General Electric announced on Wednesday that it had struck a $ 30 billion deal to sell its jet leasing business with rival AerCap. This would create a massive lessor as the aviation industry battles its way through the Covid-19 pandemic and GE’s efforts to reduce its debt burden.
The deal would give GE a 46% stake in the combined company and generate around $ 24 billion in cash for the conglomerate and further downsize it. GE Capital Aviation Services, or Gecas, is part of GE Capital that has been scaled back since the financial crisis. GE said it will reduce its debt by approximately $ 30 billion when the deal closes, using the proceeds from the deal and existing cash.
GE shares rose 3.5% in premarket trading after the deal was announced, while AerCap’s shares were barely changed.
Both companies are major customers of Boeing and rival Airbus. Gecas owned, serviced, or ordered over 1,600 aircraft and had assets of $ 35.86 billion at the end of 2020. AerCap owned, managed, or ordered approximately 1,330 aircraft with assets of $ 42 billion as of the end of last year. 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 of trading. Stocks are up more than 10% this week since the Wall Street Journal reported Sunday that the two companies were close to a deal.
According to GE’s annual report, the Gecas unit posted a loss of $ 786 million last year, compared with a profit of $ 1.03 billion the previous year. AerCap posted a net loss of nearly $ 299 million last year, after gaining more than $ 1.1 billion in 2019, and posted a fourth quarter profit of $ 28.5 million.