Should the airplane lessors be flying higher? $AER $AL
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I mentioned the aircraft lessors in my June links post, and as I was writing the post I decided I wanted to do a fuller write up on the lessors because I thought I had a few non-consensus views on them and, in particular, on their risks (in addition, I think the discussion of Buffett's thoughts on lessors and how its tough to reconcile it with his investment in airlines was different). My general thesis on the lessors is pretty simple: they trade at a discount to book, and they probably deserve to trade at a premium, both because their book value is understated and because they have some franchise / platform value. With continued earnings growth driving by new plane deliveries into long term contracts with airlines combined with share repurchases below book value, I could see the shares delivering 20%+ IRRs for the next three years. The two major public players are AerCap (AER; disclosure: long) and Air Lease (AL); Aircastle (AYR) and Fly Leasing (FLY) are also publicly traded. While I've read through most of ARY / FLY's transcripts and financials, I've spent much less time on them than AER and AL so this post will mainly be AER / AL focused. There's plenty of information out there on the aircraft lessors.David Einhorn pitched Aercap in both
Should the airplane lessors be flying higher? $AER $AL
Should the airplane lessors be flying higher…
Should the airplane lessors be flying higher? $AER $AL
I mentioned the aircraft lessors in my June links post, and as I was writing the post I decided I wanted to do a fuller write up on the lessors because I thought I had a few non-consensus views on them and, in particular, on their risks (in addition, I think the discussion of Buffett's thoughts on lessors and how its tough to reconcile it with his investment in airlines was different). My general thesis on the lessors is pretty simple: they trade at a discount to book, and they probably deserve to trade at a premium, both because their book value is understated and because they have some franchise / platform value. With continued earnings growth driving by new plane deliveries into long term contracts with airlines combined with share repurchases below book value, I could see the shares delivering 20%+ IRRs for the next three years. The two major public players are AerCap (AER; disclosure: long) and Air Lease (AL); Aircastle (AYR) and Fly Leasing (FLY) are also publicly traded. While I've read through most of ARY / FLY's transcripts and financials, I've spent much less time on them than AER and AL so this post will mainly be AER / AL focused. There's plenty of information out there on the aircraft lessors.David Einhorn pitched Aercap in both