With commercial aviation demand continuing to grow quite well in
developing markets and the funding environment in developed markets
getting better with each quarter, this is a pretty good time to be an
aircraft leasing company. It's not so surprising, then, that AerCap Holdings (AER) shares are up more than 65% over the past year.
As
for the future, I would argue that AerCap is still looking at a
multi-year period of strong operating conditions. AerCap's focus on
smaller airlines in developing markets is in tune with where the growth
is likely to be, and the company's focus on maintaining a younger fleet
and demonstrated skill in managing credit/default risk (as well as
selling aircraft to maximize portfolio value) should result in
significant cash flows in the coming years. Valuation for leasing
companies is trickier and more subjective than for many other types of
companies, but I nevertheless maintain that AerCap is still about 10% to
15% undervalued today - not the most appealing bargain out there, but
still undervalued and with the potential of a dividend in the coming
years.
Follow this link to continue:
AerCap Holdings At A Good Cruising Altitude
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