Send me real-time posts from this site at my email

Why Shares of Fly Leasing Are Falling Today

What happened

Shares of Fly Leasing (NYSE: FLY) fell more than 8% on Thursday after the aircraft leasing company reported weaker-than-expected earnings. The COVID-19 pandemic is weighing on airlines, making life difficult for companies that rely on aviation for revenue and profits.

So what

Before markets opened on Thursday, Fly Leasing reported second-quarter earnings of $0.37 per share on revenue of $79.1 million, falling short of analyst expectations for $0.45 per share on revenue of $83 million.

The company is in the business of buying aircraft and leasing them to airlines. With travel demand plummeting due to the pandemic, the airlines need fewer planes, and are flying the ones they have less often.

Image source: Getty Images.

Fly reported lease revenue down 21% year over year, and sold no aircraft during the quarter after booking $16 million in plane sales in the same three months of 2019. The company is deferring payments owed by customers and extending payback periods to try to help the airlines through the crisis.

"Our second-quarter results reflect the challenges of the COVID-19 pandemic, but FLY remains in a strong position to meet its financial and operating commitments with unrestricted cash of $289 million and nearly $600 million of unencumbered aircraft," CEO Colm Barrington said. "We are working closely with our airline customers and now expect to agree to defer rents representing approximately 20% of contracted rental revenue for the second half of the year."

Now what

Fly Leasing remains well diversified, with aircraft and engines on lease to 41 airlines spread across 25 countries. As Barrington notes, the company has the wherewithal to survive the downturn, but until aviation shows signs of a recovery, it is going to be hard for Fly Leasing to soar.

I think the air lease companies are some of the safest ways to play a recovery, but investors buying in now should be warned not to expect a turnaround overnight.

10 stocks we like better than Fly Leasing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Fly Leasing wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2020

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue