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Aircraft lessors are set to increase their share of the global fleet in the next few years as the pandemic has accelerated the shift towards leasing. We believe that airlines will increasingly look to leasing to restore and grow capacity, and lessors could account for 65% of aircraft deliveries in the next few years. Furthermore, recovery in the financial condition of airlines is expected to bolster lessors’ earnings.
While lessors are poised to emerge stronger from the crisis, their share price performance are not aligned with the buoyant earnings outlook, and are trading at unjustifiably cheap valuations. The disparity between their bargain valuations and earnings outlook presents a golden buying opportunity
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Robust pipeline of purchase-and-leaseback transactions
New technology aircraft comprised around 41% of BOCA’s portfolio, significantly above the sector average of around 15-16%
BOCA’s solid growth prospects is supported by its orderbook and robust pipeline of purchase-and-leaseback transactions. Further asset impairments are also less likely with aircraft values expected to stabilise going forward.
Concentration in single-aisle aircraft and China
Young narrowbody passenger aircraft constitute 89% of CALC’s portfolio.
CALC may not record any asset write-offs due to its concentration in single-aisle aircraft and China, and its massive orderbook should expand its market share over the next few years.
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