In this scenario, I have not included any future recoveries of Russian airplanes or settlements regarding the outstanding claims. Little to no debt repayment, apart from refinancing debt.A tapering share repurchase program in 20.Inclusion of the $645 million in cash and cash equivalents. ![]() I also ran the stock price analysis for AerCap using the evoX Financial Analytics tool. Stock price valuation using evoX Financial Analytics (The Aerospace Forum) The evoX Financial Analytics Valuation For AerCap Stock Both methods, however, do show significant upside against the current trading levels. If we were to value AerCap according to its usual price-to-book of 0.86x, this would give a price target of $69.95 providing 13.5% upside which I would deem conservative since the actual fair value is $81.35 providing 32% upside. If we add the discount that AerCap received when it bought GECAS, the leasing division of General Electric, the book value would even climb to $81.34. Simply adding that gives $63.07, providing 4.5% upside and 2.5% upside from the current price, meaning that the full positive impact has not yet been fully factored in the stock price.Īdding the cash receipt to the shareholder's equity, we get to a book value of $68.68 for AerCap which means the current stock price offers around 11.5% upside. AerCap's most recent closing price was $60.36. AerCap has 237.54 million shares outstanding which indicates that $2.71 per share is added to the book value. A Higher Book Value For AerCapĮssentially, with the $645 million received AerCap's book value has increased by the same amount. Furthermore, while I believe chances of repossessions which would likely reduce the claim amount as well there are possibilities for AerCap to eventually start selling claims for buying parties to pursue and the successful settlement that AerCap announced provide some base to assume that other settlements will follow in the future, but also give some conviction that the claims can be pursued successfully which could make the claims appealing to buy by legal companies. While I don't want to make any forward projections based on this event, the settlement does provide some indication that the remaining $2.75 billion could eventually be settled. The Bigger Picture For The Multi-Billion Dollar AerCap Claim This has resulted in the claim balance to drop to $2.75 billion. ![]() Simultaneously, the Ireland based lessor has dropped the claims against insurance company NSK and the Aeroflot Group with regards to the 17 airplanes and spare engines excluding the value gap between the value of the equipment and the settlement. The balance has been reduced by $645 million for aircraft valued $908 million leaving $263 million of the claim open. ![]() ![]() The company has now settled for $645 million for 17 airplanes and five spare engines which would reduce the $3.4 billion balance. In total, the AerCap had $3.4 billion worth of claims against "All Risks" insurers. AerCap Settles With Russian Aeroflot Group In this report, I will be discussing the settlement and how this affects the stock price using various valuation methods. The most recent development is that AerCap has settled some of the claims. The pandemic eroded demand for air travel and put pressure on aircraft values and lease income while sanctions against Russia directly led to the country seizing leased jets leaving airplane lessors with significant damages to their business.Īs a result, AerCap was forced to write off $3.2 billion on their flight equipment under the assumption that these would not be recovered, clearing the path for insurance claims in the amount of $3.4 billion. The past few years have not been easy for airlines and subsequently airplane lessors. AerCap ( NYSE: AER) is one of the companies I have a Strong Buy rating on as I believe that demand for airplanes will continue to grow over the mid to long term and aircraft lessors are taking a bigger share of the market.
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