Insurance giant American International Group has paused the auction of its aircraft leasing firm, International Lease Finance Corp. (ILFC), as its new CEO reviews the divestiture process, a source familiar with the situation said on Friday.
The new CEO, Robert Benmosche, is responsible for leading AIG in repaying more than $80 billion in U.S. bailout loans while keeping the insurance company stable. Part of that repayment is to come from cash raised from asset sales.
However, the sale of ILFC, which is run by Steven Udvar-Hazy and one of the biggest customers of Boeing Co and Airbus has proved to be a challenge due to its mountain of debt and funding needs.
Benmosche told Reuters this week that the fate of the airplane leasing company was under review. I am looking at ways we can structure this so we can get more value for what that business is today. Remember that we own more than 1,000 commercial aircraft, he said.
We have to look at ways of financing the debt on those planes as we continue to take very good, healthy lease income, he told Reuters.
AIG declined to comment. The source declined to be identified because the talks are private.
The pause in sale of the aircraft leasing arm was earlier reported by the Wall Street Journal on Friday, citing people familiar with the situation.
(Reporting by Paritosh Bansal, writing by Megan Davies and Jonathan Spicer)