business

AIG Plane-Leasing Unit Repays $2 Billion Credit Line

American International Group Inc.’s plane-leasing unit repaid the $2 billion credit line drained after the firm lost access to credit markets in 2008, improving financial flexibility as the company seeks to add aircraft.

“We are in a much stronger liquidity position,” Fred Cromer, chief financial officer of International Lease Finance Corp. said in a statement. “This provides our core relationship banks with more flexibility to support us in the future.”

Henri Courpron, named CEO of ILFC this year, said in July that the firm was in talks to buy jets for the first time since 2007 after regaining access to private capital. The Los Angeles- based company, which had been shut off from its usual sources of funding because of downgrades to AIG in 2008, increased liquidity by more than $12.5 billion since March by extending credit agreements, selling aircraft and issuing bonds.

The credit line was created in October 2005 and fully tapped in September 2008, the month New York-based AIG needed a bailout that swelled to $182.3 billion, ILFC said. AIG announced a plan last week to repay bailout funds to the U.S. Treasury Department and Federal Reserve and regain independence.

Bank of America Corp., Credit Suisse Group AG, HSBC Holdings Plc, JPMorgan & Chase Co. and Societe Generale SA are among lenders on the credit line, ILFC said in a 2005 filing. The plane-leasing unit said in August that it lacked “any borrowing capacity” on credit lines as of June 30.

The cost to protect ILFC debt has fallen this year. Five-year credit-default swaps tied to the company have declined to 472 basis points yesterday from 836 basis points on Dec. 31, according to data provider CMA. The contracts typically drop as investor confidence improves.

ILFC has made “significant progress” tapping capital markets this year to raise funding, Standard & Poor’s analyst Christopher DeNicolo said in June.

(Updates with banks in the fifth paragraph.)
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