IB Net Payout Yields Model

AerCap Holdings Continue Leasing Planes

While the stock price for AerCap Holdings (AER) continues to suggest business remains soft, AER leases plane after plane on very long term leases. The Q3 transaction report released today shows that the average lease term of 3 new planes was 138 months (11.5 years). Hard to find a more reliable business then one with desirable assets on contract for over 11 years. Yet investors still aren't willing to pay much more then 6x earnings while the company continues to grow much faster then 10%.

Q3 transactions weren't particularly special compared to past results yet they show continued, stable growth. The industry has rebounded from the lows in 2009d with even O'Hara airport in Chicago reporting record passengers for September. Airlines continue to lack the financial leverage to buy planes outright so the leasing business is set for continued growth. AER is becoming the premier public leasing company. Management remained aggressive during the global recession by purchasing Gensis Lease (GLS) and sticking with buying new Airbus planes. Those moves are starting to really pay off. The stock price will follow.

Transaction Highlights:
  • Signed new lease agreements for three aircraft,
  • Delivered 13 aircraft and 12 engines under lease agreements,
  • Purchased 12 aircraft and eight engines,
  • Sold five aircraft and five engines, and
  • Disassembled seven aircraft and six engines.
  • The average term of lease agreements for new aircraft signed during the first three quarters of 2010 was 138 months. The average term of lease agreements for used aircraft was 62 months (including letters of intent).


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