European Union antitrust regulators have authorized the proposed combination of aircraft lessors AerCap and General Electric Capital Aviation Services (Gecas) without concessions, after their analysis of the $30 billion deal showed the transaction would raise no competition concerns. The transaction marks part of an ongoing consolidation in the leasing market and the need for lessors to “bulk up” in the wake of Covid-19.
The companies' combined market shares for aircraft and engine leasing will remain “modest” and a sufficient number of competitors will stay on the markets, the European Commission noted in a statement on Tuesday. “The transaction is therefore unlikely to give rise to serious competition concerns in the markets for aircraft and aircraft engine leasing,” it said. Because GE manufactures aircraft engines, Brussels also examined the vertical aspects arising from the transaction and concluded that the U.S. firm would not likely use its minority shareholding in AerCap to affect competition for aircraft engines, aircraft leasing, or engine leasing.
AerCap and Gecas, the two largest aircraft lessors in the world by portfolio value and fleet size with more than a combined 2,000 planes between them and an additional 500 on order, confirmed the conjectured tie-up on March 10. The leasing giant’s portfolio also includes 900 engines and 300 helicopters.
Under the terms of the deal, AerCap will buy Gecas—including its stake in Shannon Engine Support, the Irish lessor of aircraft engines it jointly controls with France’s Safran Aircraft Engines—for $24 billion in cash and $1 billion in the form of AerCap notes and cash. Additionally, AerCap will issue 115 million new shares to GE, making it the largest shareholder with a 46 percent stake in the combined leasing company. GE will also nominate two directors to the AerCap board. AerCap shareholders approved the deal in May.
GE on Tuesday reiterated it expects the transaction to close by the end of 2021. The deal remains subject to regulatory review in 20 countries. According to GE, the U.S. Department of Justice concluded its review in June.