FLY was always the weakest of the lessors due to its. small size and inability to borrow at more competitive rates. However, this was balanced by the apparent commitment of management to shareholder values (buying back debt at deep discount, buying back shares etc.). All this changed with the out-of- the blue selling of its very profitable interest in its management (BBAM) and then with its disastrous SO at a price of over $3 less than the market price and which greatly diluted shares. To date management has neither used this money or explained its action. Lack of trust engendered by all this has destroyed trust in management and fear for future dividends. This has also created a huge number of shares waiting to dump on any move up.
Edsha- you're right. Making a hard to explain move with BBAM and then completely ruining your advantage of being the higher dividend payer of the3 (6.2% vs AYR @ 3.6% and AER zero) has scuttled this equity temporarily. However, for the newly entering share purchaser, the timing is pretty good. I had held FLY for a few years before moving into VGR (Vector Group, a cigarette company with a consistent 9.3% cash dividend and a 5%/year stock dividend). I'm keeping that and looking to buy into FLY again. BTW, the fact that AER decided to obtain cash for capital investment thru a revolving loan vs. the $14 blow ,market ADR stock dilution was clearly appreciated by the market. At the same time, AYR has had a number of insider buys including the largest holder of VGR shares, Dr. Phillip Frost.
Edsha- You get a thumbs up because I agree with most of your comments. I do disagree however with your statement that FLY has always been the weakest of the lessors. While it is true that they've always had the smallest fleet, you are not allowing for all of the ways that management employed to enable them to generate additional income. Besides buying back shares and debt on the cheap, they made a substantial amount of money on the buying and selling of airplanes. Also, although I hated that they sold their interest in BBAM, they did books a $36 plus million dollar gain on the deal. As to your closing remark that investors have lost trust in management, you may or may not be right. Speaking for myself, thus far I am a bit disappointed in management. They've had more than three months to employ the cash, yet have done very little. Perhaps we are being impatient BUT management did make the statement that they saw numerous opportunities to grow the company. Mr Barrington also stated that they were looking to raise the dividend early next year. W/O added revs and profits raising the dividend will be a challenge, given that we have almost 50 per cent more shares outstanding.
There has to be more to this story because thus far, it doesn't square. In the meantime Mr Market likes the space. AER at $20 plus and AYR closing in on $19. It's getting darn hard to justify FLY as Best Of Breed. Mr Market is the final arbiter and today FLY is a lowly $14.50. I do hope that Mr Barrington is noting FLY's dreadful performance since the SO.