General Electric said Wednesday that it has reached a deal to sell its leasing business to rival AerCap in a $ 30 billion deal, a move that would create a massive lease as the aviation industry The Covid-19 pandemic is fighting and GE is moving to reduce its debt burden.
The agreement would give GE a 46% stake in the combined company and generate about $ 24 billion in cash for the conglomerate and reduce it further. GE Capital Aviation Services, or Gecas, is part of GE Capital, which has been reduced since the financial crisis. GE said it will reduce its debt by about $ 30 billion after the transaction closes, using the proceeds from the transaction and existing cash.
GE shares rose 3.5% in premarket trading after the deal was announced, while AerCaps were slightly modified.
Both companies are big customers of Boeing and rival Airbus. The aircraft owned, serviced or ordered by Gecas ranked at 1,600 and had assets worth $ 35.86 billion at the end of 2020. AerCap owned, managed or operated approximately 1,330 aircraft at the end of last year with assets assets worth $ 42 billion, according to regulatory documents.
AerCap of Ireland, whose shares are traded on the NYSE, had a market capitalization of almost $ 7.27 billion at the close on Tuesday. Its shares have risen more than 10 percent this week since the Wall Street Journal reported on Sunday that the two companies were close to a deal.
The Gecas unit last year lost $ 786 million from a profit of $ 1.03 billion a year earlier, according to GE’s annual report. AerCap posted a net loss of nearly $ 299 million last year from a profit of more than $ 1.1 billion in 2019, through which it had a profit of $ 28.5 million in the fourth quarter.