AerCap Gets Green Light For Its Merger With GECAS

The European Union has officially given the green light for AerCap’s merger with GECAS. The decision comes after some speculation that the EU might defer the decision or impose conditions before the deal. However, the unconditional approval means few hurdles remain before AerCap-GECAS increase their presence in the leasing market.

Aercap 737 MAX
The merger between market leaders GECAS and AerCap was announced in early March of this year. Photo: Boeing

Ready to go

In a statement yesterday, the European Commission officially cleared AerCap’s purchase and merger with GECAS. The decision came after competition regulators found that the joint lessor would continue to have a modest market share and will allow for other competitors to remain active. Issues over GE’s engine business and 46% ownership in the new company were also dismissed as being unlikely to influence engine purchase decisions.

The approval is unconditional, which means AerCap will not have to reduce its fleet size or make concessions as feared. Now, the $30 billion purchase of GECAS can go through with one of the most significant hurdles out of the way. However, there are still steps remaining before closing.

AerCap GECAS merger
GE will retain a 46% stake in the joint company, along with $24 billion in cash and $1 billion in cash or AerCap notes. Photo: GECAS

According to AIN, GE has confirmed that the US Department of Justice has completed its review of the deal in June. This means the merger is set for completion by the end of 2021, as originally planned when it was announced in March.

Huge

The merger between the world’s two largest lessors will have an impact on the market. The combined fleet size of AerCap will rise to nearly 2,100 aircraft, while its market share will stand at around 18%. This is far ahead of number two Avolon, which operates a fleet of 837 aircraft in total.

However, with the pandemic shaking up the leasing industry, increasing fleet size and consolidation have come to the fore. This has meant the deal has not seen much resistance from regulators and industry players, allowing it to proceed as normal. In total, the deal will require approval from 20 regulators globally before completion.

AerCap A350-900
Both GECAS and AerCap are based in Ireland and will continue operating from there in the future too. Photo: AerCap

The coming months will see the two sides continue to iron out details of the deal and seek approval from other governments. However, with the EU’s green light, the merger is looking in a strong position for completion later this year.

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Demand picking up

Earlier this month, AerCap announced that it signed lease agreements for 51 aircraft in the second quarter of 2021. This included deals for 38 narrowbodies and 13 widebodies, signaling a rebound this year. As lessors globally look to increase their fleets, airlines are coming for new planes too, especially in regions where travel demand has surged due to a fall in COVID-19 cases.

United Boeing 737-800
With airlines already placing massive aircraft orders, lessors will have demand for years to come. Photo: Vincenzo Pace | Simple Flying

For now, the leasing market looks likely to continue to grow at a quick pace despite the pandemic, clocking 8.7% year-on-year growth in 2021. Expect to see GECAS and AerCap account for a large part of that growth.

What do you think about ongoing consolidation in the leasing market? Let us know in the comments!

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