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Air Lease (AL)
NYSE:AL
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Air Lease
(NYSE:AL)74Outperform
Positive Factors
Aircraft Sales
The beat was primarily driven by higher aircraft sales and lower interest expense.
Lease Revenue
Management indicated that most renewals would be at higher rates, and those that were restructured during COVID would be significantly higher, driving faster lease revenue.
Negative Factors
Boeing Deliveries
80% of the deliveries are Boeing, which recently experienced a strike, and it will take time for Boeing to return to pre-strike production levels.
Near-term Funding Costs
There is a potential pressure on near-term funding costs due to a rise in the average cost of funds.
Air Lease (AL) vs. S&P 500 (SPY)
Market Cap
$5.11B
Dividend Yield1.85%
Average Volume (3M)679.68K
Price to Earnings (P/E)13.8
Beta (1Y)1.20
Revenue Growth2.65%
EPS Growth-35.24%
CountryUS
Employees165
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)3.33
Shares Outstanding111,376,884
10 Day Avg. Volume726,895
30 Day Avg. Volume679,682
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.87
Price to Cash Flow (P/CF)3.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.25Price Target Upside18.19% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Air Lease Business Overview & Revenue Model
Company DescriptionAir Lease Corporation (AL) is a leading aircraft leasing company that operates globally, providing aviation leasing and financing solutions to airlines. The company purchases commercial aircraft directly from manufacturers and leases them to airline customers worldwide. Its fleet consists of a diverse range of modern, fuel-efficient aircraft, serving various sectors of the aviation industry.
How the Company Makes MoneyAir Lease Corporation generates revenue primarily through leasing aircraft to airlines. The company enters into long-term lease agreements with airlines, which provide a consistent and predictable stream of income. These leases typically include fixed monthly payments, which cover the cost of the aircraft and generate profit for the company. Additionally, Air Lease may earn revenue through the sale of aircraft from its fleet and through fleet management services. The company's financial performance is bolstered by its relationships with major aircraft manufacturers, allowing it to acquire new aircraft at competitive prices, which it can lease at favorable rates.
Air Lease Financial Statement Overview
Summary
Air Lease exhibits strong revenue growth and operational efficiency, as evidenced by its high gross profit and EBIT margins. While the lack of debt enhances its financial stability, the decline in net profit margin and negative free cash flow reflect challenges in profitability and cash management. Overall, the company maintains a robust financial position with room for improvement in profitability and cash flow management.Income Statement
Air Lease has demonstrated consistent revenue growth with a notable increase from $2.69 billion in 2023 to $2.73 billion in 2024. The gross profit margin appears strong at 100% due to the nature of its business model. However, the net profit margin decreased from 22.9% in 2023 to 13.6% in 2024, indicating reduced profitability. Despite this, EBIT margin improved significantly, showcasing operational efficiency. The data suggests strong operational performance but highlights a decrease in net income impact on profit margins.85
Very Positive
Balance Sheet
The balance sheet reflects a robust equity position with stockholders' equity growing to $7.53 billion in 2024. The debt-to-equity ratio is 0, indicating no debt, which is a positive sign of financial strength. The equity ratio has improved, suggesting a stronger asset base relative to liabilities. Return on equity has decreased due to lower net income, but overall, the company's financial leverage is well-managed.78
Positive
Cash Flow
There is a negative free cash flow trend, with a free cash flow of -$2.5 billion in 2024, but it's an improvement from the previous year. The operating cash flow to net income ratio is strong at 4.51, highlighting efficient cash generation from operations. The free cash flow to net income ratio is negative, reflecting ongoing capital expenditures exceeding cash generated.72
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.28B | 2.73B | 2.68B | 2.32B | 2.09B | 2.02B | Gross Profit |
| 882.59M | 2.73B | 961.29M | 858.42M | 743.43M | 803.01M | EBIT |
| 721.19M | 2.55B | 1.43B | 685.97M | 591.64M | 689.70M | EBITDA |
| 1.31B | 1.73B | 1.88B | 1.37B | 1.47B | 1.47B | Net Income Common Stockholders |
| -120.82M | 372.07M | 614.62M | -97.02M | 436.63M | 516.26M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 472.55M | 472.55M | 460.87M | 766.42M | 1.09B | 1.73B | Total Assets |
| 32.28B | 32.28B | 30.45B | 28.40B | 26.97B | 25.22B | Total Debt |
| 20.21B | 20.21B | 19.18B | 18.64B | 17.02B | 16.52B | Net Debt |
| 19.74B | 19.74B | 18.72B | 17.87B | 15.94B | 14.78B | Total Liabilities |
| 24.75B | 24.75B | 23.29B | 21.75B | 19.96B | 19.14B | Stockholders Equity |
| 7.53B | 7.53B | 7.16B | 6.65B | 7.01B | 6.07B |
| Cash Flow | Free Cash Flow | ||||
| -2.39B | -2.50B | -2.78B | -2.26B | -1.86B | -1.59B | Operating Cash Flow |
| 1.46B | 1.68B | 1.75B | 1.38B | 1.38B | 1.09B | Investing Cash Flow |
| -3.71B | -3.04B | -2.78B | -3.40B | -3.09B | -2.53B | Financing Cash Flow |
| 2.05B | 1.37B | 715.98M | 1.69B | 1.07B | 2.86B |
Air Lease Technical Analysis
Negative
45.90
Price Trends
47.13
Negative
47.28
Negative
46.34
Negative
Market Momentum
-0.23
Positive
44.20
Neutral
43.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AL, the sentiment is Negative. The current price of 45.9 is below the 20-day moving average (MA) of 47.40, below the 50-day MA of 47.13, and below the 200-day MA of 46.34, indicating a bearish trend. The MACD of -0.23 indicates Positive momentum. The RSI at 44.20 is Neutral, neither overbought nor oversold. The STOCH value of 43.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AL.
Air Lease Risk Analysis
Air Lease disclosed 39 risk factors in its most recent earnings report. Air Lease reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Air Lease Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Performance Comparison
AL
Air Lease
45.90
2.40
5.52%
AER
Aercap Holdings
99.86
19.06
23.59%
ALGT
Allegiant Travel Company
60.76
-9.42
-13.42%
Air Lease Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -0.97% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook for Air Lease Corporation, highlighting record revenues, strong lease rates, and robust aircraft demand. However, challenges such as elevated interest rates and reduced end-of-lease revenue were noted. The company's financial position remains strong, supporting its optimistic future outlook.Highlights
Record Full-Year Revenue and Fleet Size
Air Lease Corporation reported record full-year 2024 revenue and ending fleet net book value. The company purchased 18 new aircraft during the quarter, adding $1.3 billion in flight equipment, and sold 14 aircraft for approximately $540 million.
Strong Lease Rate Environment
Lease extensions for 23 single-aisle aircraft resulted in higher lease rates compared to initial lease terms. The company anticipates a modest upward trajectory in fleet lease yields over the next three to four years.
100% Fleet Utilization and High Delivery Yield
Fleet utilization remained at 100%, and Q4 new aircraft deliveries represented the highest delivery yield in over four years.
Continued Demand for Wide-Body Aircraft
Demand for wide-body aircraft has surged, with lease extensions for Boeing 777-300ER aircraft at lease rates significantly higher than appraisal values.
Strong Financial Position
Air Lease Corporation has a strong liquidity position with $8.1 billion as of quarter-end, a $30 billion unencumbered asset base, and a $30 billion contract rental portfolio.
Healthy Gain on Aircraft Sales
The company achieved a 14% gain on sale margin from aircraft sales in Q4 2024, reflecting the significant value embedded in its fleet.
Lowlights
Impact of Elevated Interest Rates
Interest expense increased by approximately $38 million year over year due to a 37 basis point rise in composite cost of funds to 4.14%.
Lower End-of-Lease Revenue
Significantly lower end-of-lease revenue was reported, with only $6 million recognized in Q4 2024 compared to $60 million in the prior year.
Potential Challenges with Boeing Deliveries
With 80% of expected 2025 deliveries being Boeing aircraft, any additional challenges in Boeing's production efforts could impact delivery schedules.
Reduced China Exposure
While effective in reducing exposure, sales of aircraft leased to China, which were some of the highest-yielding leases, could impact future margins.
Company Guidance
During the fourth quarter of 2024, Air Lease Corporation reported revenues of $713 million and $0.83 in diluted earnings per share, driven by fleet expansion and offset by lower end-of-lease revenue compared to the previous year. For the full year, the company's revenue and ending fleet net book value reached record levels, bolstered by the purchase of 18 new aircraft for $1.3 billion and the sale of 14 aircraft for $540 million. The fleet maintained a 100% utilization rate, with a stable weighted average age of 4.6 years and an average lease term of 7.2 years. Looking ahead to 2025, Air Lease expects to receive $3 to $3.5 billion in new aircraft deliveries, with 80% anticipated from Boeing, and aims to achieve a debt funding of approximately $2 billion. The company plans for a steady increase in fleet lease yields over the next three to four years, driven by higher lease rates and strong market demand, with a sales outlook of about $1.5 billion, including $400 million expected in the first quarter.Air Lease Corporate Events
Business Operations and StrategyFinancial Disclosures
Air Lease Reports Record Revenue and Fleet Value
Positive
Feb 14, 2025
On February 13, 2025, Air Lease Corporation held a conference call to discuss its financial results for Q4 2024 and the full year. The company reported record revenue and fleet net book value for 2024, driven by fleet expansion and aircraft sales. Despite challenges in aircraft delivery and manufacturing, Air Lease expects to maintain strong performance in 2025, with robust lease rates and reduced debt funding needs due to self-funding capabilities. The company also highlighted the growing demand for widebody aircraft and the successful reduction of its exposure to the Chinese market.
Private Placements and Financing
Air Lease Secures $966.5 Million Term Loan Facility
Positive
Dec 18, 2024
Air Lease Corporation has closed a $966.5 million unsecured term loan facility maturing in December 2027, with proceeds aimed at financing working capital and general corporate purposes. This transaction, supported by a syndicate of global banking partners, highlights the company’s robust banking relationships and provides a diversified source of financing, reinforcing its industry positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.