The world’s two largest aircraft leasing companies are combining to create a new financing giant after Ireland’s AerCap finalised a deal worth more than $30 billion to buy the leasing business of General Electric, Trend reports citing Reuters.
The two companies, which tied the knot on Wednesday after days of speculation surrounding a takeover of GE’s leasing arm GECAS, together control more than 2,000 jets, dwarfing rivals.
The tie-up creates easily the largest buyer of jetliners built by planemakers Airbus AIR.PA and Boeing BA.N and will reshape a global air finance industry that has attracted a flood of capital in recent years as investors look for higher returns.
Shares in both New York-listed companies fell about 6% on Wednesday as AerCap prepared to issue new stock to help finance the transaction and GE disappointed expectations of some investors that it would raise its cash outlook.
The deal comes as the independence of several leasing firms has been brought into question by the coronavirus crisis and could trigger further consolidation, analysts say.
It is the latest move by GE Chief Executive Larry Culp to reduce debt and focus the conglomerate on its industrial core of power, renewable energy, aviation and healthcare.
In a phone interview, Culp said the deal would help GE become better capitalised in line with peers and “significantly” derisk its balance sheet, opening up an array of capital allocation options including higher dividends, share buybacks.