Here’s Why Air Lease Corp is Flying High on A New Lease of Bullishness

Air Lease Corp (NYSE:AL), a $4.03 billion company is simply involved in the business of leasing aircraft to airlines. Air Lease corporation buys commercial aircraft, which it in turns leases out to airline companies around the world. Air Lease Corp caught my attention last Friday after reaching a new all-time high of $40.36. Interestingly, Air Lease’s gain last Friday points to an underlying bullish form that the stock has been exhibiting over the last one year as the image below shows.

AL Stockchart

Reasons Behind Air Lease Bullish Form

One of the major reasons behind Air Lease’s bullish ascent is the volume, size and quality of its customers. Some of Air Lease’s customer base across different regions of the world is listed below:

Canada Air Canada, SunWing Airlines, West Jet

United States: Hawaiian Airlines, Southwest Airlines, Spirit Airlines, Sun Country, and United Airlines

Central America and Caribbean: LIAT, TACA, Caribbean Airlines

Mexico: AeroMexico, Aeromar, Interjet, Volaris

South America

Argentina: Aerolineas Argentinas

Brazil: Azul, Gol Airlines, Passaredo Linhas Aereas

Columbia: Avianca


United Kingdom: British Airways, Monarch Airlines

Sweden: Novair, TUIFly Nordic

Switzerland: Swiss International Airlines

Turkey: Corendon Airlines, Express

Asia: Air China, Air Macau, China Airlines, China Eastern Airlines, China Southern, Hainan Airlines, Kunming Airlines, Okay Airways, Shanghai Airlines, Sichuan Airlines, Spring Airlines and Xiamen Airlines

Great Product Mix

It might interest you to know that Air Lease announced that its owned aircraft fleet reached 200 aircraft last Friday. This milestone was reached within the same period that Air Lease delivered three new aircraft to different lessees in three international cities.  The company reported the delivery of a new Boeing 737-800  to MIAT Mongolian Airlines in Seattle, Washington; a new Airbus A321 was delivered to Thomas Cook Airlines in Hamburg, Germany; and a new ATR 72-600 was delivered to Golden Myanmar Airways in Toulouse, France.

Air Lease is able to maintain high customer retention rates with the quality of aircrafts under its control. Air Lease has Boeing Aircrafts: 737 NG Family, 737 MAX Family, 787 Family, and 777 Family. Air Lease also controls Airbus Aircrafts: A320 Family, A320 NEO Family, A330 Family and A350 Family. Air Lease also controls aircrafts from Embraer and ATR.

Strong Financial Position

Air Lease has a strong financial position as seen in the quality of its Q1 2014 earnings. Diluted EPS increased 50% to $0.57 per share compared to $0.38 per share in the same quarter of last year. The company reported revenue increase of 28% to $246 million in the first quarter of 2014 from $192 million in the first quarter of last year. Income before taxes increased 54% to $95 million with a pretax gain of 39%.

Al Metrics

The image above tracks Air Lease’s Price, Revenue and 1-Year Price Return to show how the company has been moving forward in the last one year. You will observe that Air Lease’s Price, Revenue and 1-Year Price Returns has been rising in the last one year. You will observe that 1-year Price Return has wild swings; interestingly, the chart shows that Air Lease is at the start of another upward swing.

How to Trade AL Options

From the foregoing, it is obvious that Air Lease is on a bullish ascent that is set to continue unhindered if the business environment of the company remains constant. A glance at AL options chain shows about 4 calls for every put option; hence, wisdom dictates that we pitch our tents with the bulls. I consider the AL Aug 2014 40.000 call (AL140816C00040000) a nice contract to buy at a ask price of $2.05.

— Daily Option Alerts

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