FTAI Aviation Ltd. (FTAI) stock intrinsic value fair value estimate & owner earnings analysis

FTAI Aviation rebuilds, sells and leases CFM56-5B, CFM56-7B and V2500 jet engines, which power the Boeing 737NG and Airbus A320ceo aircraft. Its main business (Aerospace Products, $1.94 billion of 2025 revenue) buys engines, rebuilds them and sells or exchanges engines and parts to airlines. The second business (Aviation Leasing, $571 million) owns and leases aircraft and engines, and since late 2024 sells on-lease aircraft to a third-party investment partnership (the 2025 Partnership, $2.0 billion of equity commitments) instead of holding them on its own balance sheet. Revenue grew from $1.17 billion in 2023 to $2.51 billion in 2025. How we measured earnings. The company's reported operating cash flow was negative in 2024 (-$188 million) and 2025 (-$311 million) even though net income was $501 million in 2025. The reason is presentation: cash spent buying engines for rebuild and resale is booked in operating cash flow, but the cash received when those engines are sold as leasing equipment ($1.06 billion in 2025, $436 million in 2024, $79 million in 2023) is booked as investing. We added those sale proceeds back, removed the swings in receivables, payables and other working items, deducted stock compensation ($22 million in 2025), and deducted only the part of equipment purchases (net of proceeds from other asset sales) that is needed to stay in place rather than to grow. Interest is already deducted, because we start from cash flow. The result is $1.37 per share in 2023, -$0.35 in 2024 and $7.54 in 2025. Only three years are used because earlier years predate the current engine business and include the 2022 Russia write-off and the 2022 spin-off of the infrastructure business. The 2024 and 2025 figures are distorted by timing: assets bought in 2024 were largely sold to the new partnership in 2025. Earning power used. We use about $2.85 per share a year, the average of the three years, rather than 2025 alone. 2025 benefited from the first sales into the new partnership and cannot yet be treated as a run rate. Revenue in the first half of 2026 was $1.78 billion versus $1.18 billion a year earlier, but operating cash flow was still negative (-$265 million) as inventory kept building ($453 million), so we do not move the level up on that. Last year's owner earnings growth is not meaningful (from -$0.35 to $7.54); we assume none in year one and credit no growth in any case. Expansion of module sales, further partnership funds and market share gains are real possibilities but are not contracted or proven through a downturn, so they are left out. How long it lasts. The business rebuilds and leases engines for a specific older generation of narrowbody aircraft. The filing itself warns that retirement or prolonged grounding of aircraft would cut revenue and the value of inventory. We see no evidence of a replacement product line, so each case holds earnings for a period and then fades to zero as those fleets retire rather than assuming they persist forever. Base case: about $2.85 per share a year for 10 years, then fading in equal steps to zero over the following 10 years, discounted at 6%. Value about $27 per share. Bear case: earnings return to the 2023 level of about $1.40 per share for five years, then fade to zero by year 12. The company carries $3.5 billion of senior notes (5.5% to 7.9%, maturing 2028 to 2033) and paid $235 million of cash interest in 2025, so any weak year leaves little cushion. Value about $8.50 per share. Bull case: about $4.50 per share a year for 10 years (roughly what continued sales into follow-on partnerships like the 2025 Partnership, at the pace of the last two years, would produce), then a 10-year fade. Value about $42 per share. What would make this wrong. Earnings are lumpy and depend on the company's ability to keep selling engines and aircraft at gains; the 2025 income statement included $378 million of gains on asset sales plus $46 million from the sale to the partnership. Eight aircraft and seventeen engines remain in Russia, with $210.7 million of insured value and uncertain recovery; nothing is assumed for that. The engine cash flows cannot be fully reconciled to net income from the filing summaries alone, so the measure above rests on our own reclassification of the company's disclosed figures. Margin-of-safety price. Because of the debt, the lumpiness of cash flows, the reliance on a single engine family and the short history of the current model, the margin-of-safety price is set at a large discount to the base value and close to the bear case: about $11 per share.