Aircraft sale off again

02/02/2010
Reports abound that the sale of AIG’s aircraft leasing unit, ILFC, is off again. Reportedly disappointed by the lack of profit available in closing a sale, AIG has cancelled the sale to a consortium that was led by Steven Udvar-Hazy, co-founder of the unit, a move which could lead to the departure of Udvar-Hazy from AIG. The aircraft leasing unit is dependent on AIG for funding and cash flow, apparently utilising $3.7 billion via AIG’s TARP funding. It continues to require ongoing financial support to purchase new aircraft. For AIG’s part, the offers it has received to date for the aircraft lessor have been unsatisfactory, so why should it sell for a loss? On the other hand, the only reason the lessor has managed to continue is because it has access to government TARP funding at preferential rates, which is a stop-gap bailout in nature, and should not be taken for granted.

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