American International Group Inc. (NYSE:AIG) is currently in talks with Netherlands-based AerCap Holdings NV to sell its aircraft leasing business, sources familiar with the matter told Neha Dimri and Tim Hepher of Reuters. The insurer has been looking for a potential suitor for its International Lease Finance Corp (ILFC) for a long time now.
AIG shedding off non-core assets
American International Group Inc. (NYSE:AIG) owns about 90% of ILFC. It was earlier in talks with a consortium of Chinese investors to sell its aircraft leasing business for $4.7 billion. Despite giving Chinese investors more time, American International Group Inc. (NYSE:AIG) failed to close the deal. The New York-based company is shedding off its non-core assets to repay the bailout money it received from the government during the 2008 financial crisis. American International Group Inc. (NYSE:AIG) has sold its consumer finance business and two international life insurance arms as part of its revival plan.
Sources said that AerCap is also discussing the deal with private equity firms that may be interested in certain parts of ILFC. ILFC is the world’s second-largest aircraft leasing business. As of September 30, it owns 930 planes, and has committed to purchase another 338 planes in the near future. It incurred a loss of $600 million in the first nine months of this year. GECAS, the aircraft leasing arms of General Electric Co. (NYSE:GE), is the world’s largest aircraft lessor with a fleet size of 1700 planes. In comparison, AerCap owns only 373 passenger jets.
AIG yet to terminate its deal with Chinese investors
While American International Group Inc. (NYSE:AIG) continues its negotiations with AerCap, the company hasn’t formally terminated its agreement with Chinese investors. Sources said a deal with AerCap could be announced as soon as next week.
The aircraft leasing industry is consolidating, and most of them have involved Asian buyers. Last year, Sumitomo Corp. (TYO:8053) and Sumitomo Mitsui Financial Group Inc. (NYSE:SMFG) (TYO:8316) acquired the plane leasing business of Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) for $7.3 billion. American International Group Inc. (NYSE:AIG) is pursuing several options for ILFC, including an initial public offering.
American International Group Inc. (NYSE:AIG) shares were little changed at $49.42 at 10:38 AM EST.