What happened

Shares of AerCap Holdings (NYSE:AER) closed up 10.5% on Monday, rallying alongside shares of the company's airline customers. Wall Street is growing more optimistic the airlines will get a second round of government stimulus to help combat the pandemic, and that's giving wings to stocks that count on airlines for their revenue.

So what

The airline industry has been among the sectors hardest hit by the pandemic, and with travel demand expected to remain depressed into 2022, if not longer, the carriers face a struggle to survive. That's a danger for AerCap, which is in the business of buying planes directly from manufacturers and leasing them to airlines.

A plane soars above the clouds.

Image source: Getty Images.

The airlines love the model, as it takes the debt off of their balance sheets. But it means companies like AerCap are holding a lot of debt, and with it risk, during this crisis. AerCap shares lost more than 75% of their value in the early days of the pandemic, and though the stock has recovered somewhat in the months since, it remains down 58% for the year.

AerCap has had to grant lease-payment deferrals to help airline customers through the crisis, but the company has had success pushing back deliveries and has billions in available liquidity to fall back on. What AerCap needs to avoid is widespread customer bankruptcies, so the better the outlook is for the airlines, the better AerCap shares look.

Airlines on Monday got a boost from weekend chatter out of Washington indicating lawmakers are trying to come together on a second stimulus plan that would include additional support for the industry. A fresh injection of liquidity from the government would help the airlines stay solvent, which is reason enough for AerCap shares to jump higher as well.

Now what

Even after the rally Monday, AerCap shares are having a worse year than shares of most of the company's airline customers. There's value here, and AerCap looks like a pretty good way to invest in an eventual airline recovery without having to pick winners and losers among the airlines.

AerCap has the resources it needs to survive, and its planes are new enough that it should be able to place them elsewhere should a customer go belly up and start returning aircraft to their owners. AerCap shares had a good day today, but I expect the stock to soar considerably higher in the quarters to come.