Technicians build LEAP engines for jetliners at a General Electric (GE) factory in Lafayette, Indiana, on March 29, 2017.
Alwyn Scott | Reuters
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 while AerCap’s were little changes.
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.