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Agreement Between AerCap and Multinational Giant General Electric Worth 25 Billion Euros Would Create the Largest Aircraft Leasing Company in the World
The Irish AerCap and multinational giant General Electric are discussing a deal that would bring together the two largest aircraft financiers to forge an industry titan and create the largest aircraft leasing company in the world, with more than 2,000 jets, the Wall Street Journal reported.
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Negotiations for a deal come after years of speculation about the sale of Gecas (a subsidiary of GE Capital, the financial arm of the General Electric conglomerate) and come at a time when it is expected that Covid-19 will lead a larger portion of the global fleet of passenger aircraft to move into the hands of the leasing industry, which already accounts for about half of Airbus and Boeing aircraft acquisitions.
The American newspaper The Wall Street Journal, which was the first to report the possible agreement, valued it at US$ 30 billion (25.276 million euros) and stated that the announcement could occur on Monday, barring a last-minute setback. In turn, General Electric (GE) declined to comment on the speculation, and AerCap did not respond to Reuters’ inquiries.
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Agreement Between AerCap and Multinational Giant General Electric Moves the Stock Market
The news triggered AerCap’s shares up by 16%, while General Electric’s shares rose by about 4.5%.
The agreement would be the most ambitious expansion yet under CEO Aengus Kelly’s leadership at AerCap, who in 2013 reached a deal to acquire the company’s largest rival in Los Angeles, ILFC, which was owned by IAG. It would also be the last move for General Electric’s CEO, Larry Culp, to offload assets and reduce debt after taking over the conglomerate in 2018.
The union of these two giants in the aerospace industry would create the largest aircraft leasing company in the world, with over 2,000 owned or managed aircraft and hundreds of new aircraft awaiting delivery. Vertical Research Partners analyst Rob Stallard described the resulting giant as the “mother of all leasing companies.”
However, if the deal goes through, its massive size could attract the attention of antitrust regulators, as AerCap and Gecas are each about twice as large in terms of fleet as the third player in the sector, Dublin-based Avolon, according to analysts.
Aircraft Leasing Companies Grow During the Pandemic
The leading aircraft leasing companies, which rent aircraft in exchange for a monthly fee, are trying to grow as airlines focus on repairing their balance sheets, battered by the drop in air travel during the pandemic.
DBS bank analysts say that more airlines are likely to lean towards aircraft leasing as they emerge from the crisis.
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