FLY Leasing Inc. (FLY) stock surges by 26.08% during current market trading after Carlyle Group Inc. has decided to buy Fly Leasing, taking the aircraft leasing business private in a $2.36 billion contract. FLY Leasing is a firm that invests in aircraft leasing. Its fleet consists of 110 flights, the bulk of which are Airbus A320 and Boeing 737 aircraft. FLY does not run its own fleet; instead, BBAM, a leasing management company, manages and executes leases.
What is happening?
According to a press release issued on Monday, Carlyle will pay $17.05 per share in cash for FLY also adding 84 aircraft to Carlyle’s commercial aviation investment and servicing arm. The agreement will probably close in the third quarter of 2021. The sale of FLY follows AerCap Holdings NV’s $30 billion purchase of General Electric Co.’s plane-leasing arm. Although air travel is steadily recovering since the leasing companies have suffered a lot due to the Covid-19 pandemic. They play an important financial role in keeping deliveries going, mostly via sale-leaseback arrangements that provide airlines with much-needed cash.
Carlyle Aviation Partners, which is part of Carlyle’s global credit business, has $6.1 billion of assets and over 90 employees, and offices in the United States, Ireland, and Singapore. With 93 airline licensees in 53 countries, Carlyle owns, manages, or plans to buy 246 aircraft. The shares of Fly Leasing, which are listed on the New York Stock Exchange and are headed by former Aer Lingus chairman Colm Barrington, have increased by 90 percent in the last year.
Chief Executive of FLY Colm Barrington said that this deal represents good value for FLY shareholders especially when airlines are facing an extremely challenging environment and smaller aircraft lessors are disadvantaged in the debt markets.