DAVY VIEW

AerCap is now embarking on the third phase of its corporate development. From its IPO in 2006 through to 2013, it increased its owned fleet by almost 75%. The 2014 ILFC deal was an inspired move that transformed the company (owned fleet five times larger) and the industry structure. AerCap’s net spread displayed remarkable consistency over this period, averaging 9.4% (+/- just 0.8%). We expect double-digit book value gains out to 2020 and $2bn of excess capital to be deployed strictly for shareholder gains. We forecast over 30% upside to the share price and initiate with an ‘Outperform’ rating. We also see attractive risk/reward on issued credit.