The European Commission has approved, in accordance with the EU Merger Regulations, the acquisition of control of GE Capital Aviation Services, from the United States, and joint control of Shannon Engine Support Limited, Ireland, by AerCap Holdings, from the Netherlands. As part of the transaction, GE will receive a 46% stake in AerCap.
“The Commission’s investigation focused on the aircraft and engine leasing markets and revealed that, after the transaction, the combined market shares of the companies will remain modest and that a sufficient number of competitors will remain in the markets,” indicated the Commission through a statement. “Therefore, the transaction is unlikely to create serious competition problems in the aircraft and engine leasing markets,” they continued.
“In addition, since GE is an aircraft engine manufacturer, the Commission examined the issues arising from the transaction and concluded that it is unlikely that GE will use its minority interest in AerCap to affect aircraft engine competition, aircraft leasing or engines,” says the statement.
Despite this, IATA had warned of their concern about this merger. “We understand that the situation of leasing companies is difficult. But combining the two to have a great player in a very dominant position is not good news for us,” had stated the then Director General of IATA, Alexandre de Juniac, in March during an interview conducted by Reuters.
GECAS is one of the largest leasing companies in the world, owner of 1,650 aircraft and helicopters that are operated by more than 200 airlines from 70 countries. Based in Boston, most of its aircraft are Boeing and Airbus, but it also owns regional aircraft. As of December 31, 2020, its assets totaled USD 35.86 billion.
Together, AerCap and GECAS will have a portfolio of more than 2,000 aircraft, 900 engines and 300 helicopters.
60% of the fleet will be made up of single aisle aircraft. Together they also have orders for 493 aircraft, of which more than 90% are Boeing 737 MAX and Airbus A320neo.
New technology aircraft will represent approximately 56% of the combined fleet in service, with the share expected to grow to approximately 75% in 2024.
This is the fourth major acquisition that AerCap has carried out since 2005, adding a new level of pressure on aircraft manufacturers when negotiating new orders and also on the airlines themselves considering that they will now manage around 40% of the aeronautical leasing market .
The agreement announced in March includes a transaction of USD 24 billion in cash, 111.5 million new shares issued by AerCap and USD 1 billion in financial instruments or cash. This brings the total amount of the transaction to USD 30 billion considering the value of AerCap’s shares as of today.
