A Dutch Treat: Aercap Holdings

By Oxford Club Research Team | April 03, 2007

The ADR Alert
Tuesday, April 3, 2007
By Alexander Green, Investment Director

Email – #153

** A Dutch Treat: Aercap Holdings

Based in Amsterdam, AerCap Holdings N.V. leases jets, engines and other aircraft parts to the world’s airlines.

Leasing gives airline companies flexibility. (In a downturn, they’re not paying for planes they don’t need.) And AerCap has proven it is very good at buying and selling the right airline assets at the right time.

Although the Dutch company has a market cap of just $2.5 billion, it is already the world’s third largest airline lessor, after GE and AIG. The company owns more than 100 aircraft, manages 100 others and has another 100 new planes on order from Airbus.

This is a good business, although one highly dependent on the strength of the economy. But there are a number of factors that favor the industry right now.

Number one, large airlines are finally coming out of the lean years after 9/11. Air traffic is up, yet it takes years to build a new plane. Both Boeing and Airbus report long backlogs.

Secondly, the airline business is booming in emerging markets. From Latin America to Eastern Europe to the Pacific Rim, more people in developing markets are flying. That’s good for the leasing business.

Third, high fuel prices and strict new environmental regulations are forcing airlines to favor newer, more efficient planes.

And, finally, low-cost airlines are popping up worldwide. With leasing, young companies can launch fleets with very few start-up costs.

A month ago, AerCap announced fourth-quarter results. They were excellent. Revenue jumped 78% to $211.6 million. Earnings hit $41.5 million on a 36% increase in leased flight equipment.

Expect the earnings momentum to continue. AerCap looks ready for take off.

***Action to Take***

Buy AerCap Holdings (NYSE: AER) at $30 or better. And place a sell stop at $25 for protection. There are no options on this one for speculators to consider.

If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or contact Pillar One Advisor Greg Galloway or Rick Pfiefer at 800.438.3040 or 407.667.4729.

All International Trader Alert recommendations will be posted on The Oxford Club’s website. Simply go to http://www.oxfordclub.com and click on “International Trader Alert.”

Stock

Country

Current Price

Comments

AerCap Holdings (NYSE: AER)
Netherlands

New

Buy at $30 or better. Place a sell stop at $25.

Ctrip.com (Nasdaq: CTRP)
China
$67.31
Buy. Sell stop is $55.

Deutsche Bank (NYSE: DB)
Germany
$134.55
Buy. Sell stop is $115.

Logitech Intern. (Nasdaq: LOGI)
Switzerland
$27.95
Hold. Sell stop is $25.