Aercap’s takeover of ILFC to create global aircraft leasing leader with $41bn assets

Irish- and Dutch-based aircraft leasing specialist Aercap is poised to become a global leader in the industry following the takeover of a rival owned by US insurance giant AIG in a near €4 billion deal.

Netherlands-headquartered Aercap, whose key operations are based in Shannon and whose chief executive is Irishman Aengus Kelly, is buying AIG's aircraft leasing outfit International Lease Finance Corporation (ILFC) for $5.4 billion (€3.9bn).

Aercap will pay AIG $3 billion in cash and cover the balance with 97.5 million shares, around 46 per cent of the combined company. It is assuming ILFC's net debt of $21 billion.

Order book
When the deal closes in the second quarter of next year it will create an aircraft leasing group with assets of $41 billion, a fleet of close to 1,400 aircraft and an order book of 385 further aircraft, which its statement valued at around $25 billion yesterday.

The delivery pipeline includes 787s and Airbus SAS A320neos and A350s, for which the newly-merged entity will be able to charge top rental fees. Mr Kelly indicated that most of the new craft that it is acquiring will be leased from its operations in the Republic.

Aercap's share price surged by over 30 per cent in New York on the back of the news, gaining $7.65 to $32.58 by 7pm yesterday. The deal ends a long period of uncertainty for ILFC, which AIG pledged to sell four years ago.

'Strategic opportunity'
Mr Kelly told analysts yesterday the deal would create an industry leader. "This transaction presents a unique strategic opportunity to bring together the outstanding and experienced personnel from both companies and two attractive portfolios of modern aircraft on lease to a highly diversified customer base."

John Higgins, president and chief commercial officer at Dublin-based aircraft lessor Avolon, said the news was good from both an industry perspective and from that of the Republic. "Anything that's good for aircraft leasing is good for Ireland because Ireland is the global leader."