American International Group Inc (AIG), Air Lease Corp (AL): What Do Airlines Actually Do?

But even as the sale of ILFC remains in doubt, ILFC founder Steven Udvar-Hazy is running a new aircraft leasing venture. Offering aircraft from The Boeing Company (NYSE:BA), Airbus, Embraer SA (ADR) (NYSE:ERJ), and ATR, Air Lease Corp (NYSE:AL) leases planes to airlines worldwide such as United Airlines, Southwest Airlines Co. (NYSE:LUV), and Air Canada. Air Lease Corp (NYSE:AL) ran an IPO in Apr 2011 and saw shares fall below the IPO price until more recently when the stock made an impressive run higher.

For those looking for a dividend along with their aircraft leasing company, Aircastle Limited (NYSE:AYR) may be their type of airplane leasing company. The current dividend yield stands at 4.6 percent, well above the 0.35 percent offered by Air Lease Corp (NYSE:AL) and the non-existent dividend for those buying American International Group Inc (NYSE:AIG) shares. Aircastle Limited (NYSE:AYR) is a smaller company than Air Lease Corp (NYSE:AL), leasing fewer planes and valued at less than half of Air Lease Corp (NYSE:AL) by market capitalization. Shares of Aircastle could see a boost over the next few years as analysts expect earnings at the company to increase, partially due to a strengthening economy increasing the demand for air travel and the airplanes that make it possible.

Actual airplane owners

Airlines are often not the ones who own the airliners in the sky, leaving that job to companies like ILFC, Air Lease Corp (NYSE:AL), and Aircastle. Investors who are bullish on an increase in air travel demand but not interested in the risks that inhabit the airline business may be interested in looking at aircraft leasing companies as an alternative investment to benefit from an economic recovery.

Alexander MacLennan owns shares of Air Canada, Bombardier, and Delta Air Lines. This article is not an endorsement to buy or sell any security and does not constitute professional investment advice. Always do your own due diligence before buying or selling any security. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: Long Jan 2014 $25 Calls on American International Group. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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