Why Aviation Leasing Firm AerCap's Shares Are Falling Today
Portfolio Pulse from Lekha Gupta
AerCap Holdings NV's (AER) stock is trading lower after GE Capital US Holdings, a subsidiary of General Electric Company (GE), priced a secondary offering of 26.72 million AerCap shares at $65.25 each. GE also granted underwriters an option to buy up to 4 million more shares, which could end GE's ownership in AerCap. AerCap is repurchasing 7.859 million shares at $63.62 each and announced the acquisition of five GE90-115B engines from Sanad. AerCap's Q3 FY23 revenue grew 7% YOY to $1.701 billion, missing estimates, but adjusted EPS of $2.81 beat expectations. AerCap's shares are down 2.23% in premarket trading.
November 14, 2023 | 1:58 pm
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NEUTRAL IMPACT
General Electric's pricing of AerCap's secondary offering may indicate a strategy to exit its investment in AerCap. The potential full exercise of the underwriters' option would end GE's beneficial ownership in AerCap, which could be seen as GE streamlining its portfolio.
GE's decision to price the secondary offering and the potential to fully exit its stake in AerCap may be part of a broader strategy to streamline its investments. The impact on GE's stock is less direct than on AerCap's and will depend on investor perception of the strategic move.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
AerCap's stock is trading lower due to the secondary offering priced by GE, which increases the supply of shares and may dilute current shareholders' value. The repurchase of shares may offset some dilution. The acquisition of engines and mixed Q3 results also influence investor sentiment.
The secondary offering by GE increases the available supply of AerCap shares, which can lead to price decline due to dilution. The share repurchase indicates company confidence but may not fully mitigate the impact of the increased share supply. The acquisition of engines shows growth but is overshadowed by the offering news. Mixed Q3 results contribute to uncertainty.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90