GE aircraft leasing unit to combine with rival lessor AerCap

by Buzz Street Times

General Electric on Wednesday said it reached a deal sell its jet-leasing business with rival AerCap in a deal valued at $30 billion, a move that would create a massive lessor as the aviation industry struggles through the Covid-19 pandemic and GE moves to reduce its debt load.

The deal would give GE a 46% stake in the combined company and generate about $24 billion in cash in cash for the conglomerate and further slim it down. GE Capital Aviation Services, or Gecas, is a part of GE Capital, which has been whittled down since the financial crisis. GE said it would reduce its debt by about $30 billion after the transaction closes using proceeds from the deal and existing cash.

GE shares were up 3.5% in premarket trading after the deal was announced, while AerCap’s were little changed.

Both companies are large customers of both Boeing and rival Airbus. Gecas’ owned, serviced or ordered aircraft top 1,600, and it had assets worth $35.86 billion as of the end of 2020. AerCap owned, managed or had on order some 1,330 aircraft at the end of last year with assets of assets worth $42 billion, according to regulatory filings.

Ireland-based AerCap, whose shares trade on NYSE, had a market capitalization of nearly $7.27 billion as of Tuesday’s close. Its shares are up more than 10% this week since the Wall Street Journal on Sunday reported the two companies were close to a deal.

The Gecas unit last year swung to a $786 million loss from a $1.03 billion profit a year earlier, according to GE’s annual report. AerCap posted a net loss of nearly $299 million last year from a profit of more than $1.1 billion in 2019, through it had a profit of $28.5 million in the fourth quarter.

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