General Electric is set to close a deal to sell its airline leasing business to Irish aircraft leasing group AerCap for more than $ 30 billion, the US industrial giant’s latest move to restructure its business, people have said informed about it.
An agreement, which would associate GE Capital Aviation Services (Gecas) with AerCap, could be announced as early as Monday, according to several people informed of the transaction.
The merger marks the latest attempt by Larry Culp, CEO of GE, to turn around the Boston-based company, three years after the company suffered major management changes, dividend cuts and an accounting investigation by the Securities and Exchange Commission the United States.
Many of GE’s problems stemmed from its GE Capital division, the financial unit that was hit hard in the aftermath of the 2008 recession. Over the past five years, the company has sold a series of important assets, including its biotechnology business in Danaher for $ 21 bn; and its stake in oil services firm Baker Hughes.
Gecas, which is one of the largest aircraft leasing companies in the world, buys planes and leases them to airlines for a fixed term.
GE had been exploring opportunities for several years to sell its jet leasing business with a competitor, as the company tried to get rid of assets it did not consider essential to its business model.
In 2019, Bloomberg reported that private equity firm Apollo Global Management was planning to buy Gecas for up to $ 40 billion.
GE was saddled with heavy debt after years of aggressive negotiation under the leadership of former boss Jack Welch. The company’s stock price is trading at a fraction of what it was when Welch left the company in 2001 as his three successors, Jeff Immelt, John Flannery and now Culp, took on the challenge of dismantling the ’empire.
GE declined to comment and AerCap could not immediately be reached for comment.
The aviation industry has been among the most affected by the pandemic over the past year. However, the production of several vaccines to fight Covid-19 has lifted the outlook for the sector to recover, as travelers are expected to resume flying more regularly.
Aircraft leasing companies saw renewed interest from investors, raising a total of $ 14.9 billion in debt earlier in the year.
AerCap has grown its business, becoming last year a major owner of Norwegian Air Shuttle, the besieged government airline, with a 15.9% stake. In 2013, the Irish company agreed to buy International Lease Finance Corporation for $ 7.6 billion.
News of the transaction was first reported by the Wall Street Journal.