I’d previously said that I expect normalization in domestic travel in 2023/24 and international in 2024/25, and I’m sticking to that.
Normalization is still going to be a multiyear process.
#AER SEEKING ALPHA UPDATE#
Still, the number of aircraft being returned to AerCap continues to decline from the highs of the pandemic, as does the number/value of aircraft still on lease but currently in storage (21% at the last update I saw). Those numbers were a bit better than the November numbers, but there has been a hit from the omicron variant surge, and traffic is still a good distance from “normal”. Within those numbers, global domestic numbers were even better, with a 22% decline in RPKs, and a 7% decline in load factor to 75.7%. According to the most recent IATA numbers (December), global revenue passenger kilometers were down 45% from their 2019 level, while the load factor was down 10% to 72.3%.
It’s slow, but there is ongoing progress in the global air travel recovery. The Recovery Progress … Will There Be A Pinch In A Few Years?
Even so, while I don’t necessarily think AerCap is a top call for the next 12 months, I still see meaningful long-term value, with double-digit long-term annualized potential and double-digit short-term potential as well. At this point, the worst things I can find to say about AerCap is that rates are going up (which could actually help them), they don’t pay a dividend (nothing new, and unlikely to change), the air travel recovery may be a longer, rockier process, and the stock is already well-liked and widely respected. These shares haven’t done that much since my last write-up, rising about 5% and underperforming the S&P 500 over that time. At the same time, the global air travel industry continues a slow road back to normal, and AerCap remains well-placed to be the partner of choice for airlines who can’t, or choose not to, own their fleets outright. AerCap ( NYSE: AER) closed its deal for GE’s ( GE) aircraft and engine leasing business (GEACS) back on November 1, and now the company is underway with the task of integrating and “rightsizing” the operations, a process that will probably take a couple of years and include selling non-core assets on an opportunistic basis. “The addition of Etihad to the carrier’s equity base provides the Irish government with an additional potential bidder for its 25 percent stake when that is offered for sale,” analysts at broker Bloxham said on Tuesday.Now the hard work begins. In return, Etihad received a code-share agreement giving it access to Air Berlin’s dense European short-haul route network and to the German capital ahead of Emirates, one of the fastest-growing carriers in the world, which has been lobbying for years to get into Berlin.Įtihad has already flagged its interest in the government’s stake in Aer Lingus, with Chief Executive James Hogan telling an Irish newspaper in February that the group would be open to talks. In December, it raised its stake in Air Berlin to nearly 30 percent from just under 3 percent, paying approximately 73 million euros and lending the carrier $255 million. The deal also positions state-owned Etihad as a potential buyer of the indebted Irish government’s 25 percent stake in Aer Lingus, which it is considering selling as part its international bailout.Īfter months of speculation about a possible deal, the airlines said on Tuesday that Etihad’s stake purchase reflected “its desire to forge a commercial partnership,” with Aer Lingus.Īer Lingus said talks with Etihad, which operates 10 flights a week between Abu Dhabi and Dublin since launching the service in 2007, so far have centred around a code-share agreement and have been extended to include cost savings through joint procurement.Īer Lingus said Etihad had told the Irish carrier that it did not intend to increase its stake pending the outcome of the talks.Įight-year-old Etihad is attempting to gain scale quickly - particularly in Europe - as it bids to catch up to rivals such as Dubai government-owned Emirates and Qatar Airways. DUBLIN, May 1 (Reuters) - Etihad Airways has bought a 3 percent stake in Irish airline Aer Lingus as a precursor to a commercial tie-up that could help Abu Dhabi’s flagship carrier gain more European routes to catch up with Middle Eastern rivals.
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