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GE Nears Deal to Combine Air Leasing Unit With AerCap

By Lou Whiteman - Updated Mar 8, 2021 at 12:14PM

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The deal would create an aircraft finance powerhouse.

AerCap (AER 2.32%) and General Electric (GE -0.65%) are said to be near a deal that would combine two of the world's largest aircraft finance portfolios, creating a powerhouse in what should be a growing industry as airlines adjust post-pandemic.

The deal, which was first reported by The Wall Street Journal, would value the combined company at more than $30 billion. Terms of the potential deal, which is expected to be announced as soon as Monday, were not disclosed, but GE has been hoping to fetch at least $25 billion for its GE Capital Aviation Services (GECAS).

A plane in a maintenance hanger.

Image source: Getty Images.

AerCap and GECAS are both in the business of buying airplanes and leasing them back to airlines. The airlines in recent years have been focused on becoming more asset-light and turning ownership over to lessors. Post-pandemic, with the aviation industry adding billions in new debt to survive, airlines are expected lean heavily on leased planes for their recovery.

These are two of the biggest names in the industry, and combined they would have more than 3,000 planes either owned, managed, or on order.

The deal would be part of GE's plan to pay down its debt and reduce the size of GE Capital. The company is heavily invested in aerospace due to its large aviation engine business, but has been looking to reduce its financial holdings and focus on its industrial assets.

AerCap built itself on another deal, a 2014 purchase of International Lease Finance from AIG. The company's stock fell more than 60% during the early days of the pandemic, but has recovered much of that loss in the months that followed as it became more clear the business would be able to survive the crisis.

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