Shares of commercial airliner lessor Air Lease Corp. flew to an all-time high late last month as investors poured money into the company founded by L.A. billionaire Steven Udvar- Házy.
The run-up to nearly $50 per share put the Century City-based firm’s market capitalization at approximately $5 billion, more than double since its inception in 2010.
Much of the perceived value of Air Lease Corp. comes from the company’s ability to quickly supply new jetliners to rapidly growing airlines around the world – its core business.
But Air Lease, unlike many of its competitors’, now carries an added upside: an anticipated windfall for the firm coming as a result of the recent U.S. tax overhaul.
The firm is one of the few airliner lessors not based in tax-havens such as Ireland or the Bermuda. That puts it in line to have its federal taxes slashed from 35 percent to 21 percent this year as part of tax cuts signed into law in December.
The company also is benefiting from bets made in 2010 on the growth in global airliner passenger traffic. The orders the firm placed for commercial airliners with Boeing Co. and Airbus in the wake of the Great Recession came with steep discounts, and those aircraft now are being leased out at favorable rates to fast-growing airlines that operate in emerging markets as well as low-cost carriers.
Those upstart companies are typically unable to obtain new airplanes by other means because aerospace manufacturers have long lead times and there is an order backlog created by global demand for aircraft, stock analysts said.
“You just can’t open up shop today and get brand new airplanes,” said John Plueger, Air Lease’s chief executive. “There is a five- or six-year wait from Boeing and Airbus. So, it’s not so easy, no matter how much money you have, to get into this space.”
Air Lease owns 236 aircraft and has orders to buy 372 more planes through 2023 – one of the largest aircraft order sheets in the industry – according to a financial filing for the quarter ended Sept. 30.
Its revenue grew 6.1 percent to $377 million for the quarter ended Sept. 30. The firm’s revenue grew 16 percent to $1.4 billion in 2016 from about $1.2 billion in 2015. The company’s net income rose 48 percent to $375 million over the same period.
Global demand for aircraft is expected to continue apace for at least the next two decades. Boeing forecasts a need for more than 41,000 new aircraft deliveries, valued at over $6 trillion, between 2016 and 2036. Single-aisle airplanes – the type most often purchased by Air Lease – will command the largest share of new deliveries at more than 70 percent, according to the forecast.
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