B+
Overall grade
B
Financial quality
The sleeper story is the engine-to-data-center conversion opportunity - AER owns the world's largest portfolio of serviceable CFM56s, and Kelly confirmed they're exploring direct conversion if demand proves durable. This is unpriced optionality that could be massive. The obvious headline is record $15.37 EPS, but the real story is 2026 guidance strips out all $4/share of gains, signaling management can't count on repeating the asset sales bonanza. The binding constraint is operational execution on Spirit integration - aircraft downtime bleeding into 2027 is messier than the initial narrative. Kelly's most revealing quote: 'We want to make sure this demand is durable, and it's not fleeting' on engine conversions - cautious optimism, not hype. My view changes if they quantify the data center conversion opportunity or if lease rents resume sequential growth.
The 30-second version
- The engine-to-data-center pivot is the sleeper - this could be massive
- Record $3.9B asset sales at 27% margins, but 2026 guidance excludes all gains
- Spirit integration costs hit harder than expected - Q4 maintenance went negative $106M
What changed this quarter
| Metric | Prior | This quarter |
|---|---|---|
| GAAP Net Income | $1.2B (Q3) | $3.8B (FY) |
| Adjusted EPS | $4.97 (Q3) | $15.37 (FY) |
| Gain on Sale Margin | 28% (Q3) | 27% (FY) |
| Asset Sales Volume | $1.5B (Q3) | $3.9B (FY) |
| Extension Rate | 85% (Q3) | 87% (FY) |
| Operating Cash Flow | $1.5B (Q3) | $5.4B (FY) |
| Net Debt to Equity | 2.1x (Q3) | 2.1x (Q4) |
| Net Maintenance Contribution | +$148M (Q3) | -$106M (Q4) |
Accountability tracked
7 new promises made4 narrative shifts flagged6 prior promises graded
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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