Bloomberg: Goldman Sachs likes the credit exposure to Aercap over Air Lease, positive on credit metrics and notes Aercap bonds "trade too wide to IG lessor Air Lease."
hopefully means borrowing costs to come down even more.
thats the only one i've seen mention of - from Airline Economics: AerCap is reported to be finalizing the sale of mid-life 37 aircraft to DVB’s Deucalion, first reported by Flightglobal. KKR is reported to be taking an equity stake in the deal. AerCap has previously stated that it intends to sell $2bn worth of aircraft in 2016. Gary Liebowitz has opined that such a sale would “generate a low/mid-single-digit gross margin”, adding that aircraft sales are viewed favourably by the Wells Fargo analysts since it will reduce AerCap’s average fleet age and free up cash for additional highly-accretive share buybacks at 6x EPS and 0.86x P/B.
DATE: JUNE 15, 2016
today would be a good day to accelerate the buyback.
could still put a decent chunk to work, and I have a feeling they'll have a week or so of low prices if not more, as the brexit fallout gets sorted. based on average volumes, that gives them about $20mm a day. buy buy buy.
still buying back stock, and still over 1/3 discount to BV. metrics should converge, one way or another.
Pros and cons abound, but good problem to have, imo. If they were at 20x p/e it would be more of an issue, but they aren't, they are trading below book here and about a 6-7p/e, which I contend is a substantial discount to actual asset value, with no value given to the business and their position in the industry. Even India coming back online? Nice macro. Great time to use that buyback cash. OEM delays I see as self-correcting the system. Fleet keeps getting older and even faster with passenger travel growth (+7%yoy?!) and spending $10s of millions on maintenance and refurbishment of #$%$ old planes doesn't make sense in mid/long term. Around the edges for peak short hop route demand, sure, but generally i see it as better to spend cash on a newer, better aircraft, give the customer a great flying experience and take your airline partially out of the cross-hairs of the carbon credit penalties coming down the barrel. Lots to consider. GLTA.
amazing to see a company sell off, with a 6 handle P/E beat on earnings making an adjusted +$1.50 a qtr, doing buyback in the order of 10-15% of shares outstanding, with a credit upgrade in hand and leverage ratio falling 10-20% and counting in a yr's time. maybe they need to change the name to GigaCap, AerUber or FaceCap or something more catchy...
I don't think it has quite sunk in what the middle-classing of china/india etc. means. lots of ways to play it, but air travel is a very obvious one to me. anyone remember japan's re-emergence post ww2 beatdown to the emergence of Japan Inc.? looking at the data chart, from 1960 to 2000 international departures grew 180 fold. yes, you read that correctly: 18,000%. model that demand curve on china's population, and probably less than 1/2 the time frame, of which were already quite well along. and that doesn't count domestic travel growth, which in china is expected to be massive. It's really a pretty historic moment.
Bloomberg: China Plans $11 Billion Second Chengdu Airport to Meet Demand.
BOC Aviation Ltd., Asia’s biggest aircraft-leasing company by asset value, began gauging demand Monday for a Hong Kong initial public offering that could raise as much as $1.5 billion.
Industry trend says what? Up up & away.
Moody's Investors Service has upgraded the rating of Class G-3 issued by Aircraft Lease Securitization Limited, Series 2007-1. The transaction is backed by a portfolio of aircraft on leases to airlines. AerCap Ireland, a subsidiary of Aercap Holdings N.V. (Ba2 placed on upgrade review) is the servicer.
chance to pick up shares from the weak hands...again. classic sentiment cycle.