General Meeting (10/08/2014)

Market Updates

  • Hewlett- Packard split into 2 different smaller companies. Lots of big tech companies are trying to split into small ones (eBay/ PayPal; EMC/ VMware). Main reason is to narrow down their focuses.
  • Go pro Camera gifted 5.8 million toward charitable organization during lock up period.
  • Chinese Insurer, Anbang Insurance Group, buys Waldorf Astoria for a Record $1.95B

 

Stock Pitch

 

AerCap Holdings N.V. (AER)

  • Aviation company that engages in the leasing, financing, trading, sales and management of commercial aircraft and engines.
  • December 16, 2013 announced the acquisition of ILFC from AIG.

Airline Leasing Industry

  • Over a third of the world’s airline fleet is now rented and the proportion is likely to keep growing
  • Many leasing companies also offer maintenance for the airlines at an additional cost.

Acquisition

  • The combined company will be the largest global franchise in the aircraft leasing industry.
  • Combined fleet of 1,329 aircraft and an order book for an additional 385.
  • Will allow for cost savings and operating efficiencies.
  • Lower tax expense.
  • Future profits and synergies are expected to reduce its leverage meaningfully over the following four to five years.

Revenue

  • Lease rental revenue:
  • Asia/Pacific/Russia 32%
  • North America 18%
  • Latin America 11%
  • Africa/Middle East 4%
  • Europe 35%

Recent Activity

  • Sold $2 billion worth of planes since December.
  • Well ahead of its disposal target averaging $1 billion a year.
  • Expected to meet a target of reaching a debt-to-equity ratio of around 3-to-1 by the end of next year.
  • Secured operators for 90% of the planes due for delivery by the end of 2016.

Risks

  • Interest Rates
  • Emerging Markets
  • Defaults
  • Continued Demand from Airlines

 

Recommendation

  • Buy
  • Asses the result of earnings report in November
  • Hold through end of December