2024-03-08 10:43:47 ET
Summary
- Air Lease is trading at a 2024 estimated P/E of 9.5x, a 2025 estimated P/E of 7.9x, with a price to book 0.68x.
- Lease rates and residual values for aircraft are surging to record highs because of strong demand and production issues from aircraft manufacturers.
- The majority of Air Lease's orderbook are Airbus narrow-body A220 and A320/A321 aircraft, some of the most in-demand aircraft currently.
- Air Lease has a TBV of $7.1 billion, but in 2023 sold $1.5 billion of assets 11% above carrying value. If that premium is representative of the entire fleet, true book value is near $10 billion.
- Air Lease is probably a year away from resuming share repurchases, which could push the price back towards stated book value.
The leasing business is easy to understand. A finance company buys an asset, in this case, aircraft, and leases it out to airlines.
It pays for a portion of the assets in cash and finances the rest with debt. Its cost of capital should be lower than an airline, because it's better diversified, and can repossess the assets and lease to others if an airline goes bankrupt....
Read the full article on Seeking Alpha
For further details see:
Air Lease: Tremendous Value Hiding In "Plane" Sight