AerCap: The World's Biggest Airplane Company You've Never Heard Of

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AerCap, the largest aircraft leasing company, owns over 2000 commercial aircraft and has a diverse portfolio of aircraft and engines.AER's extensive fleet and global reach make it a preferred lessor ...

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On the one hand, there are fewer new aircraft for AER to own and lease. On the other hand, whenever a lease comes up for renewal, if current lessees are unwilling to pay the going rate, many other airlines are waiting impatiently in the wings to take over those leases at a higher price than AER was receiving. For the sake of the traveling public, who a","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AL":"航空租赁公司","LU0109981661.USD":"FRANKLIN MUTUAL EUROPEAN \"A\" (USD) ACC","BK4588":"碎股","LU0211331839.USD":"FRANKLIN MUTUAL GLB DISCOVERY \"A\" (USD) ACC","BK4572":"航空租赁","IE00B19Z6F94.USD":"Legg Mason Royce - US Smaller Companies A Acc USD","BK4551":"寇图资本持仓","SAFRY":"Safran SA","IE0034390439.USD":"FTGF ROYCE US SMALLER COMPANIES \"A\" (USD) D","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","BA":"波音","LU1098665638.USD":"FRANKLIN MUTUAL EUROPEAN \"A\" (USDHDG) H1 ACC","BK4590":"PTP","BK4104":"贸易公司与经销商","FTAI":"FTAI AVIATION LTD","BK4516":"特朗普概念","BK4564":"太空概念","AER":"Aercap飞机租赁","LU0053671581.USD":"摩根大通美国小盘成长股 A(dist)","EADSY":"空中客车集团","BK4187":"航天航空与国防","BK4585":"ETF&股票定投概念","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H"},"translate_title":"AerCap：您从未听说过的世界上最大的飞机公司","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"EADSY":1,"SAFRY":1,"FTAI":1,"AER":1,"AL":1,"BA":0.7},"content_text":"AerCap, the largest aircraft leasing company, owns over 2000 commercial aircraft and has a diverse portfolio of aircraft and engines.AER's extensive fleet and global reach make it a preferred lessor for all airlines.Despite production issues at Boeing and Airbus, AER remains a prime mover, benefiting from high demand and its strong financial position.AER is a better investment than Boeing or Airbus, offering steady growth, reasonable PE, and selling at book value.FabrikaCr/iStock via Getty Images AerCap (NYSE:AER) is the largest aircraft leasing company in the world. It had more airplanes than Delta and Southwest combined! The company owns more commercial aircraft than the largest, and far better-known, individual carriers. In fact, some of the airplanes flown by the big US carriers are leased from AER. AER owns or controls more than 2,000 commercial airline aircraft - plus more than 150 cargo planes, helicopters, and other aircraft types -- and more than 1,000 airline aircraft engines. American Airlines has a fleet of over 1,500 aircraft, built by both Boeing and Airbus. Delta has a fleet of over 1,200 aircraft, built by both Boeing and Airbus. United has a fleet of about 1,300 aircraft, built by both Boeing and Airbus. Southwest has around 750 aircraft that are currently approved to fly by the FAA. Southwest operates an all-Boeing fleet of various iterations of the Boeing 737. China Southern Airlines' fleet is larger than Southwest by about 100 airplanes, but like the others above, it owns or leases aircraft built by both Boeing and Airbus. AER does business with almost every carrier worldwide, as well as leasing aircraft to private individuals and consortiums. It has more than 300 customers in, at any given time, 70 to 80 countries. Competition AER has competitors in aircraft leasing, but none of them come close to the range of offerings AER can offer lessees. SMBC Aviation Capital (private), BOC Aviation (listed on the Hong Kong Exchange), and FTAI Aviation Ltd. (FTAI), and Air Lease Corp. (AL) are four such firms. All are sizable firms, but none enjoy anywhere near the range and heft of AER. Some carriers prefer to lease aircraft with no ownership of any models whatsoever. These are usually start-ups or smaller lines that need to prove themselves. They would rather pay for gate access, marketing, promotions, etc. than hardware. AER's huge fleet makes AER a go-to vendor for these airlines that prefer to lease rather than purchase aircraft. But Can AER and its Competitors Get New Airplanes to Lease? Production issues plaguing both Boeing (BA) and Airbus SE (OTCPK:EADSY) are a double-edged sword. On the one hand, there are fewer new aircraft for AER to own and lease. On the other hand, whenever a lease comes up for renewal, if current lessees are unwilling to pay the going rate, many other airlines are waiting impatiently in the wings to take over those leases at a higher price than AER was receiving. For the sake of the traveling public, who are flying at an ever-increasing rate, let us hope the problems with Airbus and Boeing are resolved. Both face significant headwinds, with Boeing especially fraught with issues. Many investors believe these two producers must be great investments because, after all, they own a duopoly on commercial aircraft production and more people are traveling. They are wrong! Here are the results of owning Airbus for the past year: Seeking Alpha Think that's just a recent aberration? No. Here is your return for the past five years: Seeking Alpha Surely, you would have done better with Boeing, right? No. Seeking Alpha In fact, you would have done far, far worse than you would have done with Airbus! Seeking Alpha Yet, hope springs eternal. The \"they are the only game in town and more people are traveling\" argument would have cost you dearly! I believe I am the only analyst at SA who has consistently, for 5 years, warned readers that these two companies, Boeing in particular, were money pits into which too many investors were tossing their future. You can find my previous analyses on SA and my most recent (not on SA,) complete with several links backing up each of my findings here.) I conclude that AerCap is a better way to profit from increasing air travel than either Boeing or Airbus. Can they get the engines and the airplanes they need as a lessor? Yes. They are considered a prime purchaser from both major aircraft manufacturers. The assembly lines have not stopped; they have slowed (or been slowed by the FAA) to ensure quality workmanship and passenger safety. AER has an excellent reputation as a company that can supply aircraft engines and airplanes, and can consistently pay for whatever they need from BA and EADSY. Below is one of AER's competitors regarding the ever-increasing backlog of safe airplanes manufactured versus the backlog of orders. The backlog is now 11 years. This is to say that if there were no more orders for airplanes for 11 years, at today's rate of production, that finally the supply would catch up to the demand. Air Lease Corp. Another way of looking at this, with a little greater granularity into each producer, comes to us from AerCap: AerCap Why I Prefer AerCap to BA, EADSY and every AerCap Competitor AerCap is everywhere, and they do everything except build the airplanes. AerCap AER has the financial strength to handle the supply chain issues. AerCap As the above graphic points out in Box 1, BA and EADSY are far behind their projections from a few years ago. In Box 2 we see that MRO capacity was \"significantly reduced\" during Covid-19. (MRO stands for maintenance, repair, and overhaul.) Airplanes and, especially, aircraft engines, need frequent maintenance. Sometimes they need repairs. And occasionally, they need complete overhauls. Especially with the current backlog, older aircraft need MRO to keep flying safely. The next part of the cycle shown in Box3 is the fact that…well, there is no other way to say it: current engines have not proven to be as reliable as older engines. Projections made for the lifespans of these newer engines were based on the experience users had with older, more stable engines. Finally, Box 4 shows that those firms with excess engines, lots of spare parts, and a workforce that knows what they are doing, are going to excel. I believe AER understood this earlier than most competitors. AerCap This why AER, in viewing the lifecycle (below) of an aircraft acquisition to the end of its safe and useful life, includes MRO as a key step along the way. Knowing where to find skilled labor, specialized equipment, hangars, and repair shops to perform maintenance, inspections, and overhauls has become more critical than ever. AER gets that. AerCap AerCap also understood early on that jet engines were becoming more complex - perhaps too complex for the MRO workforce to keep up with in the early days. As a result, AER decided to make a new thrust (no pun) into jet engines, both for their own inventory and in concert with the giant French aircraft design, parts, systems and MRO company Safran SE (OTCPK:SAFRY). AerCap Is AerCap a Bargain? No, not in the sense that it is \"cheap\" today. But I believe it is one of those companies Warren Buffett often lauds when he says, \"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.\" Compare this slow but steady progression upward of AER to those of the two aircraft producers above… Seeking Alpha Paying roughly 8 times (forward estimate!) earnings seems quite cheap to me. (You will note all SA charts that come up when you first look up a company show the estimated forward P/E.) I also see AER as underpriced based on how rapidly its book value has risen -- and is likely, in my opinion, to continue to do so. The company currently sells at 1x BV. (The chart below is from May 2024.) AerCap Is AER a bargain? It sells at book, with an eminently reasonable P/E, is the top competitor in its industry, and looks to have a long runway (I couldn't resist) ahead of it. For me, that constitutes a bargain at the current price. Good, safe, steady investing, AnalystAerCap  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.28.1","shortVersion":"4.28.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2466642244"}