Genesis Lease Ltd. (GLS)
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- All Comments on GLS
- General Discussion on GLS
- Plane Lessors Are Headed to the Desert [view article]
- Eye on Plane Leasing Sector [view article]
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loading ...Recent GLS Articles
- Seven Intriguing Stocks Going Ex-Dividend Next Week
- Plane Lessors Are Headed to the Desert
- Genesis Lease: Picking Among the Rubble
- Eye on Plane Leasing Sector
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- Irish Stocks: 11 Ways to Tap Into the High Growth Nation
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Plane Lessors Are Headed to the Desert [view article]
Just look at what the major US airlines are taking out of service. They are all old generation 737's. A320 and MD80's. Those leasing the more modern planes should do well. The modern ones are still in high demand. ReplyPlane Lessors Are Headed to the Desert [view article]
Air Castle has improving numbers and 92% of its business comes from outside the US, where fuel costs are not compounded by a declining dollar. With increasing leasing revenue, the aircraft are still far from the desert. ReplyEye on Plane Leasing Sector [view article]
I think you're misunderstanding the way this business works. As the fuel price goes up, the sufferers are not these guys, but the airlines who own older, less fuel efficient airplanes. Those older airplanes tend more to be owned by airlines. The newer airplanes are owned more by these lessors. When the pressure gets too much, the airlines go under. The shareholders/lenders of the airline are stuck with the old airplanes (as well as the legacy pension costs, etc). The lessors can easily get back their planes, even in the US (thanks to section 1110 of the bankruptcy code), and lease them to the younger, stronger airlines, thus creating a virtuous cycle.Obviously there is a frictional cost to this repossession and releasing, which can be quite substantial - the planes may be idle for a few months, although that is not happening yet. That's why, if you look at the history of operating leasing in the last 20 years, operating lessors with short-term lease-specific debt and hair trigger covenants (e.g. GPA) go under, whereas operating lessors with higher credit and more stable sources of funding (e.eg. GECAS and ILFC) survive. Obviously the backing that GECAS and ILFC have is not as valuable anymore. But the trick in picking winners here remains looking closely at the terms of their debt . If they are stable on that, they will make a lot of money. Provided that they do not try to buy cheap by buying older generation aircraft - that is a quick and easy form of suicide these days.
On Apr 17 01:02 PM DSX Lover wrote:
> These things have come down, because they are heavy leveraged and
> keep missing the numbers. AYR and GLS have missed earnings the last
> 2 quarters. I won't be surprised if GLS misses again next week. FLY
> is the worst, borrowing in excess of Free Cash Flow to pay for the
> dividend. AYR and GLS have paid huge dividends above EPS because
> they been able to utilize the large depreciation expense, and easily
> available Finance from commercial paper to finance a large percentage
> of the fleet. Now the Financing is not that easy, and creditors are
> requiring lower debts on Net Asset Value of the Planes, which will
> contract the Dividend. AYR had to cut the dividend over 50%, and
> I assume that GLS will do so in the near term as well. I would wait
> until GLS reports before jumping in, AYR is interesting in the $10-$11
> level with a 10% Dividend being supported by a dividend payout of
> 60% of EPS. Unlike the Shipping sector, where charterer's have to
> ship an excess of in demand for commodities, and Ship charter contracts
> are not dependent on fuel prices, the Air Leasing companies clients,
> are not as stable because the high fuel prices is putting bankruptcy
> pressure is smaller unprofitable airlines, making the business more
> risky, despite long-term leasing agreements with the airlines. Reply
Plane Lessors Are Headed to the Desert [view article]
One other thing to keep in mind is that airlines prefer the flexibility of contracts. A buying contract may be for structured for a decade or even longer. If one leases an aircraft, which can be done for as short as a year, the airline could diminish its risk on missing out on technology coming out or wait until an aircraft has proven worthy. Do not like the results of the aircraft you leased? Don't renew. Get another one. Short term contracts will not get defaulted on (usually). Most aircraft leasors require at least a month's (and up to three) worth of lease payments to be paid down as deposit. As with GLS, they were able to get the deposit and a month's worth of lease (defaulted at the beginning of the month and had already paid for the next) for a new aircraft that should be able to go right back up. ReplyPlane Lessors Are Headed to the Desert [view article]
Oh,lets not forget,not all planes have to sleep under the moon and stars in the desert,some are converted to freight planes or hey,send them to Mexico or some African countries to ferry soldiers and guerillas alike .They dont mind,it is just living dangerously another day! Reply
Plane Lessors Are Headed to the Desert [view article]
wow,I find this thread so interesting,airlines are always going thru thy revolving door of bankruptcy,makes you wonder what insane mind would want to be in bed with them?But those Irish and psudo Irish citizens dont seem to mind,as they find leasing business a jovial profession which make them stand out in a St Patrick Day parade and gets toasted in their local watering holes by comrades and secret admirers.
I will drink to that! Reply
Plane Lessors Are Headed to the Desert [view article]
The airlines will always need updated planes. Additionally, these lessors lease all over the world, not just the USA, so they are adding capacity in the emerging markets. Long term, probably a good investment. Short term, buy some puts if you want to take a long position... ReplySeven Intriguing Stocks Going Ex-Dividend Next Week [view article]
Nordic American Tanker (NAT): $1.18 ex 5/23 payable 6/3. $39.39 close 5/16.NB: Even small volume guys can take advantage of this. I'm new, small cap (so far ;-) and recognized this strategy early as a valuable addition to my strategies. I *do* make sure the stock is one I wouldn't not mind holding, JIC the price drops too much after ex dividend date.
Last one I did like this gave an effective APR of 200.20% just from the dividends.
Now, NAT has issued another 4M shares (IIRC) which will be dilutive. But they do oil transport, lots of spot business. With oil where it's at, two new tankers being built, long-term div history, good appreciation, I don't care if it drops a bit after dividends date. Reply
The Wind
Seven Intriguing Stocks Going Ex-Dividend Next Week [view article]
Actually, there are quite a few of those monthly stocks that have a nice dividend yield. Pick up a couple hundred shares, and hold them for a few months, and you'll notice a difference quickly. A few that I like (for price and yield) are HTE, PWE, and CRT. I considered buying and selling frequently to take advantage of price drops and price increases, but those dividends just keep on coming. The other advantage is that these three are in the energy area, and doing just fine. I keep adding instead of selling! ReplySeven Intriguing Stocks Going Ex-Dividend Next Week [view article]
Good technique for an investor who can buy stocks by 1000"s; for a few hundreds, the commissions takes an important part off. ReplyPlane Lessors Are Headed to the Desert [view article]
PEOPLE HAVE TO FLY AND DEMAND ALWAYS WILL BE THERE ReplyArvai
Plane Lessors Are Headed to the Desert [view article]
Like any other business, aircraft leasing depends on the quality of decisions made, including which aircraft to buy, which airlines to lease to, and the anticipated residual values.The poor results in the United States, while a significant sector of the market, does not mean that international airlines will perform as poorly as those here. Growth in emerging countries, namely China and India has been spectacular, and will continue as these economies mature and air travel replaces rail for the majority of the populations.
One must pick and choose carefully - the right aircraft that are likely to remain green, not being late adopters of technologies facing near-term replacement, and which aircraft to remove from your portfolio on a timely basis while residuals are strong.
Historically, the airlines have been a cyclical business, and while record high fuel prices are depressing earnings, global growth in the industry will continue. That growth will need aircraft, and people to finance them.
Will some aircraft lessors get into trouble, and find that some aircraft hit the desert? Perhaps for older fleets, but the demand for the newest and most fuel efficient aircraft is such that they can quickly be re-leased internationally.
It is easy to be caught up in the woes of the US airline industry, most of which lacks the financial wherewithal for long-term viability, and ignore the underlying demand and global growth.
Ernest S. Arvai
CEO
The Arvai Group, Inc. Reply
Ode to Joy Global, Cramer's Mad Money (5/1/08) [view article]
Sell Block.........AAPL ?Come back to us Seamus !
seekingalpha.com/symbo... Reply
Genesis Lease: Picking Among the Rubble [view article]
Sorry to nit pic as I think your article is very good and I agree with it but you are wrong on the 8 year depreciation. I did read the 20-F to be sure (page 65,F-9, F-11). You are mixing GAAP and tax information. The 8 year deprec is for tax purposes. For financials, they use US GAAP accounting and the planes are depreciated over 20 years, the book basis you refer to is based on the GAAP numbers. I still agree with you that the value of the planes is greater than book but that is because of the devaluation of the dollar and the the good market for used planes, it does not have anything to do with tax deprecation rates. The 8 year tax life is valuable because it makes the T in EBITDA poistive operating cash flow to the company as the tax is all, or mostly, deferred for many years. ReplyGenesis Lease: Picking Among the Rubble [view article]
A recent (April 17) report on GLS from Wachovia Securities contains the following surprising sentence:"We are aware that the financial sector is littered with companies that pledge a commitment to its dividend, only to sharply change course shortly thereafter. We believe that is less likely to occur at Genesis given its high-quality income-generating assets."
*Cough!*
I almost spit my coke onto my computer monitor when I read that one!
Wachovia's slashed dividend aside, the report indicates a belief that GLS's dividend is secure.
I'm a sad owner of WB, and I'm thinking of buying some GLS. Reply