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GE nears deal to sell air leasing unit to AerCap for more than $30bn

General Electric is nearing a deal to sell its air leasing business to Irish aircraft-leasing group AerCap for more than $30bn, the latest move by the US industrial giant to restructure its business, said people briefed about the matter. 

A deal, which would combine GE Capital Aviation Services (Gecas) with AerCap, could be announced as early as Monday, according to multiple people informed about the transaction.

The merger marks the latest attempt by Larry Culp, GE’s chief executive, to turn round the Boston-based company, three years after the company underwent big leadership changes, dividend cuts and a US Securities and Exchange Commission accounting investigation.

Many of GE’s troubles stemmed from its GE Capital division, the financial unit that was badly hit in the aftermath of the recession in 2008. Over the past five years the company has sold a series of large assets, including its biotech business to Danaher for $21bn and its stake in Baker Hughes oil services company. 

Gecas, which is among the world’s largest aircraft leasing companies, buys aircraft and leases them to airlines for a set period of time. 

GE had been exploring opportunities to sell its jet leasing operations with a competitor for several years, as the company has been trying to dispose of assets that it does not deem core to its business model.

In 2019, Bloomberg reported that private equity group Apollo Global Management was exploring buying Gecas for up to $40bn.

GE had been struggling under a heavy debt load from years of aggressive dealmaking under its former boss Jack Welch. The company’s share price is trading at a fraction of where it was when Welch left the company in 2001 as his three successors, Jeff Immelt, John Flannery, and now Culp faced the challenge of dismantling the empire. 

GE declined to comment and AerCap could not be immediately reached for comment.

The aviation industry was among the worst affected by the pandemic over the past year. However, the production of multiple vaccines to combat Covid-19 has lifted the prospects of recovery for the sector, as travellers are expected to start flying again more regularly.

Aircraft leasing companies have seen renewed interest from investors, raising a combined $14.9bn in debt at the start of the year.

AerCap has been expanding its business, last year becoming a major holder in Norwegian Air Shuttle, the embattled government-owned airline, with a 15.9 per cent stake. In 2013, the Irish company agreed to buy International Lease Finance Corporation for $7.6bn. 

News of the transaction was first reported by the Wall Street Journal.

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