AIG May Break Up Aircraft Lease Unit: Report

The insurer is considering whether to break up its International Lease Finance unit if it can't reach a deal to sell the entire unit, a report says.
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American International Group

(AIG) - Get Report

is considering whether to break up its International Lease Finance subsidiary if it can't reach a deal to sell the entire aircraft leasing business, the

Financial Times

reports.

The embattled insurer remains in talks with three private equity groups bidding for ILFC. But progress has slowed in recent weeks as the potential buyers seek improved financing from the New York

Federal Reserve

, which along with the U.S. Treasury, owns 80% of AIG, the newspaper reports, citing people familiar with the matter.

The

Financial Times

previously reported the Fed has discussed with AIG about providing about $5 billion in loans to help assure a sale of ILFC. But the bidders have argued that isn't enough. People familiar with the matter said the Fed is unlikely to meet the calls for extra financing.

Thomas H. Lee Partners and Carlyle Group head one group bidding for ILFC, while Onex and Greenbriar Equity Group lead a second group.

AIG has been trying to sell many of its assets to help it repay the $182.5 billion in financial support it has received from the U.S. government since September.