UPDATE 4-AIG unit raises $2 bln in aircraft sale to Macquarie

* AIG’s ILFC will get much needed funding

* ILFC sells portfolio for less than book value

* Macquarie seen buying more planes in depressed market

* Macquarie shares up 0.9 pct, in line with market
(Adds detail on aircraft type)

By Narayanan Somasundaram

SYDNEY, April 14 (BestGrowthStock) – The aircraft leasing unit of
bailed-out insurer American International Group (AIG.N: ) has
agreed to sell 53 passenger jets to Australia’s Macquarie Group
(MQG.AX: ) to raise a much-needed $2 billion in cash.

International Lease Finance Corp (ILFC), a top customer of
Boeing (BA.N: ) and Airbus (EAD.PA: ), said on Wednesday it was
selling the aircraft, mostly 737s and A320s, for below their
book value of $2.3 billion.

The deal follows AIG’s failed efforts to offload the entire
ILFC business as part of a global asset sale programme to pay
back the U.S. taxpayer after a $182.3 billion bailout during
the height of the financial crisis.

For Macquarie Group, the deal hoists it to the top of the
second tier of aircraft leasing with a total fleet of 186,
prompting investors to suggest it will look to expand further
and capitalise on the recovering Asia Pacific air travel

“We see this as a good acquisition given the price, above
average credit quality as called out by the company and the
scalable nature of the business,” Citigroup analyst Wes Nason

“For them it makes sense to have self-sufficient, large
divisions. The deal could mean they are open for expansion,”
said Angus Gluskie, a portfolio manager at White Funds

For a FACTBOX on AIG asset sale progress: [ID:nN08132517]


AIG tried selling the ILFC business but a mountain of debt
at the unit and the challenge to meet its ongoing funding
requirements amid tough capital markets meant a deal was not

Instead it switched to aircraft sales to fund the unit and
had said last month it was looking to sell planes for up to
$3.5 billion.

ILFC founder Steven Udvar-Hazy, who effectively invented
the business of aircraft leasing, left the firm in February
after failing to buy a portfolio of planes for about $4
billion. [ID:nN04104420]

Formed in 1973, ILFC was bought by AIG for $1.3 billion in
1990. As part of AIG, ILFC for many years enjoyed easy funding,
but its access dried up as its parent was brought to its knees
by the financial crisis in September 2008.

“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.


By contrast, investment bank Macquarie is using the global
downturn to pick up assets on the cheap.

It said the deal would not make a major dent in its capital
surplus, sparking talk of further aircraft purchases.

A Macquarie spokeswoman declined to say anything beyond the
statement, citing a blackout period ahead of its earnings

The deal expands Macquarie’s aircraft portfolio by 40
percent, but it remains far from the big league dominated by
ILFC and General Electric’s (GE.N: ) GE Commercial Aviation.

Macquarie said the planes acquired from ILFC comprised
young aircraft on lease to 35 airlines in 27 countries. The
weighted average age of the fleet was less than four years and
the average remaining lease term was more than five years.

Boeing 737 Next Generation and Airbus A320 family aircraft
make up more than 70 percent of the portfolio. The remainder
are in-production widebody planes.

Of the 53 planes acquired, Macquarie would buy 47 aircraft
outright for $1.67 billion in cash and transfer the rights to
buy the remaining six to sister company Macquarie AirFinance
Ltd, which is 37.5 percent owned by Macquarie.

Macquarie’s corporate and asset finance division already
has loans and leases under management of A$13.8 billion, it

Macquarie shares gained 0.8 percent to A$50.40.

Investing Tools

($1=1.076 Australian Dollar)
(Additional reporting by Paritosh Bansal in NEW YORK; Editing
by Mark Bendeich, Jean Yoon and Lincoln Feast)

UPDATE 4-AIG unit raises $2 bln in aircraft sale to Macquarie