The American International Group is hoping that a change in bidders for its big aircraft leasing unit, the International Lease Finance Corporation, will finally lead to a sale.
The insurer is in discussions with AerCap, another aircraft lessor, over a potential sale of the business for about $5 billion, a person briefed on the matter said Thursday. Talks are continuing and could still fall apart, though a deal could be announced as soon as next week.
Should A.I.G. agree to a deal with AerCap, it would complete an effort to divest its aircraft leasing unit â€" popularly known as ILFC â€" that had stalled for much of the past year. Behind the sales effort is A.I.G.’s campaign to shed nonessential businesses and focus on its core insurance operations as part of its revival. Among the other divisions it has sold are two big international life insurance businesses and a consumer finance arm.
ILFC has long been considered one of A.I.G.’s top holdings. It is one of the biggest aircraft lessors in the world: The firm owned 913 planes as of Sept. 30 and had commitments to buy 338 more.
But it has long been considered a noncore business, especially given the large amounts of capital needed for its business. The company reported a $599.2 million loss for the nine months ended Sept. 30, largely because of accounting charges tied to the value of its aircraft.
Just over 12 months ago, the insurer announced that it planned a majority stake in ILFC to sell the business to a group of Chinese investors. But the consortium has struggled to put together the necessary financing, missing a mandatory payment this spring.
While A.I.G. gave the group more time, the Chinese bidders lost exclusive bargaining rights for ILFC this summer, freeing the insurer to pursue other potential buyers.
Representatives for A.I.G. and AerCap declined to comment. News of the discussions was reported earlier by Bloomberg.
