AerCap Scores The Mother Of 'Buy Low, Sell High' Deals

Investors can’t fault the management of AerCap (AER) for thinking too small. Yet again management has shown its willingness to make bold moves at tough points in the cycle, agreeing to a huge $31B-plus deal with General Electric (GE) to acquire GEACS and create far and away the largest aircraft leasing company in the world.

I believe time will show this to be a savvy deal done a bit past the bottom of the cycle, with AerCap paying around 0.6x book (on a levered basis) for a quality leasing company and paying around 0.75x to 0.80x for a fleet similar to its own, all while maintaining its invaluable investment-grade debt rating. I expect meaningful aircraft sales in the years to come (into a strengthening market), with share repurchases restarting a little further down the line.

 

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AerCap Scores The Mother Of 'Buy Low, Sell High' Deals