Stocks Fly Leasing 04.30 NYSE: MUHA climbed more than 25% on Wednesday after a report said the company was considering a sale. It has been a difficult year for Fly and other aircraft leasing companies, but management could hope the buyer sees long-term value in their portfolio.
It has been a turbulent year for airlines, and airline-relying companies have fallen into decline. The pandemic has led to less demand for flying, and Fly Leasing and other companies that buy planes from manufacturers and then lease them to airlines have seen their business bruised.
Fly Leasing’s third-quarter revenue was down 56.8% from a year earlier, and the company lost a lot more money than analysts had predicted. To date, the company’s shares have fallen by more than 50%, which is a worse performance than many of the company’s customers.
The company is apparently now considering exiting public markets. The Airfinance Journal reported Wednesday that Fly Leasing is considering a sale, citing unnamed sources.
It is worth noting that there are many rumors that do not turn into actual transactions. Even if Fly Lease explores the possibilities, he may not find a suitor worth selling. Investors need to be careful when buying speculation about a merger.
In this regard, there is some logic in it. These aircraft rental companies have in the past found good homes in large global insurance companies that need reliable ways to invest funds and make good money. With the vaccine in hand, the worst should go for airlines, which means they should be better able to pay their bills in the coming quarters. This in turn should make the business of Fly Lease and other landlords more stable and predictable.
In fact, I’m going to go so far as to say that buying airplane landlords is the best way to invest in a potential airline recovery. So it wouldn’t surprise me that some big customer isn’t at least shooting tires on Fly Lease right now.