AIG’s aircraft leasing unit sells 53 planes to Macquarie for $2 Billion
14 Apr 2010
Bailed-out insurer American Investment Group (AIG) is now selling 53 planes to Australia's Macquarie Group Ltd for $2 billion as it continues to sell assets to repay taxpayers after receiving $182.3 billion bailout from the US government.
Sydney-based Macquarie, Australia's largest investment bank will pay $2 billion to International Lease Finance Corporation (ILFC), the aircraft leasing unit of AIG, although the book value of the business is $2.3 billion.
ILFC, headquartered in Los Angeles, California, the world's largest aircraft leasing company acquired by AIG in 1990, has nearly 1,000 Boeing and Airbus jet aircrafts valued at more than $44 billion.
It leases and sells aircrafts to its global airline customers that includes India's Air India, Jet Airways, Kingfisher Airlines, Air Deccan and SpiceJet Airlines.
AIG has been trying to sell some of ILFC aircrafts since February for as much as $3.5 billion and was in talks with several buyers including founder and CEO Steven Udvar-Hazy, who was negotiating with Chinese and Middle East sovereign wealth funds for financing.
"ILFC's ability to accomplish significant aircraft sales, together with recent successes in the financial markets, strongly demonstrates ILFC's ability to generate liquidity and de-lever its balance sheet," chief executive Alan Lund said in a statement.
Macquarie, which has its own aircraft leasing company will expand its fleet by 40 per cent but still far below industry leaders ILFC and General Electric's GE Commercial Aviation.
Greg Ward, chief financial officer of Macquarie Group said, "This transaction leverages Macquarie's existing expertise in asset leasing, demonstrates the strength of our aircraft management capabilities and diversifies the client base of our aircraft fleet."
Of the 53 aircraft, Macquarie Group will transfer 47 aircrafts to its banking unit Macquarie Bank, while it will transfer the purchase rights on the remaining six to Macquarie AirFinance Ltd, which is 37.5 per cent owned by Macquarie.
Macquarie Bank said that the 47 aircraft comprises 70 per cent of Boeing 737 Next Generation and Airbus A320 Family aircraft, which are on lease to 35 airlines in 27 countries.
The weighted average age of the fleet is less than four years and the average remaining lease terms are more than five years.
