Here’s everything you need to know the $AER deal for GECAS sucked bigly in one thread.
1) This is NOT ILFC. When AER bot ILFC in 2013 they went up to 5x levto buy an asset at a lower multiple of book, at much lower absolute valuations on the fleet, w a much better order book...
1) This is NOT ILFC. When AER bot ILFC in 2013 they went up to 5x levto buy an asset at a lower multiple of book, at much lower absolute valuations on the fleet, w a much better order book...
...they also had an equity currncy trading well above book to pay for it. Basically diametrically opposed to today’s deal (higher book multiple; worse order book; less leverage; own currency trading at a discount)
2) fleet mix: AER took a predominantly narrow body, newer, mostly new tech fleet and diluted it w widebodies, older lanes, and current tech (oh and helis and freighters!) Exactly the things Aengus railed against, for years.
3) scale: I’m not sure I buy any of these scale arguments. Certainly the pandemic showed scale was irrelevant, it’s still fundamentally about picking the right clients. When you’re this big you basically have to serve every client so it’s tantamount to a sector bet now...
4) structure: Aengus took every share he’s bought back since ILFC (and more) and gave it to GE for this deal. They now own 46% and you can bet your life they’ll be smacking the bid every time they can, basically a $6.3bn overhang in the stock....🤮🤮
All in all I can’t see the rationale for this transaction, this price, or this structure. They put Guinness Peat back together and shareholders (of $AER) lost out bigtime. I would vote AGAINST this transaction if I’m still involved (which I doubt) when the vote comes around
Off to drown my sorrows now 😥😥
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