General Electric said Wednesday it reached an agreement to sell its aircraft rental business with rival AerCap in a $ 30 billion deal, a move that would create a massive landlord as the aerospace industry struggles to the Covid-19 and GE pandemic will 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 a part of GE Capital, which has been downsized since the financial crisis. GE said it would reduce its debt by about $ 30 billion after closing the transaction with the deal’s revenue and existing cash.
GE shares rose 3.5% in pre-market trading after the announcement of the deal, while AerCap shares changed little.
Both companies are big customers of rival Boeing and Airbus. The Gecas aircraft owned, operated or ordered 1,600 aircraft, and had assets worth $ 35.86 million at the end of 2020. AerCap owned, operated or commissioned some 1,330 aircraft at the end of last year with $ 42 billion worth of assets, according to regulatory records.
Ireland-based AerCap, whose shares are listed on the NYSE, had a market capitalization of about $ 7.70 billion at the close on Tuesday. Its shares have risen more than 10% this week since the Wall Street Journal reported Sunday that the two companies were about to make a deal.
According to GE’s annual report, the Gecas unit earned a loss of $ 786 million last year, due to a profit of $ 1.03 billion the previous year. AerCap posted a net loss of about $ 299 million last year from a profit of more than $ 1.1 billion in 2019, through which it made a profit of $ 28.5 million in the fourth quarter.