General Electric said on Wednesday that it had reached an agreement to sell its jet leasing business with rival AerCap in a deal valued at $ 30 billion, a move that would create a huge landlord while the aviation industry struggles with Covid-19 pandemic and GE moves to reduce its debt burden.
The deal would give GE a 46% stake in the combined company and generate about $ 24 billion in cash for the conglomerate and further reduce it. GE Capital Aviation Services, or Gecas, is a part of GE Capital, which has been reduced since the financial crisis. GE said it would reduce its debt by about $ 30 billion after closing the deal with the deal’s product and existing cash.
GE’s shares rose 3.5% in the pre-market after the deal was announced, while AerCap’s shares changed little.
Both companies are major customers of Boeing and rival Airbus. The aircraft owned, serviced or ordered by Gecas amount to 1,600, and had assets worth $ 35.86 billion at the end of 2020. AerCap owned, managed or ordered around 1,330 aircraft at the end of last year with active assets in the $ 42 billion, according to regulatory records.
Irish AerCap, whose shares are traded on the NYSE, had a market capitalization of nearly $ 7.27 billion at the close of Tuesday. Its shares have risen 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 posted a loss of $ 786 million, compared with a profit of $ 1.03 billion a year earlier, according to GE’s annual report. AerCap posted a net loss of almost $ 299 million last year, from a profit of more than $ 1.1 billion in 2019, through a profit of $ 28.5 million in the fourth quarter.