstanding the rise in oil prices,” Kelly said. “While the rising fuel prices over the past year has clearly had some impact on airlines profitability, it has not risen to a level where we believe it will cause major problems for the airlines, as it reflects a global economy that continues to do well.”

Brent Crude oil prices, which were at $105/barrel four years ago and just under $50/barrel three years ago, have been between $70-$80 for the last four months.

AerCap sees no evidence that Chinese carriers are contemplating shifts away from Boeing aircraft to proactively insulate themselves from tariffs that could result from the escalating trade discord between China and the US, a top executive said.

“We see absolutely no evidence whatsoever of any airline contemplating a move from Boeing to Airbus because of this trade dispute,” AerCap CEO Aengus Kelly told investors on the company’s second-quarter earnings call July 30.  

AerCap is in the midst of several campaigns with Chinese customers, and Kelly acknowledges they are “more focused on Airbus.” This, he explains, is stems from each customer’s needs, not a trade-driven strategy. “At the moment most of the campaigns are around Airbus equipment, but they are Airbus carriers,” he said. 

The US and China have been trading tariff threats for much of 2018. Large commercial aircraft have been largely spared, with the threat of a 25% tariff on Boeing 737NGs being the notable exception. China, Boeing’s largest export market, is using aircraft empty weights to set tariff thresholds, and so far, heavier aircraft—including the 737 MAX family—have not been targeted.

Meanwhile, the lessor is prepared to deliver its first Airbus A350s into China following the Civil Aviation Administration of China’s validation of the model’s type certificate. Kelly said as many as six AerCap A350s could go to Chinese customers this year.

Kelly said demand for the A320neo family has not slowed, despite problems with both the CFM International Leap and Pratt & Whitney PW1000G geared turbofans that power them. AerCap is “most focused” on the Pratt-powered neos, Kelly said, noting that the engine-maker seems “to be through the worst of it.” AerCap’s portfolio of nearly 1,100 owned or managed aircraft includes 270 A320neos—most among lessors.

Sean Broderick, sean.broderick@aviationweek.com