Thursday, March 26, 2009

International Lease Finance in trouble

The Wall Street Journal reports that the world's biggest lessor of airplanes, International Lease Finance Corp., says in a recent filing that its financing needs could threaten its survival. ILFC is a (profitable) part of AIG, and AIG's woes have been impairing its ability to borrow money to finance its purchases of planes, which it leases to many of the world's airlines. ILFC owns 955 planes worth $50 billion. It had been using commerical paper for a lot of its financing, but with the cut in credit ratings it has suffered as part of AIG, that market is now closed.

The article speculates that ILFC is too big to fail, as it's the largest customer for both Boeing and Airbus (not to mention the prime supplier of airplanes to numerous airlines). AIG is trying to sell ILFC to raise money to repay their borrowings from the feds.

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