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Air Lease (AL) Benefits From Fleet Growth Amid Rising Costs

Air Lease Corporation’s AL top line is benefitting from persistent growth in its fleet.

The company recently reported second-quarter 2022 earnings of 95 cents per share, which surpassed the Zacks Consensus Estimate of 79 cents. The bottom line surged 26.7% year over year on the back of an increase in revenues. Total revenues of $557.7 million outperformed the Zacks Consensus Estimate of $545.8 million and increased 13.4% year over year.

Air Lease Corporation Price, Consensus and EPS Surprise

Air Lease Corporation Price, Consensus and EPS Surprise
Air Lease Corporation Price, Consensus and EPS Surprise

Air Lease Corporation price-consensus-eps-surprise-chart | Air Lease Corporation Quote

How is Air Lease Doing?

Steady growth in the fleet is driving Air Lease’s top line. Notably, total revenues jumped 13.4% year over year in the second quarter of 2022. During the second quarter of 2022, the company took delivery of a total of 21 aircraft, representing approximately $1.4 billion in aircraft investments. As of Jun 30, 2022, Air Lease’s fleet included 392 owned and 89 managed aircraft, with 430 new aircraft orders from Boeing and Airbus.

Revenues from the rental of flight equipment climbed 20.6% year over year to $545.27 million in the reported quarter. As of Jun 30, 2021, Air Lease owned 392 aircraft with a net book value of $23.5 billion. Total fleet size at the end of first quarter was 911 (including the owned fleet of 392) compared with 908 at the end of March 2022.

Strong freight and cargo markets are supporting demand for the company’s wide-body passenger aircraft. Continued recovery in airline operations is further driving lease demand. Higher lease demand, coupled with rising interest rates and inflation indicates a rising lease rate environment, which bodes well for Air Lease.

The company’s efforts to reward its shareholders are encouraging. During the first half of 2022, Air Lease completed its previously announced $150 million share buyback program by repurchasing 3.4 million shares.

However, rising operating expenses pose a threat to the company's bottom line. Total operating expenses jumped 8% year over year in the first half of 2022. Depreciation of flight equipment costs rose 10.3%. Selling, general and administrative expenses increased 32.9% year over year in the period.

Zacks Rank and Stocks to Consider

Currently, Air Lease carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Transportation sector that investors can consider are GATX Corporation (GATX), Triton International Limited TRTN and Teekay Tankers Ltd. TNK, each carrying a Zacks Rank #2 (Buy) as well.

GATX Corporation has an expected earnings growth rate of 17.8% for the current year. GATX delivered a trailing four-quarter earnings surprise of 28.9%, on average.

The Zacks Consensus Estimate for GATX’s current-year earnings has improved 2.1% over the past 90 days. Shares of GATX have gained 7.9% over the past year.

Triton has an expected earnings growth rate of 22.4% for the current year. TRTN delivered a trailing four-quarter earnings surprise of 7.5%, on average. TRTN has a long-term expected growth rate of 10%.

The Zacks Consensus Estimate for TRTN’s current-year earnings has improved 4.2% over the past 90 days. Shares of TRTN have increased 20.9% over the past year.

Teekay Tankers has an expected earnings growth rate of 140.1% for the current year. TNK delivered a trailing four-quarter earnings surprise of 46.1%, on average. TNK has a long-term expected growth rate of 3%.

The Zacks Consensus Estimate for TNK’s current-year earnings has improved more than 100% over the past 90 days. Shares of TNK have soared 120.3% over the past year.


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