GE, AerCap link air leasing wings

$30B deal continues GE’s efforts to simplify, strengthen itself.

General Electric is combining its aircraft leasing business with Ireland’s AerCap Holdings in a deal valued at more than $30 billion, a big step in what has become a six-year odyssey to reshape the one-time sprawling, global conglomerate.

By pushing GE Capital Aviation Services, or GCAS, into a separate business, GE is essentially closing the books on GE Capital,

the financial wing of General Electric that nearly sank the entire company during the 2008 financial crisis.

“Today marks GE’s transformation to a more focused, simpler, and stronger industrial company,” Chairman and CEO Larry Culp said in a prepared statement Wednesday.

AerCap will pay about $24 billion in cash for GCAS, and GE will take an approximate 46% ownership stake in the combined company, and $1 billion paid in

AerCap notes or cash at closing.

GE’s Capital Aviation Services and AerCap are two of the biggest aircraft leasers in the world with more than 2,500 aircraft between them. The companies lease commercial aircraft to hundreds of airlines around the world.

The global pandemic sent shockwaves through the entire air travel industry, and the deal announced Wednesday could have extensive ramifications.

It could mean more pressure on plane manufacturers like Boeing and Airbus if beleaguered airlines chose not to buy planes. It could also mean some breathing room for airlines that are reeling from plunging air travel, if they can cut near-term costs through leases.

A combined company would likely be able to lower its costs, and extend them to customers.

As for GE, it said Wednesday that it will be able to lower its debt by about $30 billion, bringing total debt reduction since the end of 2018 to more than $70 billion.

In 2015, GE announced a transformation of the company, vowing to shed billions in assets to focus on the company’s industrial core, namely power, aviation, renewable energy and healthcare.

With the new company formed with GCAS, the largest remaining operation in GE Capital, General Electric has largely excised what many industry analysts viewed as a risk. That belief existed before the financial crises that almost brought Wall Street to its knees more than a decade ago.

GE went through a series of upheavals following the crisis.

Longtime CEO Jeff Immelt, who had built GE into a massive conglomerate that many came to believe had grown too complex, was ousted in 2017.