Mon, Jul. 13, 12:59 PM
- Top publicly traded aircraft leasing company AerCap (AER +1.9%) shares look cheap, trading at just 8x earnings, and shares could jump 35% as earnings beat estimates, according to a Barron's weekend analysis.
- A major AER asset is its big order book, largely inherited from ILFC; ~205 of the 368 planes on order are highly desirable Airbus A320neo and A321neo narrow-body planes, and another 60 in the order book are Boeing 787s, probably the best plane in Boeing’s fleet; analysts also say AER gets high marks for both business and financial management.
- The article says AER may be undervalued because of an overhang from the sale a month ago by AIG of 71M shares, or about a third of total shares outstanding; there is concern about developing markets, where AER generates half of its revenue; and AER has a lot of debt - ~$30B, vs. $8B of equity - making it vulnerable to higher interest rates.
Tue, Jun. 2, 11:47 AM
- "We view this as another step forward on the capital management plan," says FBR's Randy Binner, assuming AIG (AIG +1.6%) might use the proceeds (in the area of $2.4B) for an immediate buyback. He rates the stock an Outperform.
- AIG a few weeks back announced a $3.5B share repurchase plan.
- AerCap (AER +2%) is also on the move higher despite 50M shares of its stock hitting the market. Alongside the secondary, AerCap is buying back $750M of stock from AIG.
- Previously: AIG unloading chunk of AerCap stake (June 1)
Mon, May 11, 7:47 AM
Tue, Jan. 20, 8:13 AM
- To review, AIG is the owner of nearly 100M shares of AerCap (NYSE:AER) following its sale of ILFC in May 2014. AerCap's stock price has declined from about the $45 area at the time of the sale to $38 at the close on Friday, and Reuters reports the company is mulling repurchasing shares from AIG.
- AIG +1.3% premarket
Nov. 4, 2014, 8:01 AM
May 15, 2014, 3:25 PM
- AerCap (AER -2.7%) financed the cash portion of the purchase (closed yesterday) primarily with new debt issuance, significantly boosting leverage, says S&P's Betsy Snyder, downgrading the credit rating to BB+ from BBB- and removing the company from CreditWatch negative.
- "We expect the consolidated entity to generate solid cash flow and gradually decrease leverage following the merger, but we don't expect AerCap's debt leverage to return to previous levels for at least the next 18 to 24 months," she says.
- AIG is now the owner of nearly 100M shares of AerCap.
- Previously: AerCap rally means billions for AIG
Dec. 17, 2013, 3:23 PM
- AerCap's (AER +6.4%) gains today put the stock more than 40% higher since the deal with AIG was announced yesterday, and Deutsche's Michael Linenberg says there's more to come, reiterating his Buy rating and boosting the price target to $40 from $27.
- "We expect the deal to be accretive for AER shareholders on the onset, in light of the $600M of expected annual synergies and the attractive price at which the portfolio will be acquired,"says Linenberg. "Moreover, AerCap is inheriting ILFC’s order book of 385 in-demand aircraft, which should lead to a strong/relatively predictable stream of CF/EPS for the foreseeable future."
- For AIG, the deal - at the moment - is less sale than a swap, as the insurer will be an owner of 46% of AER's common stock and will still include ILFC's operating results on its own books.
- Writing in Barron's, Dimitra Defotis, says the spotlight now turns to AIG's core financial operations, and that may not be a good thing based on last quarter's results. Yes, AIG trades at a discount to book, but with analysts not projecting earnings growth next year, that discount could be warranted.
- Maybe the most bullish case for AIG at the moment is the moonshot in AerCap may allow the insurer to unload its stake at a sweet price (the lockup agreements aren't yet known).
Dec. 16, 2013, 12:57 PM
- "Our preliminary conclusion is that we would lower AerCap's (AER +30.7%) corporate credit rating one notch to BB+ from BBB-," says S&P, putting the company on "CreditWatch with negative implications" due to the deal to buy ILFC (AIG +1.2%).
- The assumption of ILFC's debt, plus the debt to fund the acquisition, plus anticipated purchase accounting write-downs on ILFC's assets will push AerCap's debt-to-capital ratio to among the highest of eight aircraft leasing companies rated by S&P, says the agency. "We expect that the consolidated AerCap would generate solid cash flow and gradually de-lever following the merger, but would not restore its balance sheet for at least several years," says analyst Betsy Snyder.
- Previous coverage
Dec. 16, 2013, 12:46 PM
Dec. 16, 2013, 9:11 AM
Dec. 16, 2013, 8:01 AM
- "Upon completion, the transaction will have a positive impact on [our] liquidity and credit profile and will enable us to continue to focus on our core insurance businesses," AIG CEO Robert Benmosche says, regarding the deal to sell ILFC to AerCap (AER).
- AER is paying ~$3B (net to AIG after loan settlements is ~$2.4B) in cash and issuing ~97.5M shares.
- AIG will own around 46% of AER's common shares as a result of the deal, and will thus "include ILFCs operating results in continuing operations."
- AIG is also providing a $1B revolver. (PR)
- AIG +2.8% premarket; AER +17.7% premarket
Dec. 12, 2013, 1:07 PM
- Moving nicely ahead in a bright red market is AIG (AIG +2.2%) which is now in talks to sell ILFC to AerCap Holdings (AER +4%), according to a Bloomberg report. "We never comment on rumors," says AerCap CEO Aengus Kelly when reached by telephone.
- Based in the Netherlands, AerCap - a former holding of Cerberus Capital - is the largest independent aircraft lessor with $15B in assets, and - recently reporting a debt/equity ratio of 2.5x - said it could increase the load to 3.5x-4x "if extremely attractive opportunities are found."
- Of course, AIG's effort to sell ILFC to a Chinese consortium for about $4.2B isn't formally dead, but the insurer is free to pursue other sales avenues.
Oct. 24, 2011, 10:50 AM
AER vs. ETF Alternatives
AerCap Holdings NV provides aircraft leasing & aviation finance services. Its activities also include aircraft asset management, corporate services, remarketing of aircraft, collecting rental, maintenance payments & monitoring aircraft maintenance.
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