manuelbean Posted July 29, 2020 Share Posted July 29, 2020 Hi guys, any idea where I can find the $430 in deferrals that the company states on the Q2 presentation? Shouldn't they be included on the Accounts Receivable? Thank you Link to comment Share on other sites More sharing options...
manuelbean Posted July 29, 2020 Share Posted July 29, 2020 Found it. It's under "notes receivable" which is under "other assets" Link to comment Share on other sites More sharing options...
keerthiprasad Posted September 21, 2020 Share Posted September 21, 2020 AER mkt cap less than AL now... Link to comment Share on other sites More sharing options...
keerthiprasad Posted September 24, 2020 Share Posted September 24, 2020 https://seekingalpha.com/news/3616886-aercap-holdings-prices-1_5b-debt-offering AER raises 1.5B at ~4% unsecured. Yet its trading at 40% of BV. Debt market and equity markets seem to have very different opinions. Link to comment Share on other sites More sharing options...
manuelbean Posted September 25, 2020 Share Posted September 25, 2020 Well, if there are any impairments, that 40% discount wouldn't actually be 40% while the bondholders would still be ok, right? Link to comment Share on other sites More sharing options...
keerthiprasad Posted September 27, 2020 Share Posted September 27, 2020 Well, if there are any impairments, that 40% discount wouldn't actually be 40% while the bondholders would still be ok, right? Depends on what caused the impairments. Link to comment Share on other sites More sharing options...
Edward Posted September 27, 2020 Share Posted September 27, 2020 Well, if there are any impairments, that 40% discount wouldn't actually be 40% while the bondholders would still be ok, right? The only thing that matters here is really cash flow. i.e How many of the lessees are not liquidating and still have to pay. The book value of the planes is of very little consequence. Link to comment Share on other sites More sharing options...
manuelbean Posted September 27, 2020 Share Posted September 27, 2020 Well, if there are any impairments, that 40% discount wouldn't actually be 40% while the bondholders would still be ok, right? The only thing that matters here is really cash flow. i.e How many of the lessees are not liquidating and still have to pay. The book value of the planes is of very little consequence. The cash flow is obviously important. I was refering to the consequence of that. If the clients aren't paying and the company isn't able to place the airplanes, then Aercap will likely have to impair its assets and there goes the discount to book. Link to comment Share on other sites More sharing options...
manuelbean Posted September 29, 2020 Share Posted September 29, 2020 Does anyone here know where to find a chart such as the one that Aercap publishes on its fleet, but for Airlease? Average age is good, but it's important to understand its composition. Link to comment Share on other sites More sharing options...
manuelbean Posted September 29, 2020 Share Posted September 29, 2020 I wonder if the skew to more CAPEX and fewer debt maturities might be a reason (other than fleet age) for $AL current higher valuation. If the debt market dries-up, $AER won't be able to negotiate with the bondholders whereas $AL will be able to negotiate w/ the OEM's. Link to comment Share on other sites More sharing options...
manuelbean Posted March 2, 2021 Share Posted March 2, 2021 Hi guys, can anyone point me to resources on the other side of this equation (the debt markets)? I feel that the biggest risk that Aercap faces is a possible refinancing risk, and I feel that I know very little about the current debt markets. I've heard a few investors who I respect talking about the debt markets being a bit lofty these days so I want to learn more about it. Thanks Link to comment Share on other sites More sharing options...
chesko182 Posted March 7, 2021 Share Posted March 7, 2021 Huge deal, not surprisingly. Let's see how the details look like but I suspect they are getting good value from this knowing mgmt and guessing GE is a quasi-forced seller. "GE Nears Deal to Combine Aircraft-Leasing Unit With AerCap" https://www.wsj.com/articles/ge-nears-deal-to-combine-aircraft-leasing-unit-with-aercap-11615157471?mod=e2tw Link to comment Share on other sites More sharing options...
Xerxes Posted March 8, 2021 Share Posted March 8, 2021 Larry Culp is dealing a hand ! Ahead of GE investor day. Damn i own neither AerCap nor GE shares, but like them both. Unrelated to the GE news, here is a great reading on the leasing business coming out of pandemic from Aviation Week. Reading it, I feel like much like the insurance business that is going through 'hard cycle' the airplane leasing business will be going through their own 'hard cycle' as airline strap for cash, prefer to lease, to keep their balance sheet in check. https://aviationweek.com/mro/aircraft-leasing-gains-more-power-only-price Link to comment Share on other sites More sharing options...
Xerxes Posted March 8, 2021 Share Posted March 8, 2021 guessing GE is a quasi-forced seller. I am fairly certain, the GE will maintain an equity stake in the combined structure, and wind it down slowly. Link to comment Share on other sites More sharing options...
Peregrine Posted March 8, 2021 Share Posted March 8, 2021 This deal is incredibly reminiscent of the ILFC transaction with AIG years ago. In both cases there was a motivated parent selling to simplify and pay down debt and headed by a new CEO. AER issued shares at 1.4x BV at the completion date to buy ILFC at 1x BV, not to mention an incredibly attractive order book. Will be very interesting to see the terms - I suspect pretty good value in this deal again. Link to comment Share on other sites More sharing options...
adhital Posted March 8, 2021 Share Posted March 8, 2021 If it's a 30Billion plus deal - GECAS 1600 owned or ordered aircraft. AER 1400 owned or ordered with a current enterprise value of $34Billion - I suspect it's like, just my guess, 30%GECAS-70%AER equity ownership type deal by issuing AER share plus debt for ~$12B cash to GECAS without much impact to the current leverage ratio. Combined BV/share and ROE should improve. Should be a good deal for both but will see... Link to comment Share on other sites More sharing options...
Peregrine Posted March 8, 2021 Share Posted March 8, 2021 If it's a 30Billion plus deal - GECAS 1600 owned or ordered aircraft. AER 1400 owned or ordered with a current enterprise value of $34Billion - I suspect it's like, just my guess, 30%GECAS-70%AER equity ownership type deal by issuing AER share plus debt for ~$12B cash to GECAS without much impact to the current leverage ratio. Combined BV/share and ROE should improve. Should be a good deal for both but will see... GECAS reported $36 billion in assets at the end of 2020. That would be a $6 billion impairment, which at a 4:1 assets to equity ratio would equate to a P/BV of 1/3. Of course, a big part of the purchase may well be in stock so that $30 bn price may rise a lot if AER stock appreciates significantly upon completion. Link to comment Share on other sites More sharing options...
adhital Posted March 8, 2021 Share Posted March 8, 2021 If it's a 30Billion plus deal - GECAS 1600 owned or ordered aircraft. AER 1400 owned or ordered with a current enterprise value of $34Billion - I suspect it's like, just my guess, 30%GECAS-70%AER equity ownership type deal by issuing AER share plus debt for ~$12B cash to GECAS without much impact to the current leverage ratio. Combined BV/share and ROE should improve. Should be a good deal for both but will see... GECAS reported $36 billion in assets at the end of 2020. That would be a $6 billion impairment, which at a 4:1 assets to equity ratio would equate to a P/BV of 1/3. Of course, a big part of the purchase may well be in stock so that $30 bn price may rise a lot if AER stock appreciates significantly upon completion. Yes, I think the AER stock now would appreciate much higher. whatever the deal might be but merging the company equal of its size, by maintaining leverage ratio, at the current cheap debt market environment along with expected future leasing prospects and being a no1 lessor should definitely improve margins, ROE, and its stock price substantially. Aengus Kelly is a proven capital allocator with a huge ownership stake. A very similar example would be a merger between FCNCA and CIT where the stock price is now almost double the merger announcement. https://www.firstcitizens.com/about-us/newsroom/news-releases/2020/cit-group-merger-announcement If AER is to be valued like a bank, it's too cheap to ignore selling at a 30% discount to the current tangible BV with now improved ROE and BV accretion. It survived the global pandemic with a close to a 60% drop in air passenger traffic with less than 2.5% impairment charge off. It doesn't need to endure much stress test IMO going forward to be valued appropriately https://www.icao.int/sustainability/Documents/COVID-19/ICAO_Coronavirus_Econ_Impact.pdf Link to comment Share on other sites More sharing options...
Lakesider Posted March 8, 2021 Share Posted March 8, 2021 I have faith that aercap managment got a great deal. Bigger is better in this space right? It was cenrtainly the right environment to be doing a big deal over the past year. Link to comment Share on other sites More sharing options...
Peregrine Posted March 8, 2021 Share Posted March 8, 2021 I have faith that aercap managment got a great deal. Bigger is better in this space right? It was cenrtainly the right environment to be doing a big deal over the past year. All else equal - yes. Bigger = better negotiating leverage, both with the OEMs and in the credit markets. Bigger also = better informational advantage and greater operational scope which enhances portfolio management. A bit surprised that AER is pulling the trigger on a deal of this size and this early...they had been reticent about doing sale leasebacks while others were being aggressive. Just me reading the tea leaves here - I'm guessing that the terms were really good that they didn't want to pass up. Link to comment Share on other sites More sharing options...
manuelbean Posted March 8, 2021 Share Posted March 8, 2021 Does anyone know the amount of debt in GECAS? I've seen a fellow investor on twitter mention that the debt is around $26B, so the equity portion for a $30B deal would be $4B. The profits in 2019 were around $1B so, 4x 2019 earnings? Link to comment Share on other sites More sharing options...
manuelbean Posted March 10, 2021 Share Posted March 10, 2021 Here it is. https://www.aercap.com/media/news/aercap-to-acquire-ge-capital-aviation-services/ Still no mention of how much debt GECAS has. Link to comment Share on other sites More sharing options...
Peregrine Posted March 10, 2021 Share Posted March 10, 2021 Here it is. https://www.aercap.com/media/news/aercap-to-acquire-ge-capital-aviation-services/ Still no mention of how much debt GECAS has. That is not what matters. AER is issuing $25 bn in debt and 111.5 mm shares for this deal. At current AER stock price - that equates to ~80% debt/20% equity financed transaction. Looks like AER values the GECAS assets at $34 bn (down from $36 bn at the end of 2020), so they're buying at a P/BV of 2/3 using AER stock at ~75% of BV. Accretive assuming the ROE profiles are similar but not like the ILFC deal. Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 10, 2021 Share Posted March 10, 2021 Here is the global ranking of aircraft lessors by fleet: 1) AerCap: 1,080 aircraft owned or managed, 289 on order; Total 1,369 2) GECAS: 984 aircraft owned or managed, 255 on order; Total 1,239 3) Avolon: 593 aircraft owned or managed, 263 on order; Total 856 4) Air Lease Corp: 410 aircraft owned or managed, 365 on order; Total 775 5) SMBC Aviation Capital: 469 aircraft owned or managed, 230 on order; Total 699 6) Nordic Aviation Capital: 504 aircraft owned or managed, 79 on order; Total 583 7) BBAM: 526 aircraft owned or managed, 0 on order; Total 526 8.) BOC Aviation: 392 aircraft owned or managed, 119 on order; Total 511 9) ICBC Leasing: 380 aircraft owned or managed, 123 on order; Total 503 10) Aviation Capital Group: 301 aircraft owned or managed, 65 on order; Total 366 https://www.reuters.com/article/us-ge-divestiture-factbox/factbox-aercap-gecas-plane-leasing-tie-up-would-dwarf-rivals-by-fleet-idUSKBN2B01Y4 Link to comment Share on other sites More sharing options...
manuelbean Posted March 10, 2021 Share Posted March 10, 2021 Here it is. https://www.aercap.com/media/news/aercap-to-acquire-ge-capital-aviation-services/ Still no mention of how much debt GECAS has. That is not what matters. AER is issuing $25 bn in debt and 111.5 mm shares for this deal. At current AER stock price - that equates to ~80% debt/20% equity financed transaction. Looks like AER values the GECAS assets at $34 bn (down from $36 bn at the end of 2020), so they're buying at a P/BV of 2/3 using AER stock at ~75% of BV. Accretive assuming the ROE profiles are similar but not like the ILFC deal. It matters just because I wanted to look at it from another point of view. I'm not sure my math is correct so I welcome the push-back: GECAS had $1B in profit in 2019. If Aercap is buying that for $7B, that's a 7x multiple, but there's interest costs in the mix. Let's say Aercap gets a 2% interest rate on the $24B. That's $480M that you need to take from the $1B in profits, leading to $520M of profits per year, leading to a multiple of 13.4x. The issue is, what were the interest costs before the acquisition that led to the $1B dollars in net income for GECAS that will be now replaced by the $480M? Link to comment Share on other sites More sharing options...
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