January 24, 2018 / 11:27 AM / 25 days ago

UPDATE 1-GE break-up not on cards, says head of aircraft finance unit

(Adds background; GECAS plans for 2018)

By Conor Humphries

DUBLIN, Jan 24 (Reuters) - General Electric Co is looking at alternative structuring arrangements, not a break-up of the company, the head of its aircraft finance unit, GECAS, Alec Burger said on Wednesday.

GE Chief Executive John Flannery last week said the conglomerate was looking at restructuring options “including separately traded assets” after it announced more than $11 billion in charges from its long-term care insurance portfolio and new U.S. tax laws.

“I would like to say that John’s comments were not looking at breaking up GE, but looking at different structuring alternatives - and there is a difference,” Burger told the Air Finance conference in Dublin, without giving details. “I think his view is also that there will continue to be a General Electric company.”

Flannery has already announced plans to eliminate thousands of jobs and cut $3.5 billion in costs as he tries to solve problems he inherited when he became CEO on Aug. 1, including falling sales of power turbines, a build-up of inventory and declining profit margins in some businesses. His turnaround effort is still likely to take a year or more to play out.

GE’s fourth-quarter $11 billion charge includes $6.2 billion after tax for reevaluation of insurance assets, $3.4 billion for U.S. tax changes and $1.8 billion for impairments of energy financing at GE Capital.

Burger on Wednesday reiterated that GE was unlikely to divest itself from its GECAS, the world’s second-largest aircraft lessor.

“When you compare the stability of earnings, the consistency of earnings and return of capital, that’s definitely not lost on John Flannery, it’s not lost on the board,” Burger said.

GECAS this year aims to increase its portfolio from a value of $43 billion to $44 billion or $45 billion, but it does not have immediate plans for large new aircraft orders, he said.

“Over the last couple of years we have put in significant orders both for new (Boeing 737) MAXs and new (Airbus) NEOs. So I think this is a year when we are in what I would call consolidation mode,” he said.

GECAS plans to deploy between $6 billion and $7 billion of capital this year and would consider acquiring aircraft portfolios from other lessors, he said.

Reporting by Conor Humphries, editing by Louise Heavens

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