General Electric said on Wednesday it has reached a deal to sell its jet leasing business with rival AerCap in a $ 30 billion deal, a move that would create a massive landlord as the airline industry struggles through the Covid-19 pandemic and GE tries. to reduce his indebtedness.
The deal would give GE a 46% stake in the combined company and generate approximately $ 24 billion in cash for the conglomerate and wind it down further. GE Capital Aviation Services, or Gecas, is part of GE Capital, which has been phased out since the financial crisis. GE said it would reduce its debt by about $ 30 billion after the transaction closes, using the deal proceeds and existing cash.
GE shares rose 3.5% in premarket trading after the deal was announced, while AerCap’s had changed little.
Both companies are major customers of both Boeing and rival Airbus. Gecas’ owns, serviced or ordered aircraft in the top 1,600, and it had assets worth $ 35.86 billion at the end of 2020. AerCap owned, operated, or ordered approximately 1,330 aircraft at the end of last year with assets of assets worth $ 42 billion, according to regulatory filings.
Ireland-based AerCap, whose shares are traded on the NYSE, had a market capitalization of nearly $ 7.27 billion as of Tuesday’s close. Shares are up more than 10% this week since the Wall Street Journal reported on Sunday that the two companies were close to a deal.
The Gecas unit last year surged to a loss of $ 786 million from a profit of $ 1.03 billion a year earlier, according to GE’s annual report. AerCap posted a net loss of nearly $ 299 million last year on a profit of more than $ 1.1 billion in 2019, driven by a profit of $ 28.5 million in the fourth quarter.