AerCap has today publicly confirmed the rumors that it was looking to buy out the aircraft leasing division of GE, GE Capital Aviation Services (GECAS). The transaction, valued at $30 billion, still needs shareholder and regulatory approval, but should conclude in the fourth quarter of the year. The acquisition will make AerCap the largest leasing firm globally, with more than 2,000 aircraft, putting it in control of around 18% of the leasing market.
AerCap buys GECAS for $30 billion
It’s official. AerCap, one of the world’s largest leasing firms, has bought out GE Capital Aviation Services (GECAS), with an announcement today confirming the transaction. The deal, worth around $30 billion, will be transacted via a combination of 111.5 million AerCap shares, $24 billion in cash and a further $1 billion of AerCap notes or cash.
After the transaction is complete, GE will own around 46% of AerCap and will have two spots on the company’s board of directors. The company hopes to complete the transaction process by the fourth quarter of the year, following shareholder meetings and regulatory approvals.
Aengus Kelly, Chief Executive Officer of AerCap, commented on the announcement saying,
“We are excited about this opportunity to bring together two leaders in aviation leasing. AerCap and GECAS both have industry-leading teams, attractive portfolios, diversified customer bases and order books of the most in-demand new technology assets. This combination will enhance our ability to provide innovative and attractive solutions for our customers and will strengthen our cash flows, earnings and profitability.
“GECAS is a highly attractive business and this transaction continues our strong track record of capital allocation. As the recovery in air travel gathers pace, this transaction represents a unique opportunity that we believe will create long-term value for our investors. This business combination will also strengthen our longstanding partnership with GE Aviation, which we look forward to working with closely in the future.”
This is the fourth major acquisition by AerCap in recent history, following its purchase of debis AirFinance in 2005, Genesis Lease in 2009 and ILFC in 2013. The company says that its experience in large-scale integration will allow it to make a success of this new venture.
The biggest lessor in the world
The two leasing firms’ combined fleet will total 2,098 aircraft across around 200 airlines, making it by far the largest in the world. Out of the two, AerCap has the smaller fleet, but has a newer and more valuable lineup. According to Cirium’s Portfolio Tracker, AerCap’s fleet is worth $29.8 billion against GECAS’ $19.7 billion valuation.
The new, combined entity will now operate some 18% of the world’s leased fleet. That puts it strides ahead of the next-largest leasing company, which Cirium pegs to be Avolon with around 5% of the leased fleet. Between the two companies, outstanding orders with manufacturers total 531 aircraft, mainly new technology types.
As well as more than 2,000 leased aircraft, AerCap will control more than 900 owned and managed engines across 45 customers. Its engine leasing fleet will be concentrated on CFM56 and LEAP engines, powering many of the world’s narrowbody fleet.
GE Chairman and CEO, H. Lawrence Culp, Jr., said,
“AerCap is the right partner for our exceptional GECAS team. Combining these complementary franchises will deliver strategic and financial value for both companies and their stakeholders. Together we’re creating an industry-leading aviation lessor with expertise, scale and reach to better serve customers around the world, while GE gains both cash and upside in the stronger combined company as the aviation industry recovers.”
AerCap plans to continue investing in new technology aircraft in the coming years. It assessed the combined fleet of GECAS and AerCap to be weighted 56% new technology aircraft in December 2020. This number will swing to 75% by December 2024.
As well as this, the lessor plans to increase its narrowbody focus, taking the new combined fleet from 59% narrowbody in December 2020 to 66% by the end of 2024.
This significant merger is set to shake up the leasing market, and will make AerCap the global leader in leased aircraft and engines for many years to come.
