Today’s Market Overview
Aircraft leasing companies have been growing in the double digits over the last year. As sales of brand new aircraft have been slowing down in the U.S. side have slightly dropped with the grounding of the 737 MAX.
This was the next flagship aircraft to be released by Boeing and was projected to have thousands of new orders in place.
As airlines have been unable to grow and expand their routes due to not having the desired equipment available for order they turn to different options. The airlines do not want to invest in an older aircraft that will greatly depreciated in value over time and will result in an overall loss on the asset.
Being able to lease an aircraft provides operational benefit to the airline. They are able to bring the aircraft into the fleet for the time that it is required based on the contract and then they are able to return the asset back to the owner without any financial penalty.
The aircraft is paid for with operational costs which helps mitigate the risk from the airline as they are not bringing on a great deal of liability.
Aircraft Leasing Companies
Some of the well known publicly traded Aircraft leasing Companies include:
|Air Castle||Nov 7th 2019|
|Air Lease (AL)||Nov 7th 2019|
|Fly Leasing (FLY)||Nov 8th 2019|
|AerCap Holding (AER)||Nov 8th 2019|
Trading news earnings release contain a great deal of risk as there is large amounts of volatility. Price of stocks around earnings releases tend to start moving very quickly and can jump in price dramatically.
As we look into some of the companies that are releasing their 3rd quarter earnings we need to keep a level head and manage our risk appropriately.
It is important that we focus on the big picture goal of our investing strategy and focus on using the skills we have develop as compared to trading based on emotions.
Today we are starting off with Air Castle and Air Lease releasing their earnings for the day. Then tomorrow on the 8th we have Fly Leasing and AerCap Holding releasing their earnings. This week it is all about the Aircraft leasing earnings reports!
Air Castle (AYR)
Air Castle closed off yesterday spiking up a total of 16% gains in a single day. Air Castle (AYR) came to an agreement to sell their company to Marubeni and Mizuho Leasing for $32/share.
As news broke out in the market investors quickly reacted and price climbs up from just under $28 on the close on the 5th to up above $32 on the open of the 6th.
This news was perfectly time the day before their earnings report. I don’t see this as being a coincidence. Keeping a close eye on how AYR reacts after the news and with how they report their earnings release today will play the large role in how the price reacts.
Although naturally technical traders are looking for a retracement after a strong gap like we see on AYR, the S&P is pushing up in Pre-Market trading.
Overall there has been a large spike in trading volume for AYR. Should those investors continue to trade AYR after the news then we can expect to see stronger and more supportive moves.
Trading stocks with high trading volume will prevent for wild spikes in the market. Stocks with lower trading volume are easily affected by large institutions and banks investing in their stocks.
Air lease (AL)
Air lease has been able to maintain strong revenue numbers over the last year. All of the stated revenues have been under $500 Million.
Looking back our first quarter was $466 M the second quarter released earnings were $471 M. This quarter they have forecasted a growth up toward total revenue of $521 M.
Based purely on their forecast and their projections for today’s earnings we see they they are expecting a growth in sales. Part of this can be accredited to their growth in the Asian Market.
Based on the technical perspective of Air Lease, we have been in an uptrending channel. We have been taking it upwards and have finally met the last major previous high from the daily chart.
Today has the potential to be able to use the new release to drive price above the last major resistance level. In the even that earnings fall a bit short under the forecast or even if their outlook for the next quarter shows a bit of weakening then it would be setting up strongly to use the news as an excuse to reject the price level.
Understand that the news and headlines are the dialogue and story line that create the chart that you and I trade. Many times news will work as a catalyst to move price in a desired location. As you are trading aviation stocks make sure to listen first and think before you act.
Part of my trading routine involves taking the time in the morning to prepare my analysis and create potential trade set up. I am then being patient and waiting for confirmations to enter my desired trade set ups.
I am keeping emotions out of the equation to prevent myself from rushing into a trade before I have my confirmations.
If you missed yesterday earnings report on RYANAIR make sure to go back and check it out to get a recap on our trade. Tomorrow we have Fly Leasing (FLY) and AerCap Holding (AER) releasing their earnings.
Make sure to check back tomorrow to get the best market analysis on the aviation stock that you trade!