Air Lease Corp., the new Century City commercial aircraft leasing company, made some big moves last month with large purchase orders from Boeing Co. and Airbus.
You just wouldn’t know it from the company’s share price.
The venture, led by L.A. billionaire Steven Udvar-Hazy, which had a successful April initial public offering that raised $800 million, saw its share price fall nearly 5 percent to close at $24.50 for the week ended June 29.
That made it one of the biggest losers on the LABJ Stock Index during a week when the index rose 1.4 percent. (See page 24.)
In fact, the stock, which closed at $27.95 on its first day of trading April 19, has been on a losing streak since hitting a 52-week high of $29.94 on May 19.
The drop came in a week when share prices of other publicly traded lessors rose, including single-digit stock gains by Stamford, Conn.-based Aircastle Ltd. and Burlingame-based AeroCentury Corp.
Some profit taking may be involved and analysts believe the dip is temporary. Jason Arnold of Toronto-based RBC Capital Markets Corp. said that the big aircraft purchases should lift the stock.
“The delivery times on those aircraft will be further down the road and not an immediate benefit to earnings based on those purchases. We have a very optimistic view of the potential for this business going forward,” said Arnold, who has a “hold” rating on the stock and a $29 target price.
Of nine analysts tracking the company according to Bloomberg News, five rate the stock a “buy” and four a “hold.”
On June 20, Boeing announced it had sold Air Lease up to 33 planes, reportedly worth $3.9 billion at list price. That was followed the same day by an announcement that Air Lease had ordered 62 Airbus planes, reportedly worth $6 billion at list price.
The orders will add significantly to Air Lease’s existing fleet of 46 new and used commercial jets. The company anticipates growing its fleet to about 100 planes by the end of the year. The company, which raised $3.3 billion last year, said last month that it has issued $120 million in senior unsecured notes in a private placement to institutional investors to raise money for additional aircraft purchases.
That action comes at a time when money has been pouring into the air lease business, in which lessors buy large numbers of planes at a discount and then rent them to airlines on thin margins
In addition to Air Lease, there are several recent large startups, including Dublin-based Avolon, which has raised $3 billion since May of last year. Jackson Square Aviation of San Francisco launched last year.
Air Lease declined to comment for this story.
