Stock of the Day: AerCap Holdings (NYSE: AER)
This Small Cap is Quickly Gaining Altitude…
by Robert Williams, Associate Investment Strategist, The White Cap Report
A small-cap aviation company, based in The Netherlands, is gaining traction in a difficult investment environment.
The company – AerCap Holdings (NYSE: AER) – is a global player in the aircraft engine leasing industry. It provides aircraft management services and performs aircraft maintenance, repair and overhaul services and aircraft disassemblies.
Its stock has been under serious buying pressure of late. In fact, it’s been one of the market’s fastest movers for the better part of two weeks now. And it’s no fluke, either. Some very favorable news regarding the company has come to light since the start of the New Year.
AerCap recently announced that it signed 14 new lease agreements for aircraft in the fourth quarter of 2008:
- Three new Airbus A330 for Air China (China),
- Three new Airbus A330 for Sichuan Airlines (China),
- Three new Airbus A320 for Air One (Italy),
- Three Boeing B737-400 for P.T. Metro Batavia (Indonesia),
- One Boeing B767-300 for North American Airlines (USA), and
- One Boeing B767-300 for Aeromexico (Mexico).
“Notwithstanding the increasingly negative impact of the global credit crisis on most airlines worldwide during the fourth quarter of 2008, AerCap’s solid business franchise continued to sign new lease contracts and deliver aircraft as planned throughout this period. In addition, we have added significantly to our capital base with the completion of the $1.4 billion funding facility for our A330 forward order,” said CEO Klaus Heinemann of the lease agreements.
Heinemann is referencing news that AerCap recently secured the remaining financing needed for the company’s Airbus A330 order, which is scheduled for delivery, in parts, over the next three years. In the terms of the agreement, the European Export Credit Agencies will provide guarantees on up to $1.4 billion of financing.
AerCap’s CFO, Keith Helming, feels that the transaction, which highlighted AerCap’s execution of nearly $3.4 billion of financing arrangements during 2008, is impressive, given how tight lending standards are. “The support by the banking community and the export credit agencies confirms that there is strong backing for AerCap’s business model,” said Helming.
The market has embraced the news. The stock, which trades for $6.03, is up 140% since December 30, 2008. AerCap’s market capitalization is $500 million.
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In addition to once being a full-time trader of equities and equity derivatives, Robert Williams has served as the lead financial analyst for a Forbes top-50 private corporation and an analyst for the endowment of a major academic institution. He's also been profiled in such books as Trade with Passion and Purpose and Alexander Green's The Secret of Shelter Island. 
An interesting view of the automotive industry. Where do you see the future of the industry, will it ever recover or will there be major casulties?
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