This Aircraft Supply Company Is Soaring Under the Radar

Core Viewpoint - The airline industry is experiencing a supply-demand imbalance, benefiting FTAI Aviation, a company specializing in aircraft maintenance, repair, and leasing [1][4]. Company Overview - FTAI Aviation is based in New York City and operates in two main divisions: asset ownership and leasing, and manufacturing, refurbishing, and repairing aircraft engines and components [1]. - The company focuses on two key engines: the CFM56 and the V2500, which are widely used in commercial aviation [3]. Industry Challenges - The airline industry faces significant equipment supply issues, including a shortage of aircraft and components due to pandemic-related production halts, a lack of skilled labor, and an aging fleet requiring repairs or replacements [4]. - Aircraft engine maintenance and repair has become a critical bottleneck, with turnaround times increasing by 35% for legacy engines and 150% for new engines, with peak issues expected by mid-2026 [5]. Financial Performance - FTAI's second-quarter results showed a 53% year-over-year revenue increase to $676 million, with earnings per share (EPS) of $1.57, a significant recovery from a loss of $2.26 the previous year [9]. - The company's stock price has risen 47% since the July 29 results announcement, with a 19% increase this year and over 1,100% growth in the past five years [9]. Future Outlook - Wall Street forecasts a 47% revenue increase for FTAI this year to $2.55 billion, with further growth expected to $3.03 billion in 2026. EPS is projected to rise 160% this year to $4.75 and another 41% next year to $6.70 [10]. - The market cap of FTAI is approximately $17.2 billion, with a forward price-to-earnings (P/E) ratio of about 22, indicating it is relatively inexpensive compared to peers [11]. Demand Dynamics - Demand for air travel has returned to pre-pandemic levels and is expected to continue growing rapidly through 2040, further supporting FTAI's business model [11]. - FTAI is well-positioned to capitalize on ongoing supply chain issues in the aviation industry, as it provides essential engines and parts that are currently in high demand [12].