The European Commission has approved AerCap Holdings N.V. (‘AerCap’) to acquire GE Capital Aviation Services (‘GECAS’). This follows a review under EU competition law. This was an important regulatory step in the acquisition process, and it is also important because the split between GE and GECAS may permit GECAS lessees to consider PMA in a more favorable light.
PMA has the ability to add value to an aircraft in many ways. One advantage that air carriers have touted is the reliability improvement often seen in PMAs designed in response to air carrier requests. These reliability improvements help improve dispatch rates, reduce unexpected maintenance, and improve safety.
GECAS was less motivated to encourage PMA reliability improvements, because they competed with GE’s own priorities. With the portfolio of assets being bought by Aercap, Aercap will have an opportunity to chart a PMA strategy that optimizes the use of the reliability and safety improvements available through PMA. These reliability and safety improvements can help make the Aercap assets more profitable.
GE will obtain a 46% interest in Aercap, so there is still some opportunity to depress PMA competition but the incentives to use PMA will be different for Aercap. Nonetheless, the EC concluded:
“In addition, given that GE is an aircraft engines manufacturer, the Commission examined the vertical aspects arising from the transaction, and concluded that it is unlikely that GE would use its minority shareholding in AerCap to affect competition for aircraft engines, aircraft leasing or engine leasing.”
The same EC decision also authorizes Aercap to acquire GE’s 50% interest in Shannon Engine Support Limited (‘SES’) in Ireland. Safran retains 50% interest in SES.
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