Milestone Aviation parent company GECAS acquired by AerCap


Milestone Aviation’s parent company, GE Capital Aviation Services (GECAS) will be acquired by Dublin-based lessor AerCap Holdings. It will acquire 100% of the General Electric (GE) leasing business, in a deal valued at $30bn. The companies hope to close the transaction in the fourth quarter of 2021.

The combined company will own and manage up to 2,098 aircraft, according to a review by Cirium. These include 900 owned and managed engines, over 300 owned helicopters and about 300 customers around the world.

Thomas Kaplan, valuations consultant at Ascend by Cirium, said: “Both their leasing business models are already based on economies of scale, so this is a matter of scaling up big-time. AerCap also already have the experience of integrating GECAS-sized giant [International Lease Finance Corporation] ILFC.”

Although slightly smaller in fleet size, AerCap’s portfolio is considerably more valuable than GECAS’s – $29.8bn versus $19.7bn, according to Cirium.

Helicopters will account for less than 5% of AerCap once the deal has closed.

AerCap CEO Aengus Kelly said on an investors call: “We are acquiring the youngest and largest helicopter fleet in the industry. This segment has historically had a strong reliance on the oil and gas sector. The macro outlook for oil and gas is more positive than it has been for quite some time. As we will mark that business down, we expect it to make up 5% of our assets altogether.”

Transaction highlights

GE will receive 111.5m newly issued AerCap shares, $24bn of cash and $1bn of AerCap notes and/or cash.

GE is expected to own approximately 46% of the combined company and will be entitled to nominate two directors to the AerCap Board of Directors, at the end of transaction.

Citi and Goldman Sachs have provided AerCap with $24bn of committed financing for the transaction.

The adjusted debt-to-equity ratio of the combined company is expected to be 3.0x at closing of the transaction. AerCap will maintain its target adjusted debt-to-equity ratio of 2.7x and expects to return to this level rapidly.

Key points

The transaction is said to have the following key points:

  • Over the past four years AerCap and GECAS have sold on average over $5bn of assets per year
  • Narrowbody aircraft will represent about 60% of the combined aircraft fleet
  • New technology aircraft will represent approximately 56% of the combined in-service fleet, expected to grow to about 75% in 2024
  • Attractive order book of 493 new technology aircraft, more than 90% of which are narrowbodies
  • Premier engine leasing business adds revenue diversification and greater ability to provide innovative solutions to our airline customers.

The transaction is subject to approval by AerCap shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions. The combined company will retain the name AerCap, and GECAS will become a business of AerCap.