Yahoo Finance AerCap buys AIG's aircraft leasing arm
Insurer AIG announced Monday the sale of its aircraft leasing unit International Lease Finance Corp. to AerCap for $5.4 billion, making the Dutch company the leader in the global leasing industry.
The sale of the unit came a year after AIG announced the planned sale of ILFC to a Chinese consortium, a deal that fell through after the buyers failed to make the key down payment.
AerCap will pay AIG $3.0 billion in cash and give it 97.6 million shares, a 46 percent stake in AerCap worth $2.4 billion at the closing price of $24.93 on Friday.
AerCap shares surged 32.6 percent to $32.85 in early New York trade Monday, while AIG shares gained 1.7 percent to $50.43.
AIG said the deal marked the last major sale by AIG of non-core assets, as the insurer remakes itself following its $182 billion bailout by the US government, the largest rescue in the 2008 financial crisis.
"As we have said all along, the aircraft leasing business is not core to our insurance operations," said Robert Benmosche, AIG president and chief executive.
"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."
The deal will see AerCap assume $21 billion of outstanding ILFC debt, as it runs a combined fleet of more than 1,300 aircraft and $25 billion worth of orders for hundreds more.
Over 85 percent of the fleet by value will be in fuel efficient aircraft including Airbus models A320 and A330 and Boeing the 737NG and 777 families.
"AerCap's acquisition of ILFC will create the leading global franchise in the aircraft leasing industry," said AerCap chief executive Aengus Kelly.
"We believe AerCap will now have the most attractive order book in the industry. With these combined resources, along with a strong liquidity profile, we will drive high levels of stable long term profitability and cash flows for the benefit of all our stakeholders."
In December 2012, AIG announced it had a deal to sell ILFC to a group of Chinese investors, in a deal that valued the unit at $5.28 billion.
The buyers, who proposed to take 90 percent of the company and leave 10 percent with AIG, included New China Trust Co. Ltd, China Aviation Industrial Fund and P3 Investments Ltd.
But in late May, AIG reported that the Chinese group had failed to make the initial deposit on the sale, which needed approval of regulators in both Washington and Beijing.
After that Benmosche had expressed optimism that the deal could still by consummated. But then in August two of the Chinese investors, New China Trust and China Aviation Industrial, dropped out of the deal.
