There's still a long way to go, but there are at least some signs of improvement in the airline industry - not that has really been reflected in the share price of AerCap (AER) since my last update on this leading aircraft lessor. Travel does appear to be recovering, though still down sharply, and the pace of bankruptcies has slowed, but current activity levels are still far too low for airlines to make money, and the risk of "zombie airlines" propped by government largesse is still real.
Specific to AerCap, though, not much has changed in my view. Yes, this is a highly-leveraged business and highly-leveraged businesses are always at elevated risk when their key markets are in severe downturns. That said, unless there's a resurgence of COVID-19 infections (and travel restrictions), the likely course of lease deferrals and reduced business activity seems endurable, and I believe AerCap can regain former levels of adjusted earnings in five to seven years.
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