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Why is the AerSale Corporation (ASLE) stock going down to 20.84%?

AerSale Corporation (ASLE) saw a downfall of 20.84% in the aftermarket following the announcement of third-quarter 2021 results. However, the last trading session concluded at $22.89.

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Third Quarter 2021 Results by ASLE – Did it work?

ASLE released third-quarter 2021 results on 9th November 2021 in which the company announced the revenue of $73.3 million with a GAAP net loss of $1.6 million. Lower leasing income somewhat offset the impact of flying equipment sales, which was mostly due to an end-of-lease payment reported last year.

A drop in TechOps revenue owing to decreased aircraft storage and related repair operations mitigated the growth in Asset Management Solutions (AMS) income. The demand for passenger-to-freighter conversions is still high and plans to monetize the remaining Boeing 757 fleet are on schedule. During the third quarter of 2020, ASLE earned $6.3 million via their Payroll Support Program.

So, what’s the future?

The continuing recovery in commercial markets is expected to continue, though a bit slow, as the impact of the COVID-19 delta version clouds the picture. During the balance of 2021 and the first part of 2022, the Company expects to recoup its B757 investment. Moreover, ASLE is willing to anticipate increased MRO business from commercial aircraft recommissioning, increased demand for USM components for overhaul work, and contributions from the launch of its novel AerAware solution.

Second Quarter 2021 Results – Was it a successful one?

On 6th August 2021, ASLE reported second-quarter 2021 results. According to this, the net revenue came out to be $91.9 million with a GAAP net income of $16.5 million and Adjusted EBITDA to be $30.4 million. Greater revenues and a better sales mix led to higher margins, resulting in increased adjusted EBITDA and margins. Payroll Support Program profits totaled $8.4 million in the second quarter of 2020, up from $6.3 million the previous quarter. To be clear, the Company must pay specific offsetting charges to the Payroll Support Program in order to be eligible for the program.

Company’s future plans

As the commercial markets continue to recover, ASLE forecasts robust growth in the second half of 2021, driven by stronger MRO volume from commercial aircraft recommissioning. This will cause an increase in the demand for USM parts consumption for overhaul operations and sales from its Boeing 757 purchase program.

However, the company is happy to be on the track to gain from the commercial markets’ steady rebound in the second half of the year. Since the beginning of the epidemic, their purpose-built, integrated business model has been shown to perform throughout cycles and end markets. Not only this but their MRO facilities drove incremental volume as aircraft were recommissioned over the quarter, and strategic investments in the freighter industry enhanced shareholder returns as they completed the 757-freighter conversion program.

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