General Electric has agreed to sell its aircraft-leasing business to Irish rival AerCap in a deal valued at more than $30bn that brings together the world’s two biggest lessors and marks a further step in the dismantling of the US industrial group’s financial arm.

GE will receive $24bn of cash, a stake of about 46 per cent in the combined company and $1bn of AerCap notes and/or cash when the deal is completed. GE will also be entitled to nominate two directors to AerCap’s board.

GE plans to reduce its debt by around $30bn once the deal has gone through, using the proceeds from the sale and existing cash resources. That will bring its total debt reduction to more than $70bn since the end of 2018.

The combined company would dwarf its nearest rivals, prompting the head of Iata, the global airline industry’s trade body, to warn that the deal would add to the “monopolistic situation” airlines face among their suppliers.

“You have two aircraft manufacturers, you have two or three big [equipment manufacturers], monopolistic air traffic control, monopolistic airports and now we have monopolistic lessors,” Alexandre de Juniac told the Financial Times. “Lovely.”

The combined company’s roughly 2,000 jets would represent 7 per cent of the world’s commercial fleet, according to analysts at Jefferies.

One analyst said any antitrust concerns were likely to be diluted by the fact that there are many lessors in the fragmented market, while airlines have other options for financing their aircraft purchases.

The deal has the potential to spark further consolidation as rivals race to catch up, said Phil Seymour, president of IBA, the aviation consultancy.

“It is a bit of a surprise . . . it would almost be like Boeing and Airbus merging,” he said: “I can imagine now the executives at those other lessors will be looking around thinking: how do they keep up with a mega lessor? Is there a need for more consolidation among the other top 10?”

Leasing companies have helped finance air travel’s explosive growth over the past 30 years, but they have suffered as the effects of the Covid-19 crisis have caused airlines to defer payments, cancel new orders and cut back the size of their fleets.

The steady rollout of vaccines has raised hopes for a way out of the crisis, with AerCap among those betting that airlines will increasingly seek the financial flexibility leasing offers as they look to rebuild and cut borrowings.



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