Thursday 18 October 2018

Irish aviation finance arm Gecas survives huge GE asset cull

GE’s Veresegyhaz plant in Hungary. It says it will focus on power, green energy and jet engines
GE’s Veresegyhaz plant in Hungary. It says it will focus on power, green energy and jet engines
Donal O'Donovan

Donal O'Donovan

General Electric's major Irish asset will not be included in a massive disposal programme announced yesterday by the US corporation.

GE said yesterday that it will exit the healthcare and oil markets, as CEO John Flannery takes the most dramatic steps yet to pull the fallen corporate titan from a deepening crisis. The shares surged in early trading.

GE's decline was marked this month when the conglomerate was swept out of the Dow Jones Industrial Average, losing the spot it had held for more than a century in the index that aims to reflect the US economy as a whole.

The company will narrow its focus to power, renewable energy and jet engines, GE said in a statement.

It will spin off its medical equipment business and a majority stake in oilfield supplier Baker Hughes, he said.

GE Capital, its financial services arm will shrink as part of the move, including a planned sale of its insurance business.

However, despite some speculation last year that it could be sold, GE Capital Aviation Services (Gecas) it was not among the assets put on the block.

It is understood Gecas's role is seen as complementary to the jet engine business.

Gecas - formed from the former Guinness Peat Aviation (GPA) - has an operational HQ in Shannon and an office in Dublin.

It has a fleet of more than 1,900 fixed-wing jets and helicopters, with assets under management valued at about $45bn (€37.7bn). It employs around 250 people in Ireland.

Overall, GE's changes will fundamentally reshape an icon of American business, which is mired in one of the worst slumps in its 126-year history amid flagging demand for industrial equipment, weak cash generation and an accounting investigation by US regulators.

Once the new Flannery plan is complete, GE will bear little resemblance to the conglomerate that used to count NBC, home-appliances, plastics and a sprawling finance unit among its holdings.

Before the crash here, GE even had an Irish subprime mortgage business.

"GE will be a focused high-tech industrial company that will be easier for investors to follow and measure with a significantly improved balance sheet to support its remaining businesses," the manufacturer said in the statement.

GE plans to reduce net debt by about $25bn by 2020, the Boston-based company said.

Investors backed the plan. Shares surged 8.6pc yesterday to $13.85, the biggest one-day gain since April 2015 and enough to add almost $9bn to the company valuation. (Additional reporting Bloomberg)

Irish Independent

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