NU Online News Service, April 15, 11:26 a.m. EST

American International Group said it has arranged to sell off 53 aircraft from its airplane leasing unit to an Australian banking and investment firm subsidiary for $1.987 billion.

The fleet of jets belonging to International Lease Finance Corporation is being made to Macquairie Bank Ltd. for use by Macquarie AirFinance Limited, a leasing operation belonging to Macquarie Group Limited of Sydney.

AIG's transaction is the latest in a series of moves it has made in efforts to pay off the billions it took in government bailout cash to keep from failing in 2008.

Macquarie said the purchase involves "young, modern aircraft on lease to 35 airlines in 27 countries." The weighted average age of the fleet is less than 4 years and the average remaining lease term is more than 5 years.

Boeing 737 Next Generation and Airbus A320 Family aircraft were said to make up more than 70 percent of the portfolio with the remainder of the portfolio in-production widebody aircraft, suited to the operating lease market.

MBL said it will transfer 47 aircraft to Macquarie AirFinance Limited of which Macquarie owns 37.5 percent. MBL will also transfer its right to purchase six of the 53 aircraft directly from ILFC on similar terms to MBL.

Completions of the sales of aircraft, AIG said, are expected to occur over the remainder of the year, subject to customary closing conditions.

The sale will result in a change to the average age of the remaining ILF fleet of 1,000 aircraft from 7.4 years to 7.6 years, AIG said. ILFC, said AIG remains as "the international market leader in the leasing and remarketing of advanced technology commercial jet aircraft to airlines around the world."

Underlining the distress nature of the sale, AIG said aggregate net book value of the aircraft portfolio was $2.316 billion. The firm said that net cash proceeds from the sale will be transferred as the individual aircraft are sold.

Alan Lund, ILFC's president and chief executive Officer in Century City, Calif. said, "ILFC's ability to accomplish significant aircraft sales, together with our recent successes in the financial markets, where ILFC raised over $4 billion in new secured and unsecured financing, strongly demonstrates ILFC's ability to generate liquidity and de-lever its balance sheet."

Robert H. Benmosche, AIG President and CEO, added, "ILFC and AIG are confident in the long term potential of ILFC as a leader in its marketplace. ILFC has a strong, deeply experienced leadership team committed to our customers and the continued future success of the ILFC franchise.

ILFC and AIG have worked hard to enhance ILFC'S long term potential, including its funding requirements, and to manage its portfolio in the best interests of all ILFC constituencies."

ILFC owns a portfolio consisting of approximately 1,000 jet aircraft.

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