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.
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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.