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General Electric Shares Near 3-Year High on AerCap Plane Leasing Deal Reports

A combined AerCap and GE Capital Aviation Services would control more than 2,600 aircraft and mark another milestone in the ongoing GE turnaround under CEO Larry Culp.

General Electric  (GE)  shares tested a three-year high Monday amid reports that the industrial group will merge its aircraft leasing business with Ireland's AerCap Holdings  (AER ) in a deal that could be worth more than $30 billion.

The Wall Street Journal first reported Sunday that General Electric will combine GE Capital Aviation Services, the largest portion of its GE Capital division and also known as GECAS, with AerCap, the world's biggest jet leasing company. Collectively, the pair have around 2,600 commercial jets in service, store or on order from major carriers around the world. 

The deal would follow GE's 2019 sale of its aircraft financing business to private equity group Apollo Global Management for around $3.6 billon and mark yet another milestone in the ongoing GE turnaround under CEO Larry Culp. GECAS added $120 million in profits to the group's fourth quarter earnings, down $94 million from the same period in 2019.

General Electric shares were marked 3.25% higher in early trading Monday to change hands at $13.92 each, a move that would extend the stock's six-month gain to around 125%. Earlier in the session, GE traded at $14.25 each, the highest since May of 2018.

AerCap's U.S. listed shares, meanwhile, were marked 10.9% higher at $56.36 each.

Last week, Morgan Stanley analyst Joshua Pokrzywinski lifted his price target on GE by $4, to $17 per share -- well ahead of the Wall Street average of around $12.30 -- as he argued the group's March 10 investor day event will mark and "an important catalyst and starting point for free cash flow over next several years", a key metric for the stock's near-term progress. 

He also sees a return to normal profits for GE's aviation division, which has been hit hard by the impact of COVID 19, in 2023, a year which he describes as a 'starting point' for sustainable earnings growth thereafter.