General Electric's (GE) GECAS Unit To Divest PK AirFinance

The financial services unit of General Electric Company (NYSE:GE) yesterday announced that it agreed to sell its aviation lending business, known as PK AirFinance, to Apollo Global Management, LLC (NYSE:APO) and Athene Holding Ltd. (NYSE:ATH) . Financial terms of the divestment deal have not been disclosed.

General Electric’s shares gained 2.14% yesterday, ending the trading session at $8.11.

It is worth mentioning here that Apollo is a globally renowned alternative investment manager while the other party to the transaction, Athene Holding, engages in providing retirement services.

Divestment Deal

As noted, PK AirFinance is a business within GE Capital’s Aviation Services (“GECAS”) arm. GECAS is a financier and lessor in the aviation industry, offering products, including secured debt financing, operating leases, airframe parts management, purchase/leasebacks, and asset sales and servicing.

PK AirFinance mainly serves financial institutions, airlines, investors, aircraft traders and lessors. It operates in excess of 40 countries. As part of the deal, PK AirFinance’s loan portfolio will be sold to Athene Holding while the aircraft lending platform will be divested to Apollo.

Upon the fulfillment of customary conditions, the divestment of PK AirFinance is anticipated to be completed in the last quarter of 2019.

General Electric’s Restructuring Plans

The above-mentioned transactions are part of General Electric’s plans to reduce exposure to the GE Capital business. In second-quarter 2019, the company disposed of GE Capital’s assets worth $500 million. It seems well-positioned to dispose of assets worth roughly $10 billion in 2019.

Beside this, in June 2018, the company communicated plans to transform itself into a high-tech industrial company, focused on Aviation, Power and Renewable Energy. As part of this plan, it divested GE Transportation to Wabtec Corporation (NYSE:WAB) In February 2019. It will also sell its BioPharma business (part of the GE Healthcare segment) to Danaher Corporation (NYSE:DHR) in the fourth quarter of 2019.

Zacks Rank, Share Price Performance and Earnings Estimates

General Electric currently has a market capitalization of $69.3 billion and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This company’s share price has gained 7.2% so far in 2019 compared with 14.1% growth recorded by the industry.

In the past 60 days, earnings estimates for 2019 and 2020 have been revised upward, reflecting positive sentiments about the company’s growth prospects. Currently, the Zacks Consensus Estimate for General Electric’s earnings is pegged at 64 cents for 2019 and 74 cents for 2020, suggesting growth of 3.2% and 2.8% from the respective 60-day-ago figures.

General Electric Company Price and Consensus