General Electric's (NYSE:GE) $30 billion deal to sell its GECAS aircraft financing arm to AerCap Holdings (NYSE:AER) is a key milestone in the industrial conglomerate's effort to get its balance sheet under control, the company's chief financial officer said on Wednesday, giving GE "multiple paths" to bring down its debt.

Speaking at a Bank of America conference, GE chief financial officer Carolina Dybeck Happe said the company expects to have gross debt of about $70 billion once the GECAS deal closes, down from $104 billion at year's end. The company wants to bring that $70 billion figure down by about 35% to $45 billion by 2023, largely by cutting its roughly $43 billion in borrowings nearly in half.

Front shot of a GE aircraft engine.

Image source: General Electric Aviation.

If the company is successful, that should bring its net debt down to about 2.5 times earnings before interest, taxes, depreciation, and amortization (EBITDA), compared to net debt of about 6 times EBITDA today.

Happe said the company has "multiple paths" to reach its goal, including proceeds from its many divestitures and expected growth in free cash flow. GE will also own about 46% of AerCap after the deal closes, subject to a lockup of up to 15 months. Happe said that the company is likely to monetize that stake "when the cycle recovers" for airlines post-pandemic.

General Electric is in the middle of a multiyear turnaround. The company is currently worth about one-sixth of its $600 billion market cap at the turn of the century, weighed down by its massive debt load and some market-topping acquisitions.

The new GE will be smaller and more focused on aviation, healthcare, power, and renewables, with most of its financing and debt tied to those industrial businesses.

Happe said that she expects current-quarter cash flow for GE to be "meaningfully improved" from the first quarter of 2020, a key metric analysts have been following in tracking the turnaround.

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