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Monday, December 16, 2013

AerCap to Purchase AIG's Jet-leasing Unit for $3 Billion

Woodrow Bellamy III 

American International Group (AIG) has agreed to sell its aircraft-leasing unit, International Lease Finance Corp. (ILFC) to Netherlands-based AerCap for $3 billion, the group said Monday, Dec. 16. 
 
 
ILFC 787-8. Photo, courtesy of ILFC.
 
The transaction is subject to regulatory approval and the consent of AerCap's shareholders, however AIG expects to close the transaction by the second quarter of 2014.  According to a statement from AerCap, the newly combined company would have a fleet of over 1,300 aircraft consisting of Airbus A320, A330 and Boeing 737NG and 777 family aircraft. 
 
AerCap will also take over AIG's current order book, which includes $25 billion in-future deliveries. 
 
AIG had attempted to sell its aircraft leasing business to a group of Chinese investors last year but the deal fell through when the group was unable to produce the necessary financing for the purchase. 
 
Robert Benmosche, chief executive of AIG, said the sale was a move to focus on AIG's core insurance business. 
 
"The combination of AerCap’s young fleet of in-demand aircraft and proven portfolio management capabilities with ILFC’s attractive order book and broad marketing reach will continue to lead the industry. However, as we have said all along, the aircraft leasing business is not core to our insurance operations. Upon completion, the transaction will have a positive impact on AIG’s liquidity and credit profile and will enable us to continue to focus on our core insurance businesses," said Benmosche. 
 
AerCap will retain its name for the combined company, once the transaction is competed and ILFC will become a wholly owned subsidiary of AerCap. 
 
"AerCap's acquisition of ILFC will create the leading global franchise in the aircraft leasing industry. This transaction presents a unique strategic opportunity to bring together the outstanding and experienced personnel from both companies and two attractive portfolios of modern aircraft on lease to a highly diversified customer base. Further, we believe AerCap will now have the most attractive order book in the industry," said AerCap CEO Aengus Kelly. 

 

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