GE Planning to Sell its Aviation Leasing Unit
2019-01-24 11:11 Thursday
General Electric is badly in need of cash to fill a $20 billion funding gap. Reports indicate that GE will sell its $40 billion aviation leasing unit, GECAS, which is the world's top lessor by the number of aircraft. GECAS owns or services a fleet of nearly 2,000 aircraft, according to the company's website.
The rumored sale could raise considerable capital for cash-strapped GE. The iconic American industrial company has been questioned by Wall Street about its liquidity. Apollo Global Management LLC is working to line up financing to buy GE's jet-leasing unit.
As a jet engine manufacturer, GE has been remarkably successful in twin-aisle and single-aisle jets. Losing GECAS would weaken GE's ability to persuade jetmakers that it should enjoy exclusive rights on new programs, such as Boeing's long-awaited New Midsized Aircraft (NMA).
Selling GECAS won't immediately change GE's status as the world's biggest jet engine manufacturer, and it won't impact its ability to design and build remarkably efficient and reliable jet engines, but it does signify a weaker position for the company, offering tangible proof that GE's broader corporate problems are having an impact on the company's healthiest and most successful unit. It may take years to play out, but selling GECAS will damage GE's long-term standing in the aviation market.
To boost investor confidence, GE's management has sped up efforts to reduce debt by selling assets. In November, GE announced plans to expedite its sale of a $4 billion stake in the oil-field-services provider Baker Hughes. Additionally, its finance arm, GE Capital, sold a $1.5 billion healthcare-equipment to the US lender TIAA Bank.