GAAP reporting requires AerCap to amortize certain items related to the acquisition of GECAS at an accelerated pace, which significantly affects the company's income. Perhaps that is why AerCap structured the presentation in the way it did, because while the business environment seems to be strengthening its revenues do not reflect that at all. ![]() When adding back the purchase accounting practices which do deform the reported numbers on top and bottom line but not the actual business operation, we see that year-over-year the basic lease rent actually declined by 2% and the overall topline improvement is achieved by the gain on sale booked. What I found somewhat unfortunate as well is that there really wasn't a detailed discussion on how the business is performing while there actually is a comparable period for comparison now with the GECAS business included. The first quarter showed the strength with $100 million in gains on sale providing an 18% premium to the book value of the jets. The positive is that the market for selling aircraft now is strong as OEM delivery schedules are not reliable while airlines want the airplanes to operate their schedules, so demand to purchase the airplanes is actually strong. The lessor highlighted that it sells planes when it makes business sense from multiple viewpoints besides the obvious gain on sale and bought back stock at a 15% discount. It's not something I am unhappy with but also not something that I believe is so strong it warrants not detailing the airplane shortages and travel recovery.ĪerCap clearly wanted to have the focus on its way of recycling capital to the benefit of shareholders and perhaps its stock prices tanking in March was a reason for that. AerCap did highlight value creation for investors. I would rather have seen the actual graphs with recovery numbers. Instead, AerCap decided to put in a slide with news headlines on how travel is rebounding. Take those two slides and there isn't much of a pitch you have to do to show your business is positioned rather well and attractive to investors. That wasn't the case this time and that is unfortunate, because those two slides say enough on why airplane lessors are positioned so well in the current market. AerCap usually follows its business activity slide with a slide on recovery of the air travel market and the airplane production shortfalls. ![]() The Q1 2023 earnings call was unfortunately less informative than I would have liked. The AerCap presentation is generally one that I am looking forward to as it tends to be one packed with information. That unwinding process does put some pressure on the stock as more shares come in circulation unless met with a repurchase for AerCap, but the underlying business keeps improving. In March, stock prices started weakening somewhat as General Electric ( GE) started capitalizing on its stake in the lessor. The stock is up nearly 100% more than easily outperforming the 35% return for the broader markets, supported by strong long-term demand for air travel and a recovery towards that trendline. Since I wrote about AerCap in 2020, share prices have surged. I don't regret buying shares of the Ireland-based lessor, and if I had any regret, it is that I did not buy more. AerCap Stock: A Strong OutperformerĪerCap stock has not disappointed me one day. In this report, I look at the stock price performance as well as the company's most recent results, and I will provide an update to my price target for AerCap. The stock hasn't let me or my portfolio down a single time since I added shares. ![]() Since I marked shares a buy during the pandemic, AerCap stock has showed outsized returns for shareholders, validating my buy thesis for the stock. The company is free of some of the pains that airlines face and has streamlined rental collection from long-life assets that are now more in demand than ever. ( NYSE: AER) is my favourite investment opportunity to capitalize on the recovery in air travel demand.
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