CIT Surges on Plan to Seek Alternatives for Aircraft Business

  • Shares jump as much as 14%, most since bankruptcy in 2009
  • Oppenheimer says investors had `clamored for' divestitures

CIT Group Inc. jumped as much as 14 percent, the most since the lender emerged from bankruptcy in 2009, after announcing plans to sell assets including a $10 billion commercial-aircraft business.

The shares climbed to $44.57 at 9:36 a.m. in New York, paring the 2015 decline to 6.4 percent. They dropped almost 17 percent this year through Wednesday, compared with a 5.2 percent decline in the Standard & Poor’s 500 Financials Index.

CIT on Wednesday said it intends to sell lending operations in Canada and China and explore strategic options for a commercial-air business that manages a fleet of more than 350 aircraft. Chief Executive Officer John Thain will step down at the end of March and Director Ellen Alemany will succeed him, the New York-based firm said.

Dropping the air-leasing business was "something investors had long clamored for and Thain had consistently downplayed," Oppenheimer & Co. analysts led by Chris Kotowski said in a note Thursday. “We view the change as a positive for the stock.”

Selling, spinning off or placing the aircraft business in a joint venture would create value for shareholders and help simplify the bank, Arren Cyganovich, an analyst at DA Davidson & Co., said in a note.

“The execution of this strategy will be key to how successful the potential simplification of the ‘new CIT’ will be after yet another restructuring,” Cyganovich wrote. “A simplified CIT with predominantly U.S.-based assets would be easier for regulators to understand.”

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