By Esha Dey
March 5, 2019
General Electric Co.’s jet leasing business, GECAS, is already being liquidated to support an “order book the company cannot currently afford,” JPMorgan analyst Stephen Tusa wrote in a note on Tuesday.
The analyst said GE has been liquidating a cumulative $15 billion in aircraft over the past 4 years, or 48 percent of the starting aircraft portfolio at that time, “seemingly funding purchase commitments of new aircraft.” Tusa has a neutral rating on GE. Tusa had a sell rating on GE for more than two years, but upgraded the shares to neutral in December.
“We don’t see a problem with portfolio ‘churn’ at face value, however underneath the surface of a highly opaque net income number, we see degradation in core returns, masked by substantial gains that are not being well disclosed, even relative to the past,” Tusa wrote.
The jet leasing unit had recently been in the news on reports that Apollo Global Management was meeting with lenders about a bid for all or part of its GECAS jet-leasing unit, but the company had ruled out the possibility.
GE shares were down 0.4 percent in pre-market trade on Tuesday. The stock has risen nearly 43 percent this year after a year of sharp decline.
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