In Dublin, there is a company that owns more aircraft than most countries’ entire commercial fleets. With 3,500 planes, engines, and helicopters, this company generates $8.5B in annual lease revenue, and just reported record net income of $3.8B for 2025. It is not Boeing or even Airbus. It's AerCap Holdings (NYSE: AER), and they sit at the center of one of the most consequential structural crises in the history of global transportation. 

Interestingly, Ireland commands a 65% share of the global leasing market, with more than 50 aircraft leasing companies based there, including 14 of the world's top 15 lessors. 

This week, we are diving into how a broken aviation supply chain has created a lucrative gap in the aircraft industry that groups like AerCap holdings are (rightly) monetizing at scale.

Today, the commercial aviation industry has a production backlog that is insurmountable. The order backlog is now 17k aircraft, which is ~60% of the entire active commercial fleet worldwide (for context, this has typically been in the 30-40% range, so we are far past what is normal or acceptable). We have never seen this before in the history of commercial aviation. 

That backlog of 17k aircraft is equivalent to 12 years of production output, meaning we are effectively 12 years behind in meeting existing demand (ignoring new orders next year and continued travel growth among the global population). This problem is acute. 

In addition, the average age of the global commercial fleet has now risen to 15.1 years, which is higher than the historical average of 13.6 years we saw between 1990-2024. Because new planes are not coming online fast enough, airlines are trying to extend the lifespan of their existing fleets. We all notice this on a personal level when we fly: these planes feel old, delays seem more frequent, and repairs on the tarmac feel quite common now. 

After Covid, supply chain failures have created a deficit that seems irreversible now. Over 400 Western-owned planes (worth about $8b) are stranded in Russia as a result of the war in Ukraine, furthering the issues around an available fleet. And lastly, older planes are less fuel efficient than they once were (or the newer planes being built), which means it’s more expensive to fly the planes that are on their last leg. 

This is the state of the global commercial fleet and the backlog cannot be solved quickly. 

Aircraft lessors buy hundreds of planes and lease them back to airlines (United, Delta, etc) at monthly rates for long-duration leases (typically 10-15 years). The aircraft lessor collects the monthly cash payments and depreciates the asset over 25 years, collecting the spread between the cost of capital and the lease income. At $400-500k per month in cash flow, across a fleet of thousands of planes, you can start to understand how a company like AerCap made $3.2b in net income on $6.7b in top line. 

Back in 1976, less than 2% of the global fleet was leased. This rose to 40% in 2017 and today is more than 52% of the entire commercial fleet in the air. Leasing is a well-established part of the commercial airline business model, allowing airlines to not carry as many assets on their balance sheet and to manage cash flow better (a monthly payment vs buying a plane for $100-130m out of the gate). 

Companies like AerCap (founded in 1995) have been core buyers of airplanes in the production queues of Airbus and Boeing for decades. Today, they are one of the single largest customers on earth for both Airbus and Boeing, and during Covid, while other airlines were pulling back on their orders, lessor companies like AerCap kept buying. 

If you’re an airline, and Airbus isn’t delivering your new planes on time, you either cancel your routes or you lease a plane (most choose this option). Given the laws of supply (limited) and demand (ever-increasing), the lease rate for planes has increased (up 23% in 2023 alone). 

A few specific things are contributing to the current state of affairs: 

In this environment, and to meet the pressing needs of the airline industry, AerCap has thrived. Their $3.8B in 2025 net income is incredibly impressive compared to companies like Boeing ($2.2B), United Airlines ($3.4B), Delta ($5B), and Airbus ($5.5b). This company has ~300 airline customers (basically every major airline on earth), and it returned $2.6B to shareholders through buybacks and dividends last year. In Q1 2025, their credit rating was upgraded to BBB+ by all three major rating agencies, giving it the best credit profile in aviation leasing history. 

This all came from a company that owns no gates or flight routes and employs ~700 people. Their primary risk is the cost of capital and their internal credit exposure to a rise in interest rates. 

…Travel Demand is Unconstrained

In 1990, there were ~1 billion air passengers worldwide. This rose at a 6.85% annual growth rate to 9.5 billion trips in 2024 (5.2x faster than global population growth of 1.3% per year). Looking ahead, air travel traffic is projected to grow at ~4% per year to 12 billion by 2030 (4x faster than global population growth expectations of 0.8%). Much of this traffic to date has been the rise of the middle class worldwide, and much of the forecast includes further growth of the middle class coming out of India and Southeast Asia. 

Picks & Shovels of the Commercial Airline Industry

Like many industries that we look at, common threads emerge around the best areas to capture upside, monetize opportunity, and be capital efficient. In this industry, it’s clear that the following two areas are most attractive: 

Takeaway: the commercial airline industry has a supply chain issue, which is slowing down production while airline traffic demand from consumers is outpacing population growth by 4-5x. In Dublin, there is a company called AerCap that leases aircraft and whose net profit margin is roughly 12x that of the entire global airline industry: ~44% vs. 3.6% for the airlines. In 2025, AerCap generated $3.8B in net income, which is incredibly impressive vs companies like Boeing ($2.2B), United Airlines ($3.4B), Delta ($5B), and Airbus ($5.5b). The investment opportunities in this industry are in leasing, supply chain, training, and consumer. 

Have a great weekend,

Josh