Analysis of The Air Lease Corporation
Symbol-AL
Air Lease is an interesting enterprise. Air Lease business consists of leasing air craft to the airline industry, sell aircraft to third parties, and perform fleet management services limited to private investors. It’s important to note that Air Lease’s domestic presence is not as strong as their international presence.
Air Lease has been steadily increasing their dividends over the years. This is mainly due to their portfolio philosophy of buying and maintaining a fleet of young and able aircraft. When an aircraft ages, they sell off the aged planes and seek out new and improved planes. Air Lease’s CEO (John Plueger) has been in the aviation industry for over 30 years. He joined AL in 2010 and also serves on the board for Spirit Aero Systems. The rest of the board is well versed in the aviation field as well.
A negative about Air Lease is their debt is a major problem. According to their 10k, as of 2019, they had 13.6 Billion dollars of debt. Air Lease had to pay 442 million dollars on interest payments in 2019. Air Lease’s debt financing is broken down into a few sections. In the unsecured division, Air Lease has senior notes, term financings, and a revolving credit facility. Within the realm of secured debt, it has both term financings and export credit financing. As of March 31st 2020, their debt financing is 14,414,621,000. They also have a large amount of notes reaching maturity this year along with their subsequent years. With these debt problems and the effects of the Coronavirus, it could severely hurt the company. On another note, in comparison with the S&P 500, it has usually underperformed it.
In my opinion, I would keep an eye on this stock. I believe it has potential, its management team has the experience and a plan. If they can curtail their debt burden, then this stock may be a gem.
