Air Lease (AL) Beats On Earnings In Q3, Increases Dividend

Air Lease Corporation’s (NYSE:AL) third-quarter 2019 earnings per share came in at $1.34 per share, which surpassed the Zacks Consensus Estimate of $1.29. Quarterly revenues also increased 17.8% year over year to $530.9 million and beat the Zacks Consensus Estimate of $526.2 million as well. This year-over-year top-line improvement for the company that leases planes to airlines can be primarily attributed to higher revenues from the rental of flight equipment.

Further, rental of flight equipment revenues, accounting for bulk (92.8%) of the top line, increased 16.7% from the year-ago figure. Also, revenues from aircraft sales, trading activity and other sources surged 36.1% to $38 million. Total expenses rose 24.3% to $337.2 million, thanks to higher interest expenses, costs due to depreciation of flight equipment plus selling, general and administrative expenses.

Moreover, this Los Angeles, CA-based company delivered 15 aircraft from its order book in the September quarter despite the MAX groundings and the delivery delays by Airbus. This reflected $1.6 billion investment in aircraft. Air Lease, which sold five jets during the reported quarter, had 307 owned aircraft in its fleet, representing a net book value of $18.9 billion, up 20% from the 2018-end figure. Total fleet size at the end of the third quarter was 737, lower than 758 (including owned fleet of 275) at the end of 2018.

Aircraft investments in the first nine months of 2019 were $4.1 billion, up 20% from similar investments made through 2018. Due to the ongoing Boeing (NYSE:BA) 737 MAX groundings, the company announced that it will not take delivery of the MAX planes until second-quarter 2020.

Following the MAX groundings and delivery delays by Airbus, Air Lease lowered its 2019 projection for aircraft investments for the third time this year. For the full year, the company now expects aircraft investments of $4.8 billion.

Air Lease Corporation Price, Consensus and EPS Surprise

Air Lease Corporation price-consensus-eps-surprise-chart | Air Lease Corporation Quote

Dividend Hike

Air Lease’s board approved a 15.4% hike in its quarterly cash dividend to 15 cents per share (annualized 60 cents). The amount is payable Jan 6, 2020 to its shareholders of record as of Dec 20, 2019. The current raise marks the 7th dividend increase in the company’s history. Moreover, it rewarded its shareholders with dividends for 28 consecutive quarters.

Liquidity

Air Lease, carrying a Zacks Rank #4 (Sell), exited the third quarter with cash and cash equivalents of $291.77 million compared with $300.13 million at 2018 end. As of Sep 30, 2019, the company has $13.8 billion of debt financing, net of discount and issuance costs, compared with $11.54 billion as of Dec 31, 2018.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the Zacks Transportation sector are awaiting third-quarter earnings reports from players like LATAM Airlines (NYSE:LTM) , Copa Holdings (NYSE:CPA) and Golar LNG (NASDAQ:GLNG) . While LATAM Airlines and Copa Holdings will release third-quarter results on Nov 11and Nov 13, respectively, Golar LNG will announce the same on Nov 26.

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