Fitch Affirms International Lease Finance Corp's Ratings on Potential Sale

  Fitch Affirms International Lease Finance Corp's Ratings on Potential Sale

Business Wire

NEW YORK -- December 10, 2012

Fitch Ratings has affirmed International Lease Finance Corporation's (ILFC)
Issuer Default Rating (IDR) at 'BB'. The Rating Outlook remains Stable. A full
listing of ILFC's ratings follows at the end of this release.

Today's rating action follows the announcement that American International
Group (AIG) has entered into an agreement to sell the majority of its
ownership stake in ILFC to a consortium of Chinese firms. Once successfully
completed, this transaction would conclude a lengthy sale process and resolve
long-standing uncertainty about ILFC's long-term ownership.

Fitch would expect ILFC's management team, fundamental strategy and market
presence to remain largely unchanged for the foreseeable future. Over time,
Fitch will assess the role ILFC's new owners will play in setting the
strategic direction of the company.

Fitch has viewed ILFC's ratings on a standalone basis, without any uplift for
AIG's ownership, since they were downgraded to the current level in February
2010. Inability to complete the proposed sale for regulatory or other reasons
may have a negative impact on ILFC's ratings as a result of increased
strategic uncertainty.

The transaction would value ILFC at $5.28 billion, which is a material
discount to the current book equity value of $7.87 billion. Fitch expects that
the purchase accounting adjustments required under general acceptable
accounting principles (GAAP) may significantly alter ILFC's balance sheet.
However, the economic fundamentals of the business (including operating cash
flows, liquidity, debt obligations and aircraft fleet) are expected to remain
unchanged.

ILFC's ratings and Stable Outlook continue to be supported by the company's
stable operating cash flow profile, funding diversity and sizeable market
position. The main constraints on the ratings include lack of consistent
profitability, uncertainty regarding aircraft residual values and a less
attractive fleet profile than higher-rated peers.

The resolution of the uncertainty regarding ILFC's ultimate ownership is
viewed as generally positive. However, the potential longer-term influence of
the ownership group on ILFC's leverage, growth strategy, lease rates, customer
base, geographic concentration and/or mix of aircraft manufacturers are all
considerations which could impact Fitch's rating or rating outlook for ILFC in
the future. Furthermore, the credit profiles and capital needs of ILFC's new
ownership group will need to be considered in the context of their impact on
the financial resources and flexibility of ILFC.

RATING DRIVERS AND SENSITIVITIES

Many details of the proposed transaction have yet to be finalized and Fitch
will continue to assess the potential changes to ILFC's corporate governance
and long-term strategy. A meaningful change in ILFC's growth plans may
influence Fitch's long-term view of the ratings. Furthermore, any adverse
impact on ILFC's current funding facilities or future availability of credit
may have a negative impact on its ratings.

ILFC's ratings are constrained by the company's lack of profitability over the
past two fiscal years, which has been caused by significant impairment charges
on older aircraft, as well as the weighted average age of its fleet, which is
older than other Fitch-rated peers. In addition to the factors outlined above,
negative momentum for the ratings and/or Rating Outlook could result from
inability to access capital markets to fund debt maturities or purchase
commitments, deterioration in operating cash flow or a permanent increase in
balance sheet leverage.

While positive rating momentum is not likely in the near term, over a
longer-term time horizon, positive drivers would include consistent
profitability, demonstrated funding flexibility, commitment to reduced
leverage levels and a robust corporate governance structure.

ILFC is a market leader in the leasing and remarketing of commercial jet
aircraft to airlines around the world. As of Sept. 30, 2012, ILFC owned an
aircraft portfolio with a net book value of approximately $35 billion,
consisting of 918 jet aircraft.

Fitch has affirmed the following ratings:

International Lease Finance Corp.

--Long-term Issuer Default Rating at 'BB'; Outlook Stable;

--Senior secured notes at 'BBB-';

--Senior unsecured debt at 'BB';

--Preferred stock at 'B'.

Delos Aircraft Inc.

--Senior secured debt at 'BB'.

Flying Fortress Inc.

--Senior secured debt at 'BB'.

ILFC E-Capital Trust I

--Preferred stock at 'B'.

ILFC E-Capital Trust II

--Preferred stock at 'B'.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);

--'Finance and Leasing Companies Criteria' (Dec. 12, 2011);

--'Fitch Affirms Large Equipment Lessor Ratings Following Peer Review; Outlook
Stable' (Sept. 12, 2012).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659834

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Primary Analyst
Ilya Ivashkov, CFA
Director
+1-212-908-0769
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Mohak Rao, CFA
Director
+1-212-908-0559
or
Committee Chairperson
Nathan Flanders
Managing Director
+1-212-908-0827
or
Media Relations
Brian Bertsch
+1-212-908-0549
brian.bertsch@fitchratings.com
 
Press spacebar to pause and continue. Press esc to stop.