While Air Lease’s Q1 results were reasonably good in the context of the sector’s difficulties (pre-tax margins 22%, operating cash-flow flat yoy) and the mood music remains positive (80% of order-book placed through 2023; traffic outlook improving, financing attractive), we did not anticipate cash accounting ($49m) or lease restructurings ($37m) to cause the quantum of impact they did on revenue. This drove a c.20% miss on PBT and, given uncertainty around lease renegotiations, could linger for another few quarters. The existing discount-to-book (13%) and growth story can tolerate this, but it is a short-term hit to sentiment nonetheless.
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