AL manages lease revenues and take advantage of changes in market conditions by acquiring a balanced mix of aircraft types. Its used aircraft are generally less than five years old. All of the aircraft owned were leased as of Feb. 28, 2013. Additionally, as of Dec. 31, 2012 and through Feb. 28, 2013, AL had entered into binding purchase commitments to acquire an additional 325 new aircraft through 2023.
AL operate on a global basis, providing aircraft to airline customers in every major geographical region, including emerging and high growth markets such as Asia, the Pacific Rim, Latin America, the Middle East and Eastern Europe.
Having been established in 2010, AL became profitable in its second year of operation and has grown revenues and earnings strongly since. Revenues increased 45% to $190.1 million in first quarter 2013 and Diluted EPS increased 46.2%. CEO Steven F. Udvar-Házy said although macro economic indicators remain mixed he expects strong global growth of passenger traffic led by emerging markets. The company has a significant and growing presence in Asia/Pacific, which has surpassed Europe as the region where the company holds the greatest proportion of its fleet, and the company predicts further pockets of opportunity in the Middle East, Africa and Latin America.
According to AVITAS Inc. (AVITAS), a leading adviser to the aviation industry, many of these emerging markets are experiencing increased demand for passenger airline travel and have lower market
saturation than more mature markets such as North America and Western Europe. In addition, airlines in some of these emerging markets have fewer financing alternatives, enabling AL to command relatively higher lease rates compared to those in more mature markets. With well-established industry contacts and access to capital, AL believes it will be able to continue successfully implementing its business strategy worldwide.
*Consensus earnings forecasts from Yahoo Finance
Consensus earnings forecasts on Yahoo Finance point to continuing growth of around 32% per annum. The stock is up 40% already this year but with EPS growth of 45% it is still only priced with a PE of 20.
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Disclosure: The author holds no positions in the above mentioned stocks