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Tuesday, July 13, 2010

Perspective on the Global Aircraft Leasing Market from Aircastle CEO + Fly Leasing (FLY)

In our 6/29 post, Stocks Zig, Fundamentals Zag? Psychology is Wild Card, we relayed a positive headline buried amidst mostly negative media headlines:

Global Air Cargo Tops Pre-Recession Levels
Global air cargo traffic soared 34.3 percent in May from a year ago and is now above pre-recession levels, the International Air Transport Association said.

CNBC covered this story last Friday, 7/9, by featuring Ron Wainshal, CEO of Aircastle (AYR). We include the CNBC video here:

Per our prior mention, we own shares of Fly Leasing (FLY), an Aircastle competitor.

The company recently changed its name to Fly Leasing from Babcock and Brown. The company is currently trading at approximately 2.5 times distributable cash flow, which we find extremely attractive given Fly's stable business model, relatively young aircraft fleet with high utilization, 8% dividend yield (less than a 20% payout ratio), and shareholder friendly management. We own Fly Leasing even though the company -- like our Seaspan (SSW) and Global Ship Lease (GSL) -- is a highly levered, asset heavy business. We will try to share more details in a future post.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long FLY, SSW, GSL.

© 2010 Jeffrey Walkenhorst
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