New York (
) - According to the
of London the planned sale of part of American International Group's
aircraft leasing unit, ILFC, is off again.
Reportedly disappointed by the lack of profit available in closing the deal AIG has cancelled the sale to a consortium that was led by Steven Udvar-Hazy, co-founder of the unit.
reports that this is expected to lead to the departure of Udvar-Hazy from AIG.
The aircraft leasing unit is dependent on AIG for sufficient cash flow to operate and SNL reports it is currently operating with $3.7 billion in funding from the parent, via TARP funding. It continues to require ongoing financial support to purchase new aircraft ordered by clients.
If true, this failure to sell the unit is symptomatic of the problems faced by AIG in disposing of its assets as it tries to re-focus on its core insurance business. The CEO, Robert Benmosche, is no stranger to controversy having threatened to leave AIG earlier this year.
Benmosche believes that he has the backing of the Obama administration to continue to delay the disposal of AIG assets until a price, satisfactory to him, can be achieved. With the current investigation in Congress as to whether AIG should have received a government bailout at all he may be treading on politically sensitive ground.
How patient will the government be, in this political climate, with AIG's disposal strategy? Pressure is growing for TARP funding to be repaid and AIG is the poster child for main street's anger over bailouts.
Reported by Gavin Magor in Jupiter, Fla.
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Gavin Magor is the senior analyst responsible for assigning financial-strength ratings to insurance companies. He conducts industry analysis and supports consumer products. Magor has more than 22 years of international experience in operations and credit-risk management, commercial lending and analysis. His experience includes international assignments in Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.