AerCap

We see a multi-pronged moat primarily from cost advantages, OEM access and efficient scale. Cost advantage: investment-grade funding (BBB+/Baa1/BBB+) and 11 billion of undrawn revolvers provide low-cost, flexible capital, while scale supports superior remarketing and trading economics.

Efficient scale: AerCap is the industry leader across aircraft, engines and helicopters with a vast, global customer base and order positions in the most in-demand new-technology types, which are scarce due to OEM supply constraints.

Intangibles: long-standing OEM and airline relationships plus the SES engine joint venture deepen switching frictions on complex transactions. Network effects are modest but the breadth of counterparties and assets does create incremental utility for customers.

Risks to the moat include normalization of supply constraints, new-entrant funding cycles, and potential OEM or engine issues that could shift demand mix. Overall, the combination of scale, sourcing power and funding access is durable and difficult to replicate.

In normal cycles, lessors have limited structural pricing power because airlines can solicit multiple financing sources.

Today’s environment is more favorable: OEM delivery delays and engine maintenance bottlenecks restrict supply, pushing lease rates higher and enabling strong gain-on-sale margins (Q1 2026 unlevered margin about 24 percent) and improved annualized net spread to 8.0 percent. This cyclical tailwind is meaningful but not guaranteed to persist.

We therefore assign above-average but not exceptional pricing power, acknowledging that spread resilience has held even as average cost of debt is ~4.1 percent.

Predictability is supported by multi-year leases, global diversification and a long average remaining lease term of roughly 7.1 years. Lease revenue is primarily fixed, with minimal floating-rate exposure, and the portfolio skews to newer-technology assets favored by airlines.

Still, airline credit risk, fuel costs, geopolitics, and regulatory change can drive variability, and aircraft trading gains are inherently lumpy. On balance, the long-duration lease book and diversified cash flows provide reasonable visibility, but not at the level of entrenched transaction networks or subscription businesses.

Financial position is strong: adjusted debt-to-equity is about 2.1x, investment-grade ratings are affirmed by all three agencies, and sources-to-uses coverage for the next 12 months is ~2.0x with total sources near 21 billion as of March 31, 2026. Average cost of debt is roughly 4.1 percent and the unsecured maturity ladder is well-staggered.

Liquidity includes 11 billion of undrawn credit lines and 1.5 billion in cash at Q1 2026. Key risks are macro shocks, airline defaults, and residual value swings, but the current cushion is solid.

Management has compounded per-share value through disciplined trading, leverage control, and returning excess cash. In 2025 AerCap repurchased 22.1 million shares (~2.4 billion) and paid ~192 million in dividends, then in April 2026 authorized an additional 1.0 billion repurchase and raised the quarterly dividend to 0.40 per share.

The company added attractive new-technology orders and sold older assets at gains, rotating the fleet while maintaining investment-grade metrics. Share-based compensation is material but offset by substantial net reductions in share count. Track record and incentives are aligned with long-term compounding.

CEO Aengus Kelly and team have navigated multiple industry cycles, integrated GECAS to create the clear scale leader, resolved significant Russia-related exposures via sizable recoveries, and compounded book value through accretive buybacks and asset rotation.

Disclosures show substantial equity-based compensation and meaningful CEO ownership, aligning incentives with shareholders. Communication is clear with quantitative guidance and conservative leverage targets. We rate the team as best-in-class among specialty finance operators.