When AIG first went to the government for rescue funding, the insurer had said it would pay the proceeds of the emergency loans from the sale of assets, meaning some of its subsidiary businesses. As we now know, that effort did not bear fruit.
One unit that was a candidate for sale, AIG’s aircraft lease unit, ILFC. However, in a reversal, instead of IFC possibly being a source of funding for the troubled parent, where the credit default swaps sit, ILFC now says it may need a bailout of its own.
Note earlier news reports had said the government might need to assist a buyer of the aircraft lease operation.
American International Group Inc.’s plane-leasing unit said it may not be able to survive without help from its parent company or new access to credit….
AIG, which received a government bailout valued at $182.5 billion, is trying to find a buyer for ILFC as the unit loses customers because of “financial stress” in the airline industry. Paula Reynolds, AIG’s chief restructuring officer, has said federal financing may be available to the buyer of the firm to help prop up the unit after a sale.
AIG said earlier this month it will need to “provide support” with asset sales or funding because ILFC’s operations are “inadequate” to meet debt obligations for 2009. The regulatory filing today says New York-based AIG has committed to support the plane unit’s short-term liquidity needs until a sale or the end of March 2010…
AIG and the government agreed that should a qualified buyer for ILFC be found, “there would be some form of backstop financing available through the Fed in order to facilitate that sale and carry the new owners with some secured financing over at least the interim period,” Reynolds said March 2 on a conference call. “It is still possible actually to move forward on that transaction.”
ILFC earned $703.1 million in 2008, a 16 percent increase from a year earlier, as the unit added 55 planes to its fleet and revenue from renting flight equipment rose, the company said today. Fourth-quarter profit fell 34 percent to $115 million, and 12 of ILFC’s customers filed for bankruptcy last year.