Seeking Alpha: FLY In Friendlier Skies, But There's Work To Do

Relative to AerCap (NYSE:AER), I wasn't very bullish on FLY Leasing (NYSE:FLY) back in August of 2014 and the shares have been nothing special since then. While FLY's high dividend payout helps close some of the gap in terms of share price performance, FLY Leasing hasn't really stood out from an increasingly crowded field in aircraft leasing.

Past may not be prologue in this case. I believe management at FLY is making good decisions; selling older planes out of the portfolio, acquiring newer planes, more actively managing its lease expirations, and looking to drive down its cost of capital. I am concerned that there is a lot of capital coming into aircraft leasing and that it will ultimately push returns down closer to the cost of capital - that would be bad news for AerCap, but particularly bad news for FLY Leasing given its higher cost of capital. That said, FLY Leasing seems to be undervalued today and does offer quite a bit more upside from restructuring/self-improvement.

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FLY In Friendlier Skies, But There's Work To Do