by Robert Williams
A small-cap aviation company, based in The Netherlands, is gaining traction in a difficult investment environment.
The company - AerCap Holdings (NYSE: AER) - is a global player in the aircraft engine leasing industry. It provides aircraft management services and performs aircraft maintenance, repair and overhaul services and aircraft disassembles.
Its stock has been under serious buying pressure of late. In fact, it’s been one of the market’s fastest movers for the better part of two weeks now. And it’s no fluke, either. Some very favorable news regarding the company has come to light since the start of the New Year.
AerCap recently announced that it signed 14 new lease agreements for aircraft in the fourth quarter of 2008:
- Three new Airbus A330s for Air China (China),
- Three new Airbus A330s for Sichuan Airlines (China),
- Three new Airbus A320s for Air One (Italy),
- Three Boeing B737-400s for P.T. Metro Batavia (Indonesia),
- One Boeing B767-300 for North American Airlines (USA), and
- One Boeing B767-300 for Aeromexico (Mexico).
“Notwithstanding the increasingly negative impact of the global credit crisis on most airlines worldwide during the fourth quarter of 2008, AerCap’s solid business franchise continued to sign new lease contracts and deliver aircraft as planned throughout this period. In addition, we have added significantly to our capital base with the completion of the $1.4 billion funding facility for our A330 forward order,” said CEO Klaus Heinemann of the lease agreements.
Heinemann is referencing news that AerCap recently secured the remaining financing needed for the company’s Airbus A330 order, which is scheduled for delivery, in parts, over the next three years. In the terms of the agreement, the European Export Credit Agencies will provide guarantees on up to $1.4 billion of financing.
AerCap’s CFO, Keith Helming, feels that the transaction, which highlighted AerCap’s execution of nearly $3.4 billion of financing arrangements during 2008, is impressive, given how tight lending standards are. “The support by the banking community and the export credit agencies confirms that there is strong backing for AerCap’s business model,” said Helming.
The market has embraced the news. The stock, which trades for $6.03, is up 140% since December 30, 2008. AerCap’s market capitalization is $500 million.