ACapitalist

Plane Lessors Are Headed to the Desert

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.

Genesis Lease: Picking Among the Rubble

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.

Genesis Lease: Picking Among the Rubble

I think you should check your calc on the depreciation. I have looked closly at AYR and just did a quick check on GLS and it looks like book deprec is running at about 4% year, or a 20 year life for both. This is still conservative as actual deprec is probably closer to 3%, but not in stright line. Your reference to 8 years may be tax deprec. In the US it is 7 years which creats better cash flow and a large deferred tax liab for plane owners.