Aercap poised to fly high after snapping up GECAS

GE Capital Aviation Services (GECAS) is about to come full circle. US multi-national GE created the business from its purchase of the Tony Ryan-founded Guinness Pete Aviation, in the mid-nineties. It is now poised to sell it to Dublin-headquartered Aercap for about $30 billion (€25 billion), returning it to Irish ownership.

The transaction will create the world's biggest aviation lessor, owner of 2,000 jets, 300 helicopters and 900 engines. Aercap has 200 airline customers in 80 countries while GECAS has the same number spread across 75 nations. Aengus Kelly, the Irish group's chief executive, indicated yesterday that there was little crossover between each company's biggest customers.

Aercap will be taking on GECAS’s rather specialised helicopter business as a consequence of the deal. For obvious reasons, the oil and gas industry is the biggest customer for these aircraft, but that has been in decline. However, Kelly pointed out that the sector is recovering. Nevertheless, Aercap says it will mark this business down significantly.

The 900 engines are a mix of the CFM56 and Leap models, made by a joint venture between GE and Safran Aircraft Engines. These are fitted to widely used jets made by Airbus and Boeing.

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In-demand aircraft

But as extensive as these divisions look, the commercial jets still will account for 90 per cent of the enlarged Aercap business. They will be a mix of Airbus and Boeing, about two-thirds will be short-haul aircraft, generally most in demand with airlines.

Approximately 56 per cent of the fleet will be younger, new technology planes. That proportion will rise 75 per cent by 2024 as the company takes in new aircraft and sells on older jets. The newer models emerging from the Boeing and Airbus assembly lines are cheaper to run, primarily because they burn less fuel.

For that reason, airlines like these aircraft. But they will be even more popular as air travel recovers, as carriers will be keen to control costs whatever way they can.

Aercap’s purchase of GECAS anticipates that recovery in air travel. There is no question that this will happen, but it remains to be seen just how it quickly gathers pace.