General Electric on Wednesday said it will sell its jet-leasing business to rival AerCap in a deal valued at $30 billion, a move that would create a massive lessor as the aviation industry struggles through the Covid-19 pandemic and GE moves to reduce its debt load.
The deal would give GE a 46% stake in the combined company and generate about $24 billion in cash. GE Capital Aviation Services, or Gecas, is a part of GE Capital, which has been whittled down since the financial crisis. When the deal closes, which GE expects to take nine to 12 months, GE Capital will be folded into the larger corporate structure, no longer broken out as a separate unit in financial reports.
GE said it would reduce its debt by about $30 billion after the transaction closes using proceeds from the deal and existing cash.
GE were down more than 2% premarket trading while AerCap’s were up around 1%.
″This is the right time to further accelerate our transformation,” GE CEO Larry Culp said in a deal announcement. This action will enable us to significantly de-risk GE and continue on our path to being a well-capitalized company.
Both companies are large customers of both Boeing and rival Airbus. A combination of the two into what analysts describe as the world’s largest aircraft lessor will give them the ability to press for better aircraft prices, just as Boeing and Airbus are trying to find their footing in the pandemic.