CHICAGO - The CEO of International Lease Finance Corp, the aircraft leasing company owned by insurance giant American International Group (AIG.N), is in early talks to buy a portion of ILFC's aircraft portfolio and start a new leasing company, the Wall Street Journal reported on Saturday.

Any potential deal with Steven Udvar-Hazy is at the preliminary stage, the paper said referring to the CEO, citing people familiar with the matter.

A spokeswoman for AIG was not immediately available to comment.

The deal would require government and AIG approval, but proceeds would go to pay down AIG's debt obligations tied to its government bailout, the Journal said. AIG needs to repay more than $80 billion in U.S. bailout loans.

Hazy and his management team plan to stay on at ILFC, which is one of the biggest customers of Boeing Co (BA.N) and Airbus (EAD.PA), for now and a mid-September AIG board meeting is scheduled to discuss the potential deal, the Journal said. (Reporting by Ben Klayman, editing by Vicki Allen)