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Air Lease (NYSE:AL) is scheduling a $683 million IPO with a market capitalization of $2.396 billion at a price range mid-point of $26.50 for Tuesday, April 19, 2011. The full IPO Calendar lists 4 other IPOs for this week.

SUMMARY -- Launched in February 2010 AL’s management is from AIG’s aircraft leasing company, ILFC. ILFC was founded in 1973 by AL’s Chairman & CEO. ILFC is for sale by AIG and owns about 1,000 aircraft. AL has purchase commitments for $6.8 billion in aircraft.

VALUATION -- At the mid-point price range, AL is valued at 1.3 times book value and plans on paying no dividends. Other publicly held competitors all sell for book value or less and some pay dividends: AerCap (NYSE:AER) sells for one times book; Fly Leasing (NYSE:FLY) sells for 80% of book and pays a 5.8% dividend; Aircastle (NYSE:AYR) sells for 70% of book and pays a 3.2% dividend.

The sector as a group moved in concert with the DJIA over the past year. The DJIA is up 12% in the last year. The group of AER, FLY and AYR is up 13% on average in the past year.

It seems that AL should sell for less than 1.3 times book and should also consider paying a dividend. Here are AL valuation metrics.

BUSINESS -- Air Lease Corporation is an aircraft leasing company launched in February 2010 by aviation industry pioneer Steven F. Udvar-Házy. The company purchases commercial aircraft and then leases to airlines around the world.

MARKET GROWTH --
AVITAS forecast for aircraft deliveries over the next five years suggest that leased aircraft may grow by more than 25% according to the S-1 filing page 7.

FLEET -- As of March 15, 2011

  • AL owned 46 aircraft of which nine are new aircraft and 37 are used aircraft.
  • AL had entered into purchase commitments to acquire an additional 153 new aircraft through 2017 and ten used aircraft in 2011.
  • The weighted average lease term remaining on current leases was 6.1 years, and the the company leased aircraft to 28 airlines in 17 countries.

CUSTOMERS -- AL has entered into leases and future lease commitments with airlines in Australia, Brazil, Bulgaria, Canada, China, France, Germany, India, Indonesia, Ireland, Italy, Japan, Kazakhstan, Kenya, Malaysia, Mexico, Mongolia, the Netherlands, New Zealand, Norway, Russia, South Africa, South Korea, Spain, Sri Lanka, Trinidad & Tobago, Turkey, United Arab Emirates, United States and Vietnam.

DIVIDEND POLICY -- No plans to pay dividends.

CUIRRENT FLEET -- As of March 15, 2011, AL’s aircraft fleet consisted of 41 narrowbody aircraft and five widebody aircraft, and the weighted average age of our aircraft fleet was 3.5 years.

AIRCRAFT PURCHASE COMMITMENTS -- As of March 15, 2011, AL had committed to acquire a total of 153 new aircraft and ten used aircraft at an estimated aggregate purchase price (including adjustment for anticipated inflation) of approximately $6.8 billion

LEASE COMMITMENTS -- As of March 15, 2011 AL had future lease commitments for 35 out of 36 aircraft to be delivered in 2011, 28 out of 38 aircraft to be delivered in 2012, nine out of 25 aircraft to be delivered in 2013, and for one out of 24 aircraft to be delivered in 2014.

MANAGEMENT -- Steven F. Udvar-Házy has served as Chairman and Chief Executive Officer since AL’s launch in February 2010. In 1973, Mr. Udvar-Házy co-founded the aircraft leasing business that became ILFC.

ABOUT ILFC -- Leases the entire range of Boeing and Airbus commercial aircraft, lays claim to being the largest lessor of new aircraft and the largest lessor of widebody aircraft in the world. ILFC says it owns nearly 1,000 planes

IILFC counts most of the world's airlines as customers. Its parent, embattled insurance giant AIG (NYSE:AIG), is looking to sell ILFC.

USE OF PROCEEDS -- Approximately $663 million will fund the acquisition of commercial aircraft and will be used for general corporate purposes.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Air Lease IPO Preview