With a portfolio of over 2,000 aircraft, 900 engines and more than 300 helicopters, with a lessee base of more than 300 customers and a 450-strong orderbook, AerCap is now the largest aircraft leasing company. The lessor announced the final close of its acquisition of GE Capital Aviation Services (GECAS) from General Electric (GE) today.
The aircraft fleet represents approximately 90% of the assets of the combined company. AerCap noted that with its orderbook, new technology aircraft are expected to make up 75% of the aircraft fleet by 2024.
"Completion of this transaction represents an important milestone for AerCap that will generate benefits for our customers, partners, employees and investors for many years to come," said Aengus Kelly, Chief Executive Officer of AerCap. "In GECAS, AerCap has acquired the right business, for the right price, at the right time, as air travel continues to recover from the pandemic and demand for aircraft leasing continues to accelerate."
"Many years of dedication and commitment by AerCap and GECAS's hard-working teams have produced an expanded portfolio comprised of the industry's most in-demand aviation assets. Our scale and capabilities enable us to provide comprehensive, innovative, and tailor-made fleet solutions to our customers that are unrivalled in the leasing industry. I would like to thank Larry Culp and his team at GE and the entire team at GECAS, led by Greg Conlon, for their support and cooperation throughout this process," Kelly concluded.
For GE, the deal marks a significant milestone in the company’s efforts to solidify its financial position and focus on its industrial core.
"The combination of GECAS and AerCap will deliver significant value for both companies and their stakeholders," said H. Lawrence Culp, Jr., Chairman and CEO of GE. "This strategic transaction marks significant progress in GE's transformation to a more focused, simpler, stronger high-tech industrial company, and I'd like to thank AerCap and the exceptional GECAS team for their support in creating the combined company that will better serve customers around the world."
Under the terms of the transaction agreement, GE 111.5 million newly issued AerCap shares, approximately $23bn of cash and $1 billion of AerCap notes. GE now owns approximately 46% of AerCap's outstanding shares.
Over the past few weeks, AerCap has raised a staggering amount of funds. On October 29, AerCap closed its $21bn funding package comprised of: $1.75bn 1.15% senior notes due 2023, $3.25bn 1.65% senior notes due 2024, $1bn 1.75% senior notes due 2024, $3.75bn 2.45% senior notes due 2026, $3.75bn 3.00% senior notes due 2028, $4bn 3.30% senior notes due 2032, $1.5bn 3.40% senior notes due 2033, $1.5bn 3.85% senior notes due 2041 and $500 million floating rate senior notes due 2023. The bonds were rated Baa3 / BBB / BBB- by Moody’s, S&P and Fitch, respectively. The 2032 notes represented the first senior unsecured 20 year bond issuance by an aircraft lessor.
Citi and Goldman Sachs were joint global coordinators and also joint bookrunners with: BoA, Barclays, Credit Agricole-CIB, Deutsche Bank, JPMorgan, Mizuho, Morgan Stanley, RBC, Santander, BNP Paribas, Credit Suisse, HSBC, TD, Truist, Wells Fargo, MUFG, Société Générale and Fifth Third.
On November 1, 2021, AerCap also closed $1bn 1.899% senior notes due 2025, which were issued to a subsidiary of GE.
GE intends to use the proceeds of this transaction to further reduce its debt. The company expects its total debt reduction since the end of 2018 to reach approximately $75 billion. GE’s 46% equity stake in AerCap, valued at approximately $6.6 billion as of October 29, will be used by GE to “monetize as the aviation industry continues to recover”, said the company.
Alongside the deal closure announcement, AerCap has also announced a change in accountants from PWC Ireland to KPMG Ireland. Because GE now owns 46% of AerCap stock, PwC Ireland and AerCap’s Audit Committee determined that “due to GE’s significant influence over AerCap and the continuing services member firms of PricewaterhouseCoopers International provide to GE globally, following completion of the transaction PwC Ireland would no longer be considered independent of AerCap”.
Also in connection with the transaction, AerCap has announced that Jennifer VanBelle has joined its Board of Directors, bringing the number of members serving on AerCap's Board of Directors to 10.
Citi and Morgan Stanley acted as financial advisors and Cravath, Swaine & Moore, NautaDutilh and McCann Fitzgerald acted as legal advisors to AerCap.