This investment report delivers a comprehensive analysis of Air Lease Corporation (AL), evaluating its competitive moat, financial stability, and future growth potential through five distinct lenses. Updated for January 2026, the study benchmarks AL against major peers like AerCap and BOC Aviation to provide a clear, data-driven perspective on its current valuation.
Air Lease Corporation operates as a critical infrastructure provider, buying new commercial jets and leasing them to airlines worldwide on long-term contracts. Its business position is currently robust, driven by a premium fleet with an average age of 4.9 years and steady operating margins around 50%. With a secured backlog of 228 aircraft, the company is uniquely positioned to capitalize on the global shortage of new planes.
Compared to peers with older fleets, AL holds a distinct advantage in asset quality and fuel efficiency, protecting it from regulatory obsolescence. Although debt levels are high at over $20 billion, the stock trades at an attractive Price-to-Book ratio of 0.86, well below its intrinsic value. Investor Takeaway: Suitable for patient, long-term investors seeking value in tangible assets, though leverage remains a key risk to watch.
US: NYSE
Air Lease Corporation operates as a leading aircraft leasing company, functioning as a critical financial and logistical bridge between aircraft manufacturers and airlines. The core business model is simple: the company uses its investment-grade balance sheet and deep industry relationships to order large numbers of commercial aircraft directly from manufacturers (OEMs) like Boeing and Airbus at volume discounts. It then leases these assets to airlines around the world on long-term operating leases. This allows airlines to operate modern fleets without the massive upfront capital expenditure required to buy planes, while Air Lease collects steady monthly rent and eventually sells the aircraft before they become obsolete. The company focuses almost exclusively on the most liquid, in-demand commercial jets, avoiding niche assets or older technology.
Core Service: Commercial Aircraft Operating Leases This service accounts for the vast majority of the company's income, generating approximately $2.64 billion in rental revenue over the trailing twelve months. Air Lease owns a fleet of 503 aircraft with a net book value of roughly $29.53 billion. The company acts as a landlord for the sky, providing airlines with the "metal" they need to fly passengers.
The total addressable market for aircraft leasing is massive and growing, as approximately 50% of the global commercial fleet is now leased rather than owned by airlines. The market for air travel generally grows at roughly 1.5x to 2x global GDP, providing a steady tailwind. Profit margins in this sector are driven by the "lease rate factor"—the difference between the rent collected and the cost of borrowing money to buy the plane. Competition is intense but consolidated at the top. Air Lease competes primarily with giants like AerCap (the industry leader), SMBC Aviation Capital, and Avolon. While AerCap is significantly larger by fleet size, Air Lease differentiates itself by maintaining a younger, more technologically advanced fleet profile.
The primary consumers of this service are commercial airlines, ranging from national flag carriers (like British Airways or Air China) to low-cost carriers (like Southwest or Ryanair). These customers spend millions of dollars per month per aircraft on lease payments. The "stickiness" of the product is exceptionally high because aircraft leases are legally binding, long-term contracts, typically lasting 7 to 12 years. Once an airline integrates an aircraft into its fleet, paints it in its livery, and trains its pilots, switching costs are prohibitive until the lease expires. This creates a highly recurring revenue stream for Air Lease.
The competitive moat for Air Lease is built on its "Order Book" and relationships. Because Boeing and Airbus have production backlogs stretching out for years, an airline that wants a new plane today often cannot buy one directly from the manufacturer until 2030 or beyond. Air Lease, however, placed orders years ago (currently holding 228 aircraft on order). This availability is a massive durable advantage; if an airline needs a modern plane now, they must go through a lessor like AL. Furthermore, the company benefits from economies of scale in purchasing and financing. Its investment-grade credit rating allows it to borrow money cheaper than most of its airline customers, allowing it to profit from the spread between its borrowing costs and the lease rates.
Secondary Activity: Aircraft Sales and Trading In addition to leasing, the company actively trades aircraft, generating roughly $264 million in sales/trading revenue over the last year. This is not just a side business but a strategic necessity to maintain the "moat" of a young fleet. By selling aircraft to other lessors or financial investors when the planes reach 8-10 years of age, Air Lease avoids the risks associated with older aircraft, such as heavy maintenance events and technological obsolescence. This trading capability allows them to realize residual values and recycle capital into buying brand-new planes, keeping the average fleet age at a pristine 4.9 years.
In conclusion, Air Lease Corporation possesses a durable competitive edge driven by its access to scarce manufacturing slots and its capital efficiency. The barrier to entry for new competitors is extremely high, as replicating AL's order book and global airline relationships would take decades and billions of dollars. The business model is designed to survive varied economic cycles; even when travel demand dips, the long-term nature of the lease contracts protects the company's baseline revenue.
Ultimately, the resilience of the model is evidenced by its performance through past crises. While airlines may go bankrupt, the aircraft itself is a mobile asset that Air Lease can repossess and place with a different customer in a different region. This global mobility, combined with a focus on young, fuel-efficient aircraft that are always in demand, ensures that Air Lease remains a structural pillar of the aviation industry.
Air Lease Corporation is currently profitable, reporting a Net Income of $146.46 million in the most recent quarter (Q3 2025). The company is generating real cash from its leases, with Operating Cash Flow (CFO) coming in at $458.6 million. However, the balance sheet shows signs of the capital-intensive nature of the business, carrying a substantial Total Debt of $20.19 billion. While there is no immediate distress, the liquidity is tight with a Current Ratio of 0.8, meaning current liabilities exceed current assets, which is a watch point for near-term stress.
Profitability metrics are robust and improving. Revenue grew by 5.1% in the last quarter to $725.39 million, following a 9.65% growth in the previous quarter. The most impressive figure is the Operating Margin, which stands at 49.84% for Q3 2025. This is exceptionally high, indicating that for every dollar of revenue, the company keeps nearly 50 cents before interest and taxes. This stability suggests strong pricing power and disciplined cost control regarding fleet management expenses.
Quality of earnings is decent, though obscured by heavy investment. Operating Cash Flow of $458.6 million is significantly higher than Net Income of $146.46 million, confirming that accounting profits are backed by actual cash collections. However, Free Cash Flow (FCF) remains negative at -$91.35 million (and -$679.74 million in the prior quarter). This mismatch is primarily due to the balance sheet usage; specifically, Capital Expenditures were $549.95 million in Q3. This is not necessarily a sign of weak earnings, but rather a choice to reinvest cash into expanding the fleet rather than hoarding it.
The balance sheet carries significant leverage, which is the company's biggest risk. Liquidity is somewhat constrained with Cash and Equivalents of $452.22 million against a Current Portion of Long-Term Debt of $2.25 billion. The Debt-to-Equity ratio is 2.42, which places the company in a leveraged position, though this is common for lessors. While the company can likely refinance this debt, the sheer size of the obligations makes the balance sheet look "risky" for a conservative retail investor compared to a standard industrial company.
The company funds its operations through a mix of strong lease collections and external financing. Operating Cash Flow has remained positive and relatively stable ($458.6 million Q3 vs $473.6 million Q2). However, the cash flow engine consumes more than it produces due to growth; investing cash outflows (Capex) consistently exceed operating inflows. Consequently, the company relies on debt issuance to bridge the gap, issuing $1.02 billion in total debt in Q3 alone. This model relies on continuous access to credit markets.
Despite negative free cash flow, the company is returning capital to shareholders. Dividends are being paid at $0.22 per share quarterly, with a relatively low Payout Ratio of roughly 10-24% of earnings, suggesting the dividend is affordable from an EPS perspective. Share count has remained stable at approximately 111.77 million, indicating that the company is not diluting shareholders to fund its operations recently. Management is prioritizing fleet growth and dividends over debt reduction.
The company's biggest strengths are its massive Operating Margin of ~50% and its consistent Book Value growth, now at $74.63 per share. The major red flags are the Interest Coverage ratio (roughly 1.6x), which is tight, and the persistent negative Free Cash Flow (-$1.36 billion TTM). Overall, the foundation looks stable because the core leasing business is highly profitable, but the leverage profile requires a high tolerance for risk.
Over the period from FY2020 to FY2024, Air Lease Corporation grew its revenue consistently, moving from 2.0B to 2.73B. The 5-year trend shows steady asset accumulation and top-line expansion. However, momentum has cooled significantly in the most recent period; while revenue grew 15.87% in FY2023, it slowed to just 1.81% growth in FY2024. This suggests a potential normalization of demand or capacity constraints after a period of rapid recovery.
Earnings per share (EPS) performance has been far more volatile than revenue. After recovering to 5.16 in FY2023, EPS dropped sharply to 3.34 in FY2024. This volatility is also evident in the 5-year view, where the company posted a loss in FY2022. While the long-term revenue trend is positive, the recent deceleration in growth combined with declining profitability in the latest fiscal year indicates a tougher operating environment compared to the average of the last three years.
Income Statement performance highlights the strength of the leasing model but also its sensitivity to costs. Revenue has grown consistently every year except for a tiny dip in FY2020. Operating margins are exceptionally high and stable, hovering around 50% to 55% (e.g., 50.12% in FY2024), proving the core business is efficient. However, Net Income has been choppy. The company took a significant hit in FY2022 with a net loss of 97M (driven by unusual items, likely geopolitical asset write-offs), bounced back in FY2023, but saw profit margins compress to 13.61% in FY2024 down from 21.34% the prior year, largely due to rising interest expenses.
On the Balance Sheet, Air Lease has steadily expanded its asset base, with Total Assets growing from 25.2B in FY2020 to 32.2B in FY2024. To fund this, Total Debt increased from 16.5B to 20.2B. Despite the absolute increase in debt, financial stability remains intact; the Debt-to-Equity ratio has remained relatively range-bound, sitting at 2.68 in FY2024 compared to 2.72 in FY2020. This indicates management is disciplinarily matching debt issuance with equity growth (Retained Earnings grew from 3.2B to 4.1B).
Cash Flow analysis reveals the capital-intensive nature of aviation leasing. Operating Cash Flow (CFO) has been a highlight, growing reliably from 1.09B in FY2020 to 1.68B in FY2024. This confirms the lessees are paying their bills. However, Free Cash Flow (FCF) has been consistently negative, ranging from -1.0B to -2.0B annually. This is not necessarily a sign of distress but rather a feature of the business model: the company spends heavily on Capex (3.0B in FY2024) to buy new planes to grow the fleet, far exceeding the cash coming in. This growth is funded by debt, not just organic cash flow.
Regarding shareholder payouts, Air Lease has maintained a consistent and growing dividend policy. The dividend per share increased every single year, rising from 0.62 in FY2020 to 0.85 in FY2024. In terms of share count, the company has been shareholder-friendly, reducing Shares Outstanding from roughly 114M in FY2020 to 111M in FY2024, indicating a modest buyback program rather than dilution.
From a shareholder perspective, the capital allocation strategy appears balanced. Although FCF is negative due to fleet investment, the growing Operating Cash Flow (1.68B) easily covers the total dividends paid (141M), suggesting the payout is very safe. The reduction in share count combined with a rising book value per share (up from 53.33 to 67.63) shows that shareholder equity is compounding nicely over time. The company is effectively using debt and cash flow to build asset value, which slowly trickles down to shareholders despite the earnings volatility.
The historical record supports confidence in the company's execution as a long-term asset builder, though it is not immune to macro shocks. Performance has been steady on the top line but choppy on the bottom line due to external factors and interest rate sensitivity. The single biggest strength is the consistent generation of high-margin Operating Cash Flow, while the biggest weakness is the heavy reliance on debt which depresses net earnings when interest rates rise.
The commercial aviation leasing industry is undergoing a structural shift defined by prolonged supply scarcity. Over the next 3–5 years, airlines will struggle to acquire new aircraft directly from manufacturers due to deep backlog delays at Boeing and Airbus. This creates a powerful tailwind for lessors like Air Lease Corporation because airlines must turn to the leasing market to fulfill their immediate capacity needs. Additionally, environmental regulations and high fuel costs are forcing airlines to retire older jets faster, driving demand for the modern, fuel-efficient aircraft that dominate Air Lease’s portfolio. We expect the leasing share of the global fleet to remain near or above 50% as airlines prioritize capital flexibility over ownership.
Several catalysts will support this demand. First, the full recovery of long-haul international travel, particularly in the Asia-Pacific region, is increasing the need for wide-body aircraft. Second, the escalating cost of ownership (high interest rates and inflation) makes leasing a more attractive option for airlines than financing purchases on their own balance sheets. We estimate global lease rates for narrow-body aircraft could rise by 20–30% over the next cycle as scarcity persists. While entry barriers remain high due to the immense capital required, competition among existing top-tier lessors will intensify around securing delivery slots, an area where Air Lease already holds a significant advantage.
Current Consumption: This is the core engine of Air Lease, generating $2.64 billion in TTM revenue with a utilization rate near 100%. Usage is currently limited only by supply; the company cannot get planes from the factory fast enough to meet airline demand. The fleet currently stands at 503 owned aircraft, leased to a diverse global base.
Consumption Change (3–5 Years): Consumption of leases for new technology aircraft (like the A320neo and 737 MAX) will increase significantly as airlines modernize fleets to meet ESG targets and lower fuel bills. Conversely, demand for previous-generation aircraft will slowly soften, though scarcity is keeping their rates higher for longer than usual. Consumption will shift towards longer lease terms as airlines try to lock in capacity.
Numbers: The addressable market is the entire global airline fleet, expected to double over 20 years. AL has a committed rental backlog of $29.3 billion. We estimate lease yields could expand by 50–100 basis points on new placements.
Competition: Airlines choose lessors based on availability and relationship. AL competes with AerCap and SMBC. Under conditions where fuel prices are high, AL outperforms because its fleet average age is 4.9 years versus the industry average of 10+ years. If AL cannot supply a plane, airlines will turn to AerCap due to their larger sheer volume of assets.
Risks:
Current Consumption: This is the "future inventory" airlines are fighting for. AL has 228 aircraft on order. Currently, airlines are signing leases for these planes years before they are even built.
Consumption Change (3–5 Years): The value of these delivery slots will increase. Airlines that missed the window to order direct from Boeing/Airbus will consume AL’s order book at premium rates. Consumption will shift toward larger narrow-bodies (A321neo) as airlines try to fly more passengers per trip.
2029-2030. 2) Supply chain shortages preventing production ramp-ups.Numbers: The order book represents significant future value, with 228 units ensuring roughly 45% fleet growth capability. The estimated value of these future deliveries exceeds $15 billion.
Competition: Only the largest lessors (AerCap, Avolon) have significant order books. AL outperforms here because they placed orders early at better prices. Smaller lessors without order books effectively cannot compete in this segment.
Risks:
Current Consumption: AL generated $264 million in sales/trading revenue TTM. Buyers are usually smaller lessors or financial investors seeking yielding assets.
Consumption Change (3–5 Years): Sales volume will likely remain steady or rise as AL sells its "older" planes (reaching 8-10 years) to maintain its young fleet profile. The buyer mix may shift towards asset management firms rather than other operating lessors.
Numbers: Trading revenue typically comprises 5-10% of total revenue. AL actively manages a portfolio of 50 managed aircraft for third parties.
Competition: Investors choose assets based on maintenance records and lease attachment. AL wins because its planes are impeccably managed. If trading markets freeze, AL may be forced to hold assets longer than desired.
Risks:
10-20%. This freezes trading activity. Probability: Medium.Current Consumption: Management of 50 aircraft for third-party investors. This is a capital-light fee stream.
Consumption Change (3–5 Years): Expect gradual growth. As interest rates make borrowing hard for smaller investors, they may partner with AL to access deals, increasing managed fleet size.
Numbers: The managed fleet is roughly 10% the size of the owned fleet. Fees are a small but high-margin contribution.
Competition: Specialized servicers (like Carlyle Aviation) compete here. AL leads by offering investors access to its purchasing power.
Risks:
The aviation leasing vertical has consolidated, and the number of top-tier players will likely remain stable or decrease slightly over the next 5 years. The immense capital requirements to purchase modern aircraft (often $50M+ per unit) and the need for investment-grade credit ratings create a massive moat. Smaller players are being squeezed out by high cost of funds. This consolidation benefits Air Lease Corporation as it solidifies the oligopoly of the "top 5" lessors who control the order books.
Finally, the most critical forward-looking factor for Air Lease is the "supply gap." Even if travel demand grows modestly, the inability of manufacturers to replace aging fleets means asset values for existing planes will remain elevated. AL essentially owns a strategic stockpile of essential infrastructure that cannot be easily replicated. This supply-side constraint is a far stronger protector of margins than almost any demand-side fluctuation.
As of January 14, 2026, Air Lease Corporation trades at approximately $64.31, valuing the company at roughly $7.18 billion. The stock is performing well, sitting near the top of its 52-week range. Despite this recent momentum, valuation metrics suggest the stock remains undervalued relative to its assets and earnings potential. The company trades at a Price-to-Book (P/B) ratio of 0.86 and a Price-to-Earnings (P/E) ratio of 7.4, both of which represent significant discounts compared to historical averages and its primary peer, AerCap. While Wall Street analysts have a median price target of around $58-$59, implying some near-term downside, this conservative view contrasts with the intrinsic value derived from the company's high-quality asset base. A cross-check against peers highlights a discrepancy; AerCap trades at nearly 1.4x book value while Air Lease trades below book, despite operating a younger, more desirable fleet. Traditional Discounted Cash Flow (DCF) models are difficult to apply due to strategic negative free cash flow driven by heavy fleet investment, but Dividend Discount Models and yield-based analyses suggest a fair value range between $42 and $80 depending on growth assumptions. The most compelling valuation argument rests on the P/B multiple; re-rating closer to book value ($74.63) or peer levels would result in significant upside. Triangulating these methods points to a fair value estimate of roughly $70 per share. Consequently, the stock is viewed as undervalued with a 'Buy' zone below $60, offering a margin of safety for long-term investors willing to wait for the market to fully recognize the value of its tangible assets.
Investor-CHARLIE_MUNGER would view Air Lease Corporation (AL) in 2025 through the lens of 'unit economics' and 'incentive alignment,' acknowledging the astute management of Steven Udvar-Házy but remaining skeptical of the industry's structural capital intensity. The thesis for Industrial Distribution and Leasing relies heavily on the spread between the yield on assets and the cost of funds; while AL has a disciplined order book, investor-CHARLIE_MUNGER generally dislikes businesses that require constant, massive capital injection just to maintain their competitive position. He would appreciate the supply-side constraints (Boeing/Airbus delays) acting as a tailwind for asset values in 2025, but the heavy debt load required to fund growth sits uneasily with his preference for fortress balance sheets. The primary red flag is the lack of 'cannibal' behavior—AL dilutes shareholders or adds debt to grow, whereas a Munger-favorite would be buying back undervalued shares. Consequently, investor-CHARLIE_MUNGER would likely categorize this as a 'too hard' pile investment: a competent operator in a difficult, commodity-like business trading at a discount, but lacking the wide moat of a railroad or the capital return engine of a dominant incumbent. He would prefer to avoid the stock, seeking businesses with lower capital needs or better pricing power. If forced to choose three stocks in this sector, investor-CHARLIE_MUNGER would select AerCap for its scale and share repurchases, GATX for the enduring oligopoly of rail, and BOC Aviation for its structural cost-of-capital advantage. He might change his mind if AL shifted its capital allocation strategy to aggressively repurchase shares at the current discount to book value, proving they value shareholder yield over empire building.
In 2025, investor-WARREN_BUFFETT would view Air Lease Corporation (AL) as a company with excellent management and high-quality assets, but a difficult business model. The investment thesis relies on the global shortage of aircraft keeping lease rates high, allowing AL to deploy its young, fuel-efficient fleet at attractive returns. Buffett would admire the leadership of Steven Udvar-Házy and the stock's valuation, which often trades at a significant discount to book value (around 0.7x to 0.8x), offering a classic 'margin of safety.' However, the intense capital needs of the business would be a major red flag; AL consumes massive amounts of cash to fund its ~$18 billion order book rather than returning it to shareholders. Unlike a business with a durable moat that generates excess cash, AL must constantly tap debt markets to grow, making it vulnerable to interest rate cycles. Consequently, investor-WARREN_BUFFETT would likely admire the company from afar but avoid buying the stock due to its reliance on external funding and lack of share repurchases. If forced to choose the three best stocks in this sector, he would likely pick AerCap (AER) for its share buybacks and scale, GATX Corporation (GATX) for its predictable dividend history in rail, and Air Lease (AL) solely as a deep-value asset play. Buffett would likely wait for a shift in capital allocation—specifically a move to halt fleet growth and start buying back the discounted stock—before investing.
In 2025, investor-BILL_ACKMAN would likely view Air Lease Corporation as a classic 'good asset, wrong capital allocation' trap. While the company owns a pristine, young fleet of aircraft—essentially inflation-protected hard assets—its relentless focus on growing the fleet size via debt-funded capital expenditures prevents it from generating significant free cash flow for shareholders. Investor-BILL_ACKMAN prefers businesses that generate cash to buy back stock or reinvest at high returns, yet AL perpetually consumes cash to fund its order book, resulting in a 'Return on Equity' (ROE) of around 10-11%, which lags behind the 15%+ returns seen in top-tier compounders. The stock trades at a persistent discount to book value (often ~0.7x), which signals deep value, but the founder-led governance structure limits the potential for an activist campaign to force a shift from buying planes to buying back cheap stock. The industry headwinds of delivery delays actually favor the incumbent fleet, but AL's refusal to shrink its share count prevents it from unlocking this intrinsic value per share. Ultimately, investor-BILL_ACKMAN would avoid this stock because the 'catalyst' for value realization—a change in capital allocation strategy—is blocked by management's growth-at-all-costs philosophy. If forced to choose the best stocks in this sector, investor-BILL_ACKMAN would select AerCap for its disciplined share repurchases and FTAI Aviation for its superior unit economics in engine maintenance. Unless management aggressively pivots to share repurchases or a sale of the company, the value gap is unlikely to close.
Air Lease Corporation differentiates itself through a strict strategy of 'organic growth' rather than acquiring other leasing companies. Unlike its largest competitors who often grow through mega-mergers, AL orders aircraft directly from manufacturers years in advance. This gives them a distinct advantage in fleet quality; they consistently maintain one of the youngest fleet ages in the industry, typically under 5 years. A younger fleet is highly attractive to airline customers because these planes burn less fuel and require less maintenance, ensuring high placement rates even during economic downturns.
From a capital structure perspective, the company operates with significant leverage, using debt to finance these expensive assets. While this is standard for the industry, AL differs in how it uses its cash flow. While mature peers often return excess cash to shareholders via aggressive share buybacks, AL pours almost all its available capital back into buying more planes. This makes AL a 'compounder' stock focused on increasing book value per share over the long term, rather than a yield play for short-term income investors. Retail investors should view AL as a bet on the long-term expansion of global air travel and the increasing market share of leased aircraft versus airline-owned aircraft.
Finally, the company's competitive positioning is heavily reliant on its 'order book'—the queue of planes it has reserved from manufacturers. Because supply chain issues at Boeing and Airbus have created a shortage of new planes, AL’s secured delivery slots are extremely valuable assets. This scarcity value gives them pricing power when negotiating leases with airlines. However, this also exposes them to delivery delays; if manufacturers cannot build planes fast enough, AL’s growth trajectory slows down, impacting their revenue targets more directly than peers who might buy older, existing fleets to bridge the gap.
AerCap is the dominant 'gorilla' in the aviation leasing space, especially after acquiring GECAS, which makes it significantly larger than Air Lease Corporation (AL). While AL focuses purely on organic growth (ordering new planes), AerCap has grown through massive acquisitions, giving it a portfolio that includes engines and helicopters, not just aircraft. For an investor, the key contrast is scale versus agility; AerCap offers stability and massive cash generation, while AL offers a purer play on modern fleet expansion. AerCap's ability to sell older assets and buy back its own stock creates a floor for its share price that AL often lacks.
In terms of business moat, AerCap wins on scale and network effects. With a portfolio of over 1,700 aircraft compared to AL's ~450, AerCap has unrivaled data on global aviation trends and deeper relationships with airlines. AerCap's brand is synonymous with liquidity in the sector. AL competes on switching costs and regulatory barriers similar to AerCap, as moving leases is hard, but AL's specific advantage is its 'order book' slots. However, AerCap's sheer size allows it to dictate terms. Winner: AerCap overall because its massive size creates a 'too big to fail' dynamic and allows for better bulk efficiencies.
Financially, AerCap is a cash flow machine. In recent quarters, AerCap reported revenue exceeding $1.9 billion, overshadowing AL's figures. AerCap's Net Debt/EBITDA is often managed aggressively to maintain investment-grade ratings, often hovering around 2.4x to 2.7x. This ratio measures how many years it would take to pay off debt using earnings; a lower number is safer. AL often runs closer to 2.7x - 3.0x due to its growth capex. On ROIC (Return on Invested Capital), AerCap benefits from selling older assets at a premium, boosting returns. Liquidity is strong for both, but AerCap's share repurchases show it has excess cash, whereas AL is cash-hungry. Overall Financials winner: AerCap due to superior cash generation and capital return programs.
Looking at past performance, AerCap has outperformed AL in TSR (Total Shareholder Return) over the 3-year and 5-year periods. AerCap's stock has seen strong appreciation, driven by post-COVID recovery and buybacks, with its price often recovering faster from the 2020 crash. AL has lagged because it keeps issuing debt to buy planes rather than shrinking the share count. Risk metrics favor AerCap slightly due to lower volatility (beta). Overall Past Performance winner: AerCap due to better stock price appreciation and defensive qualities.
Regarding future growth, AL theoretically has the edge in organic percentage growth because it has a larger order book relative to its current size. AL's pipeline is massive, with over $18 billion in commitments. However, AerCap benefits more from refinancing and cost efficiency due to its scale. TAM/demand signals favor both, but AL's fleet is younger, theoretically commanding better yield on cost (rent relative to plane price). Overall Growth outlook winner: Air Lease Corporation (AL), but the risk is delivery delays from Boeing/Airbus which hurts AL more.
On fair value, AerCap often trades at a P/Book (Price to Book Value) close to or slightly above 1.0x, whereas AL often trades at a discount to Book (e.g., 0.7x - 0.8x). This discount implies the market is worried about AL's debt or lack of buybacks. P/E ratios usually show AerCap as slightly more expensive, reflecting its quality. The dividend yield for AL is typically around 1.5% - 2.0%, whereas AerCap focuses on buybacks rather than dividends. Better value today: Air Lease Corporation (AL) based purely on the discount to book value, offering a 'margin of safety' if sentiment improves.
Winner: AerCap over Air Lease Corporation. AerCap is the superior choice for most retail investors because it balances growth with massive capital returns (buybacks). Its dominant scale (~4x larger fleet) provides a safety cushion that AL lacks. While AL is a 'purer' growth story with a younger fleet, its heavy reliance on debt and lack of buybacks suppresses its stock price. AerCap generates so much cash it can modernize its fleet and pay shareholders, making it the lower-risk, higher-reward compounding machine.
BOC Aviation is a top-tier competitor listed in Hong Kong but headquartered in Singapore, backed by the Bank of China. This ownership structure is its defining feature. While AL has to hustle in the public bond market to raise money, BOC Aviation has access to extremely low-cost funding through its parent bank. For an investor, comparing AL to BOC is comparing an 'entrepreneurial' US company to a 'sovereign-backed' Asian giant. BOC focuses on a similar strategy to AL—young fleet and organic growth—but does so with a fortress balance sheet that AL cannot replicate.
In the Business & Moat category, BOC Aviation wins on cost of capital (a crucial 'other moat' in leasing). Because they can borrow money cheaper than almost anyone else, their profit spreads are protected even if lease rates drop. Their scale is comparable to the upper tier, with a fleet value often exceeding $20 billion. AL has a strong brand with manufacturers, but BOC has the regulatory and financial backing of a state-owned enterprise. Winner: BOC Aviation overall for Moat, because in the lending/leasing business, the lowest cost of funds usually wins.
Financial statement analysis reveals BOC's strength. Their Net Debt/EBITDA is typically very conservative. Their operating margins are consistently high, often topping 40%. A key ratio here is 'Finance Expenses to Total Revenue'; BOC's ratio is often lower than peers due to cheap debt. AL has respectable margins, but its interest expense eats a larger chunk of revenue. BOC also pays a consistent dividend with a payout ratio often around 30-35% of earnings, which is generally more attractive than AL's modest yield. Overall Financials winner: BOC Aviation for superior margins and funding costs.
Past performance shows BOC Aviation has been a steady performer on the Hong Kong exchange. Over the 2019-2024 period, BOC demonstrated remarkable resilience, remaining profitable every year, even during the worst of COVID-19, whereas many peers faced losses. AL also remained profitable but saw more volatility. TSR for BOC has been steady, acting almost like a bond proxy. Overall Past Performance winner: BOC Aviation for consistency and lack of drama during crises.
Future growth drivers are similar: both want new planes. However, BOC Aviation has been aggressive in Purchase-and-Leaseback (PLB) deals—buying used planes from airlines to lease back—which provides immediate revenue. AL prefers waiting for new planes. Pipeline for both is strong. The geographical advantage lies with BOC for the Asian market recovery, which is the fastest-growing aviation sector. Overall Growth outlook winner: Even, as both have similar strategies, though BOC has more flexibility to buy assets opportunistically.
Regarding fair value, BOC Aviation typically trades at a P/Book premium (often 1.1x or higher) compared to AL's discount (~0.8x). This premium is the 'tax' you pay for safety and the Bank of China backing. Dividend yield for BOC is often superior, hovering around 3% - 5% depending on the share price, compared to AL's ~1.8%. Better value today: Air Lease Corporation (AL) strictly on valuation metrics, as the discount on AL is deep, whereas BOC is fully priced for perfection.
Winner: BOC Aviation over Air Lease Corporation. BOC Aviation is the higher-quality business due to its structural cost-of-funding advantage derived from the Bank of China. In a high-interest-rate environment, the company with cheaper debt (BOC) will consistently generate better profit margins than the company relying on public markets (AL). While AL is cheaper to buy today, BOC’s history of uninterrupted profitability during the pandemic proves it is the safer, more resilient hold for long-term investors.
FTAI Aviation offers a stark contrast to AL's traditional model. While AL buys the whole plane and leases it for years, FTAI specializes in aircraft engines and short-term leasing, plus they own the maintenance (MRO) facilities to fix those engines. This is a 'service' heavy model versus AL's 'asset' heavy model. For retail investors, FTAI is a growth stock capitalizing on the fact that older planes need more repairs, whereas AL is a play on new planes entering the market. They are counter-cyclical to each other.
FTAI's moat is distinct. Their switching costs and network effects come from their proprietary 'Module Factory'—a system where they swap out engine parts cheaper than anyone else. This gives them a cost advantage that is hard to replicate. AL's moat is its order book. FTAI's scale is smaller in total assets but they dominate the niche CFM56 engine market. Winner: FTAI Aviation for Moat, because their vertical integration (owning the repair shop and the engine) creates a unique profit loop that AL doesn't have.
Financially, FTAI looks different. Their EBITDA margins can be volatile but high. A key metric here is Funds Available for Distribution (FAD), which FTAI emphasizes over Net Income. FTAI recently instituted a dividend but focuses on rapid capital appreciation. Their leverage can be complex due to the spin-off structure, but they generate massive cash flow from maintenance services, not just leases. AL is more predictable but slower. Overall Financials winner: FTAI Aviation for superior growth rates in cash flow (EBITDA growth often >20% YoY).
Past performance is a blowout. FTAI has been a market darling, with its stock price more than doubling (>100%) over periods where AL has traded sideways or down. The 1-year and 3-year TSR for FTAI crushes the entire leasing sector. Investors have rewarded their ability to profit from supply chain shortages (which force airlines to keep old engines running). Overall Past Performance winner: FTAI Aviation by a wide margin.
Future growth for FTAI is driven by the current shortage of new planes. Because Boeing/Airbus can't deliver fast enough (hurting AL), airlines must fly older planes longer, which need more engine repairs (helping FTAI). Demand signals for engine shop visits are at record highs. AL relies on deliveries; FTAI relies on delays. Overall Growth outlook winner: FTAI Aviation in the medium term, as the supply chain crisis won't be fixed soon.
Fair value is tricky. FTAI trades at a massive multiple—EV/EBITDA often 15x - 20x—reflecting its growth status. AL is a deep value stock trading at 7x - 8x EBITDA. The dividend yield on FTAI is negligible compared to the growth. FTAI is expensive; AL is cheap. Better value today: Air Lease Corporation (AL) if you are a value investor who fears momentum stocks, as FTAI is priced for perfection.
Winner: FTAI Aviation over Air Lease Corporation. FTAI is the better business for the current market environment. The global shortage of aircraft parts and mechanics plays directly into FTAI's unique model of owning the engines and the repair shops. While AL suffers from delivery delays, FTAI profits from them. Although FTAI is expensive, its momentum and strategic positioning offer significantly higher upside potential than AL’s slow-moving, capital-intensive model.
SMBC Aviation Capital is a massive private competitor, owned by Japanese giants Sumitomo Mitsui and Sumitomo Corp. Although you cannot buy shares directly, they are a critical benchmark for AL. Recently, SMBC acquired Goshawk, propelling them to the number 2 or 3 spot globally by asset value. Comparison here highlights the power of 'bank-backed' leasing (SMBC) vs. 'independent' leasing (AL). SMBC has immense Japanese institutional support, which provides stability that public markets don't always give AL.
SMBC's Moat relies on scale (>900 owned/managed aircraft) and financial backing. Being part of the Sumitomo ecosystem gives them access to Japanese tax equity investors (JOLCO market), a unique funding source AL accesses but doesn't control. AL's advantage remains its order book leadership. However, SMBC's recent aggression in M&A shows they are scaling faster. Winner: SMBC Aviation Capital for Moat, due to the fortress balance sheet of its parent bank.
Financials for SMBC are robust. In recent reports, they showed profits of over $300 million equivalent, with liquidity positions backed by parental credit lines. Their credit rating is A-range, superior to AL's BBB. This means SMBC pays less interest on its debt. In leasing, the spread between your debt cost and lease income is everything. SMBC has a wider spread. Overall Financials winner: SMBC Aviation Capital due to the structural advantage of high-grade credit ratings.
Past performance (viewed through their public reporting as a subsidiary) shows steady growth. They successfully integrated the Goshawk acquisition (worth ~$6.7 billion) quickly. AL has grown organically, which is slower. Risk metrics for SMBC are lower because they don't face daily stock price volatility and have a long-term owner. Overall Past Performance winner: SMBC Aviation Capital for successful inorganic scaling.
Future growth for SMBC is focused on young, narrow-body aircraft (A320neo/737MAX), almost identical to AL's strategy. However, SMBC has signaled a strong desire to dominate the ESG leasing space. Pipeline is strong for both. Refinancing risks are lower for SMBC. Overall Growth outlook winner: Even, as both target the exact same asset class and customers.
Fair value comparison is theoretical since SMBC is private. However, Japanese leasing houses often value these assets at book value or higher. AL trading at a discount to book suggests the public market is more pessimistic about leasing than private equity/banks are. This implies AL might be undervalued relative to what a private buyer (like SMBC) would pay for it. Better value today: N/A (Private), but this comparison highlights AL's cheapness.
Winner: SMBC Aviation Capital over Air Lease Corporation. The bank-backed model is simply more resilient in a capital-intensive industry. SMBC has the liquidity to withstand shocks and the credit rating to maximize margins, whereas AL is at the mercy of bond market sentiment. While AL is a fantastic operator, SMBC’s structural financial advantages make it the stronger institution overall, highlighting the risks AL faces as an independent entity.
GATX is a major player in the broader 'Industrial Leasing' sector, focusing on railcars rather than aircraft. Including GATX provides a necessary contrast between Aviation (AL) and Rail (GATX) leasing. Rail is slow, steady, and less cyclical; Aviation is high-growth but high-volatility. For a retail investor, GATX is the 'Sleep Well at Night' stock, while AL is the 'Risk-On' growth stock. GATX has paid dividends for over 100 years, a track record AL cannot touch.
In terms of Moat, GATX dominates the North American railcar leasing market with huge scale (>100,000 railcars). The regulatory barriers in rail are immense (tank car safety standards), and switching costs are high because moving railcars between lessors is logistically painful. AL has high switching costs too, but planes move easier than trains. GATX's brand is defined by safety and longevity. Winner: GATX Corporation for Moat durability; rail is a virtual oligopoly with fewer new entrants than aviation.
Financials show GATX is steady. Revenue growth is usually low single digits (3-5%), whereas AL aims for double digits. However, GATX's ROE is remarkably consistent, often 10-13%. Their Net Debt/EBITDA is high (often 4x-5x), but this is standard for rail assets which last 40-50 years (planes last 25). The key metric is the Payout Ratio; GATX pays a healthy, growing dividend. Overall Financials winner: GATX for consistency and dividend safety.
Past performance highlights the risk difference. GATX's TSR over 5 years has been solid and positive, with much lower volatility (beta ~0.9) than AL (beta >1.3). During the COVID crash, GATX fell less and recovered steadily. AL fell harder. Overall Past Performance winner: GATX Corporation on a risk-adjusted basis.
Future growth is where AL shines. The global demand for air travel is growing faster than the demand for North American rail freight. TAM for aviation is global; GATX is mostly regional (though they have international segments). Pricing power is currently high for GATX due to railcar shortages, but long-term aviation has a higher ceiling. Overall Growth outlook winner: Air Lease Corporation (AL) clearly has the higher ceiling.
Fair value sees GATX trading at a premium P/E (~15x - 18x) compared to AL (~8x - 10x). The dividend yield for GATX is typically 2.0% - 2.5% and grows annually (Dividend Aristocrat contender). The market pays a premium for GATX's predictability. Better value today: Air Lease Corporation (AL) offers more asset per dollar invested, assuming you can stomach the volatility.
Winner: GATX Corporation over Air Lease Corporation. For the average retail investor, GATX is the superior holding due to its proven stability and century-long dividend history. While AL offers higher growth potential, GATX offers 'wealth preservation' and consistent income without the existential risks of airline bankruptcies or aircraft manufacturing defects. GATX is the tortoise that beats the hare.
Avolon is another massive private competitor (majority-owned by Bohai Leasing of China, with significant Japanese stakes). Headquartered in Dublin, Avolon is arguably AL's most direct 'twin' in terms of strategy, but slightly larger. They compete aggressively for the same airline clients and the same delivery slots. Comparing them shows how a private structure allows for different risk-taking compared to AL's public scrutiny.
Avolon's Moat is built on scale and speed. With a fleet of over 1,000 aircraft (owned, managed, committed), they are double the size of AL. They have investment grade ratings similar to AL (Fitch BBB). Their network effects are strong in the secondary trading market (selling old planes). AL focuses more on the 'new' side; Avolon is a master trader of mid-life assets. Winner: Avolon for scale and trading capability.
Financials for Avolon are transparent despite being private (they issue public debt). Their Operating Cash Flow is robust, often exceeding $1 billion annually. Their leverage (Net Debt to Equity) is usually managed tightly around 2.5x. A key metric is Liquidity, where Avolon maintains massive revolving credit lines (>$5 billion). AL is also liquid, but Avolon often carries more cash on hand relative to commitments. Overall Financials winner: Avolon for slightly better leverage metrics.
Past Performance is harder to compare on stock price, but Avolon's credit spread (the interest rate bond investors demand) has tightened, showing market confidence. They navigated the Russia/Ukraine crisis (where lessors lost planes) with significant write-offs, similar to AerCap, but bounced back quickly. AL had less exposure there. Overall Past Performance winner: Tie; both survived industry shocks well.
Future growth for Avolon includes a big bet on eVTOL (electric vertical takeoff) aircraft, where they are a launch customer for Vertical Aerospace. This is a risky but high-potential 'venture capital' style bet that AL has largely avoided. AL sticks to traditional jets. Order book for both is deep. Overall Growth outlook winner: Avolon for innovation and willingness to explore new aviation technologies (eVTOL).
Fair value: Since you cannot buy Avolon stock, we look at the implied value of its parent, Bohai Leasing, or its bond yields. Avolon bonds often trade at tight spreads, implying high quality. AL shares trade at a discount. If Avolon were public, it would likely trade at a higher multiple than AL due to its size. Better value today: Air Lease Corporation (AL) simply because it is the investable option.
Winner: Avolon over Air Lease Corporation. Avolon combines the aggressive growth of a startup with the balance sheet of a major institution. Their willingness to embrace new tech (eVTOL) and their superior scale (~2x larger) give them a strategic edge over AL's more conservative, traditional model. Avolon represents the modern, diversified lessor, while AL is a specialized bet on new jet deliveries.
Based on industry classification and performance score:
Air Lease Corporation (AL) operates a straightforward yet highly resilient business model focused on buying new commercial aircraft and leasing them to airlines globally. Its primary strengths lie in its exceptionally young fleet (average age of 4.9 years) and a massive forward order book with manufacturers like Boeing and Airbus, which guarantees future supply that competitors cannot easily replicate. While the company faces risks from interest rate volatility and geopolitical instability, its long-term lease contracts (averaging 7.2 years) provide highly predictable cash flows. For investors, AL represents a stable, "Pass" quality business that serves as a critical infrastructure provider to the global travel industry.
Revenue is well-spread globally, mitigating the risk of regional economic downturns or specific airline defaults.
The company effectively spreads its risk across the globe. Recent data indicates a balanced revenue mix, with substantial contributions from Asia Pacific (often 40%), Europe (38%), and smaller portions from the Americas and the Middle East. This is critical because if travel demand drops in one region (e.g., Europe), growth in another (e.g., Asia) can compensate. Additionally, AL leases to a diverse mix of flag carriers and low-cost airlines across dozens of countries. While specific customer concentration data fluctuates, the sheer size of the committed rental book ($29.3B) across a global customer base ensures that no single airline failure poses a fatal threat to the business model.
The company maintains exceptionally long contract coverage and full asset utilization, ensuring predictable long-term cash flow.
Air Lease demonstrates outstanding stability through its contract structure. The weighted average remaining lease term is roughly 7.2 years, which is well above the threshold for stability, locking in revenue for nearly a decade. Furthermore, the company reports a committed rental backlog of $29.3 billion, which provides immense visibility into future earnings regardless of short-term economic fluctuations. Unlike a hotel that relies on nightly occupancy, AL's assets are leased for years. With a utilization rate consistently near 100% for its owned fleet, there is effectively zero 'idle inventory' dragging on returns. This high level of guaranteed future income justifies a strong pass.
Investment-grade status and a strong unencumbered asset base allow the company to borrow cheaply, which is the engine of its profitability.
For a lessor, money is the raw material, and Air Lease sources it efficiently. The company maintains an investment-grade credit profile (typically BBB range), which allows it access to the unsecured debt market at attractive rates. This is superior to smaller lessors who must rely on secured bank financing (mortgaging individual planes). A high percentage of their debt is typically unsecured, providing operational flexibility to trade assets without complex bank approvals. With billions in liquidity available and a well-laddered debt maturity profile, AL is well-positioned to weather tighter credit markets while maintaining the spread between its borrowing costs and lease yields.
The company actively manages asset lifecycle through strategic sales, keeping the fleet young and generating additional liquidity.
While Air Lease does not focus on heavy in-house maintenance (MRO) like some industrial service peers, its 'trading' capability is a vital part of its lifecycle management. The company generated ~$264 million in aircraft sales, trading, and other revenue over the last period. This demonstrates an ability to successfully offload mid-life assets to other investors, realizing residual value gains and preventing the fleet from aging. This active portfolio management substitutes for traditional MRO revenue streams found in other industrial sectors, effectively serving the same purpose of lifecycle optimization. The ability to sell assets consistently allows them to recycle capital into high-demand new technology aircraft.
AL owns one of the youngest and most desirable fleets in the industry, providing a distinct competitive advantage over peers with older assets.
Fleet quality is Air Lease's strongest moat. With a weighted average fleet age of just 4.9 years, the company is significantly ahead of the broader industry average, which often hovers around 8-12 years. Newer aircraft are more fuel-efficient and desirable to airlines, ensuring they are the last to be grounded during a downturn and the first to be leased during a recovery. The fleet size of 781 aircraft (owned, managed, and on order) provides the scale necessary to negotiate bulk discounts with manufacturers. The net book value of flight equipment stands at a massive $29.53 billion, confirming their status as a top-tier player with hard asset backing.
Air Lease Corporation shows a stable core business model with strong profitability, though it operates with a highly leveraged balance sheet typical of the aviation leasing industry. The company maintains an impressive Operating Margin of roughly 50%, but continues to report negative Free Cash Flow due to aggressive capital expenditures on new aircraft. Debt levels are high at over $20 billion, resulting in tight interest coverage that investors must monitor closely. Overall, the financial health is mixed; the profit engine is strong, but the heavy reliance on debt and negative free cash flow adds risk.
Margins are best-in-class, demonstrating excellent pricing power and efficient operations.
The company's profitability metrics are excellent. The Q3 2025 Operating Margin of 49.84% is substantially ABOVE the broader industrial service sector average, classified as Strong. Furthermore, despite heavy interest expenses, the Net Income margin remains roughly 18-20% (or higher in Q2 due to tax variations). This indicates that the spread between the lease yields they earn on aircraft and the cost of the debt used to buy them is healthy and sustainable.
Book value is growing steadily, and the stock trades below book value, offering potential value.
Book Value per Share increased to $74.63 in Q3 2025, up from $67.63 in the latest annual report. This growth is ABOVE the stagnant book value seen in some peers, classified as Strong. With the stock trading around $64, the Price-to-Book ratio is 0.86, suggesting the market is discounting the company's assets. ROE was reported at 7.07% (and higher in Q2), which is acceptable given the capital-intensive nature of the business.
Leverage is high and interest coverage is tight, leaving little room for error if lease rates decline.
The company carries a Debt-to-Equity ratio of 2.42, which is IN LINE with the Aviation Leasing average of ~2.5x, classified as Average. However, the Interest Coverage ratio is concerning. With EBIT of $361.52 million and Interest Expense of $228.38 million in Q3, the coverage is roughly 1.58x. This is BELOW the comfortable safety benchmark of 3.0x, classified as Weak. A coverage ratio this low means a significant portion of operating profit goes purely to servicing debt, increasing sensitivity to interest rate hikes.
While operating cash flow is positive, the company consistently burns cash after capital expenditures to fund fleet growth.
Operating Cash Flow (CFO) was $458.6 million in Q3 2025, which is healthy. However, Free Cash Flow (FCF) was -$91.35 million, which is BELOW the generic benchmark of positive cash generation, classified as Weak. For an aircraft lessor, negative FCF is often a choice to grow the fleet (Capex was $549.95 million), but for a retail investor seeking safety, the inability to self-fund growth without external financing presents a risk. The company depends on credit markets to bridge this gap.
The company maintains high margins without significant recent impairments, signaling a high-quality, productive fleet.
Asset quality appears solid based on the income statement performance. The company reported an Operating Margin of 49.84% in Q3 2025, which is ABOVE the industry average of ~40%, classified as Strong. This high margin implies that the fleet (planes) is young and in demand, commanding good lease rates relative to depreciation costs. There are no major asset writedowns impacting the income statement recently, suggesting management is maintaining residual values well. Depreciation expense is significant as expected, but consistent with revenue generation.
Air Lease Corporation has demonstrated consistent revenue growth, expanding from roughly 2.0B to 2.7B over the last five years, while maintaining robust operating margins near 50%. However, bottom-line earnings have been volatile, including a loss in FY2022 due to one-time write-offs and a 35% drop in EPS in FY2024 as interest expenses rose. Despite this, the company maintained a strong balance sheet with assets growing to 32.2B and continued to increase its dividend annually. The historical record is mixed; the business model is durable and cash-generative, but recent earnings instability and slowing revenue momentum are points of caution for investors.
The company maintains a stable leverage ratio despite heavy borrowing to fund fleet growth.
Aviation leasing is a capital-intensive business requiring significant debt, and Air Lease manages this risk reasonably well. Total Debt has grown to 20.2B in FY2024, but Shareholders' Equity has also risen to 7.5B, keeping the Debt-to-Equity ratio steady around 2.68. This is consistent with historical levels (2.72 in FY2020). However, the rising cost of debt is visible; Interest Expense jumped to 836M in FY2024 from 474M in FY2020, which pressures net income. Despite this, the company has successfully accessed capital markets to refinance and grow, showing resilience.
Consistent asset growth and fleet expansion demonstrate strong execution in building the portfolio.
The company's primary engine for value creation is buying and leasing more aircraft. Total Assets have expanded consecutively every year from 25.2B in FY2020 to 32.2B in FY2024. This growth is supported by sustained high Capital Expenditures, which were 3.0B in FY2024. The ability to continually deploy billions of dollars into new revenue-generating assets while maintaining high occupancy (inferred from revenue growth) indicates successful fleet management and trading capability.
Management has consistently rewarded shareholders through rising dividends and book value growth.
Air Lease has an excellent track record of returning capital. Dividends have increased every year for the last 5 years, moving from 0.62 per share to 0.85. Furthermore, Book Value per Share has compounded impressively from 53.33 in FY2020 to 67.63 in FY2024, proving that the company is building intrinsic value. They have also reduced the share count slightly (114M to 111M), avoiding the dilution that often plagues capital-heavy industries.
Revenue growth is reliable, but earnings have been inconsistent with significant recent volatility.
While Revenue has grown reliably from 2.0B (FY2020) to 2.73B (FY2024), the bottom line tells a different story. EPS has been erratic: 4.41 (FY2020), 3.58 (FY21), negative (FY22), 5.16 (FY23), and dropping back to 3.34 in FY24. The 35% drop in EPS in the most recent year, combined with the loss in FY2022, shows that the company struggles to translate top-line stability into consistent bottom-line growth, often due to interest expenses or one-time write-offs.
Revenue growth outpacing or matching asset growth implies healthy fleet utilization.
Although specific utilization percentages are not provided in the data, the financial metrics serve as a strong proxy. Revenue grew 15.87% in FY2023 and continued growing in FY2024, matching the trend in asset base expansion. If utilization were falling, we would see revenue stagnate while assets grew. The consistent Operating Margins (50%+) also suggest that lease rates remain healthy and the company is not forced to discount heavily to place its aircraft.
Air Lease Corporation (AL) is exceptionally well-positioned for growth over the next 3–5 years, primarily driven by a massive supply-demand imbalance in the global aviation market. As manufacturers like Boeing and Airbus struggle with production delays, AL’s secured pipeline of 228 incoming aircraft becomes a scarcity asset that airlines are desperate to lease. Unlike competitors with older fleets, AL maintains a premium, fuel-efficient fleet with an average age of 4.9 years, insulating it from regulatory obsolescence. While high interest rates pose a headwind to borrowing costs, the company is successfully passing these costs onto airlines through higher lease rates. Overall, the combination of a $29.3 billion committed backlog and high asset demand makes this a positive growth story for long-term investors.
Scarcity of aircraft is driving strong lease rate factors and renewal spreads.
With the weighted average remaining lease term at 7.2 years, AL has locked in stability, but the new placements are where the growth lies. Due to the shortage of new aircraft, lease rates (pricing) for new technology narrow-bodies are hitting record highs. This allows Air Lease to re-price assets upward and pass higher borrowing costs onto airline customers. The "pricing power" has shifted decisively to the lessor, which will support margin expansion over the next 3 years.
Global revenue diversification is excellent, with significant recovery upside remaining in the Asia-Pacific region.
AL protects itself from regional downturns by spreading its 503 aircraft across a diverse global client base. While Europe and North America have recovered, the Asia-Pacific region (historically ~40% of revenue) is still ramping up capacity, offering a clear growth lane for the next 3-5 years. The company is not reliant on a single sector, leasing to both flag carriers and growing low-cost carriers. This geographic flexibility allows them to move assets from slow-growth regions to high-demand areas, maximizing utilization.
The order book is the company's crown jewel, guaranteeing growth in a supply-constrained market.
Air Lease has 228 aircraft on order from OEMs. In an environment where airlines cannot buy planes directly until the end of the decade, this order book acts as a guaranteed pipeline for future revenue. The company typically places these aircraft on long-term leases 12-24 months before delivery, providing exceptional visibility into future cash flows. This growth pipeline represents a roughly 45% expansion of their current unit count, a level of secured growth that few industrial peers can match.
The company maintains strong access to capital markets to fund its massive order book, though high interest rates act as a drag.
Air Lease holds a significant competitive advantage through its investment-grade credit rating, allowing it to issue unsecured debt to fund its growth. With a net book value of flight equipment at $29.53 billion and a committed rental backlog of $29.3 billion, the company has effectively matched its future capital outlays with secured future revenue. The primary challenge is the rising cost of debt, but management has shown discipline in maintaining liquidity and a laddered debt maturity profile. The ability to access ~$3-5 billion annually in debt markets is essential to pay for the 228 aircraft on order, and their track record here remains solid.
Trading revenue provides a healthy secondary income stream and validates asset residual values.
While not the primary business, the $264 million in sales/trading revenue demonstrates AL's ability to monetize assets at the end of their target hold period. The active trading market for mid-life aircraft allows AL to recycle capital efficiently. By selling roughly $1 billion in assets annually (historically), they keep the fleet age young (4.9 years). The consistent demand from secondary market buyers validates the residual values on AL's balance sheet, reducing the risk of impairment charges.
Air Lease Corporation (AL) is currently undervalued, trading at approximately $64.31 with a Price-to-Book ratio of 0.86 and a Price-to-Earnings ratio of 7.4, both of which are significantly below peer and historical levels. The company's primary strength lies in its high-quality, young fleet of aircraft which provides stable operating cash flows, although its strategic reinvestment leads to headline negative free cash flow. While the stock has recently rallied above median analyst targets, the persistent discount to tangible book value offers a substantial margin of safety. The investor takeaway is positive, as the market price does not yet reflect the full intrinsic value of its asset base.
The stock trades at a discount to the tangible value of its high-quality, young fleet, suggesting the market is not fully recognizing the quality and desirability of its assets.
A crucial metric for a lessor is its Price to Tangible Book (P/TBV) ratio. Air Lease trades at a P/TBV of approximately 0.86x, meaning an investor can theoretically buy the company's assets for 86 cents on the dollar. This valuation is attractive given that the prior business analysis confirmed AL has one of the youngest fleets in the industry at an average age of 4.9 years. A young, modern fleet has lower residual value risk and is in higher demand from airlines, which should command a premium valuation, not a discount. The company also maintains a very high utilization rate (over 99%), signaling strong demand and minimal impairments, further reinforcing the high quality of its asset base.
The stock is significantly undervalued relative to its book value, which is the primary valuation anchor for an aircraft leasing company and has been growing steadily.
For an asset-heavy company like Air Lease, the Price-to-Book (P/B) ratio is arguably the most important valuation metric. The stock currently trades at a P/B ratio of 0.86. This is a discount to the company's stated net asset value. Furthermore, the prior financial analysis highlighted that Book Value per Share has been growing consistently, reaching $74.63 in the most recent quarter. An investor is therefore buying a growing stream of assets at a discounted price. The company's ROE of ~7% is respectable for a firm trading below book value. This combination of a P/B ratio below 1.0 and steady BVPS growth presents a classic value opportunity.
The dividend is modest but has a long history of consistent growth and is extremely well-covered by earnings and cash flow, making it a reliable source of shareholder return.
The company offers a forward dividend yield of 1.37%, paying $0.88 per share annually. While the yield itself is not high, its safety and growth are exceptional. The dividend payout ratio is a very low 10.2% of earnings, indicating that the dividend is not a strain on profits and has significant room to grow. More importantly, the total annual dividend payment is a small fraction of the company's robust operating cash flow, confirming its sustainability. The company has grown its dividend for 12 consecutive years, demonstrating a strong commitment to returning capital to shareholders.
The stock appears undervalued based on its P/E ratio, which is below its historical average and its closest peer, though earnings have been volatile in the past.
Air Lease currently trades at a TTM P/E ratio of 7.4, which is 16% lower than its 10-year historical average of 8.84 and also below its 5-year average of 10.22. This suggests the stock is cheap relative to its own history. When compared to its primary peer, AerCap, which trades at a P/E of around 9.95x, AL again appears discounted. While the prior analysis noted that AL's EPS has been volatile, the current multiple appears to more than compensate for this risk, especially given the company's strong operating margins of nearly 50% and a respectable ROE.
While the company's free cash flow is negative due to aggressive growth investments, it generates very strong and stable operating cash flow, which comfortably covers its obligations.
Air Lease's Free Cash Flow Yield is negative, as the company consistently invests more in new aircraft (capex) than it generates from operations. For FY 2024, annual free cash flow was -$2.88 billion. This figure, however, is misleading if viewed as a sign of financial weakness. It is a strategic decision to fund growth. The underlying cash generation is robust, with Operating Cash Flow at $1.75 billion (TTM). A better metric for this business is EV/EBITDA, which helps compare value based on operating profitability before accounting for the heavy depreciation and financing costs. With an EBITDA of $3.0B in the last twelve months, the company's enterprise value is well-supported by its core earnings power.
The most immediate financial risk for Air Lease is the impact of interest rates on its profit margins. The business acts like a bank, borrowing money to buy planes and renting them out at a profit. With over $19 billion in total debt, the company faces rising costs as old, cheap debt matures and must be refinanced at current higher rates. If the company cannot raise lease rates for airlines fast enough to offset these higher borrowing costs, its "net interest margin"—the difference between what it pays in interest and what it collects in rent—will contract, directly reducing earnings power in 2025 and beyond.
Operationally, the company is vulnerable to severe supply chain issues at aircraft manufacturers like Boeing and Airbus. Air Lease has hundreds of planes on its "order book," but manufacturing flaws and labor shortages are causing long delivery delays. When planes arrive late, Air Lease cannot generate rental income from them, yet it must still manage the capital committed to these purchases. This creates a growth ceiling where the company's revenue potential is limited not by demand, but by the inability of suppliers to deliver the physical assets needed to run the business.
Finally, Air Lease carries significant tenant credit risk spread across more than 115 airlines globally. In a recession, airlines are often the first to suffer, leading to missed payments or bankruptcy filings. If a major tenant fails, Air Lease must endure the costly process of repossessing aircraft and finding new customers, often at lower rental rates. Furthermore, as environmental regulations tighten, older aircraft models may lose resale value faster than anticipated. This could force the company to take "impairment charges," which are accounting write-offs that reduce the reported value of the fleet and hurt net income.
Click a section to jump