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On Sunday, AIG (NYSE: AIG  ) sold another of its crown jewels. Not coincidentally, that same day, China officially entered the big leagues of international aviation.

In a deal first mentioned on Friday, but only confirmed two days later, AIG has agreed to sell 80.1% of its International Lease Finance Corporation to a Chinese consortium led by New China Trust Co Ltd. (part-owned by Barclays (NYSE: BCS  ) ). The sale price, $4.23 billion, values the whole of the company at just under $5.3 billion -- and that's no moot point, because New China could soon own the whole company. Part and parcel with the deal is an option for New China to buy an additional 9.9% stake in ILFC, putting it just 1000 basis points away from owning ILFC lock, stock, and barrel.

When and if that happens (and de facto, even if it doesn't), the biggest country in the world (by population) will officially own the biggest aircraft leasing company in the world (by revenues). According to S&P Capital IQ, ILFC's $4.5 billion in annual revenue outclasses rival General Electric's (NYSE: GE  ) GECAS unit by a good 20%.

What's it mean to you?
So, great news for New China, but what does this deal mean for investors? Well, for AIG shareholders, it's a good-news, bad-news situation. Bad news: Selling ILFC to the Chinese means the company has failed to arrange a more lucrative initial public offering for the unit. AIG wanted to IPO ILFC, but apparently, the market conditions just weren't right. Selling ILFC now, AIG will record a $4.4 billion non-operating loss.

On the plus side, even if it's taking a loss, AIG is generating some cash. This brings the company one step closer to repaying the U.S. government for its 2008 bailout.

Also worth pointing out ... losing ILFC isn't necessarily a bad thing for AIG. Unlike profitable rivals GE Capital and Air Lease Corporation  (NYSE: AL  ) (incidentally, established by ILFC alum Steven Udvar-Hazy), ILFC is currently losing money -- about $1 billion last year.

Final Foolish point
ILFC's sale could also be bad news for Boeing (NYSE: BA  ) and Airbus.

Acquiring ILFC, China now has a ready buyer for commercial aircraft being developed by local airplane manufacturers Aviation Industry Corporation of China (AVIC) and Commercial Aircraft Corporation (Comac). So far, local Chinese buyers have provided most of the demand for locally produced Chinese aircraft. Once ILFC changes hands and enters Chinese ownership, expect that trend to continue.

For GE, the recent financial crisis struck a blow, but management took advantage of the market's dip to make strategic bets in energy. If you're a GE investor, you need to understand how these bets could drive this company to become the world's infrastructure leader. At the same time, you need to be aware of the threats to GE's portfolio. To help, we're offering comprehensive coverage for investors in a premium report on General Electric, in which our industrials analyst breaks down GE's multiple businesses. You'll find reasons to buy or sell GE, and you'll receive continuing updates as major events unfold during the year. To get started, click here now.

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