Back in 1967, Allegheny Airlines, now U.S. Airways, was a small business with a big idea — connect dozens of American cities with regular flights. But to do that, Allegheny needed expensive planes. GE came up with a creative way to help: It would buy the jets that Allegheny needed and then lease them back to the airline over the next 12 years.
Today, GE Capital Aviation Services, or GECAS, is one the largest aircraft leasing companies in the world. It has a fleet of nearly 2,000 airplanes in operation or on order, which it leases to 270 airline customers in 75 countries. Its planes have helped fuel the growth of a wave of the low-cost carrier industry. Airlines like JetBlue, Southwest, AirAsia and many others have leased GECAS planes. GE estimates that the unit will earn $1.2 billion in 2018.
In the decades since the first lease, GECAS has expanded to include a variety of aircraft, including regional jets, turboprops, freighters and helicopters. In 2014, the business acquired Milestone Aviation Group, the world’s leading helicopter leasing and financing company, which currently accounts for about 12 percent of the GECAS portfolio. Milestone supports a variety of industries, including offshore oil and gas, search and rescue, emergency medical services, police surveillance, mining and others. With fleet utilization currently at 90 percent, GECAS expects the subsidiary to earn $50 million this year and remain profitable in 2019, despite headwinds facing the offshore oil and gas industry.
In the meantime, the passenger jet segment — GECAS’s main business — keeps climbing. “Aircraft leasing continues to grow in absolute size while maintaining a 40 percent global market share,” Boeing said in its Current Aircraft Finance Market Outlook 2018. “We expect lessors to sustain their growth throughout 2018 while taking advantage of record demand and strong liquidity.
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Above: In his 45-year aviation career, former GECAS marketing executive Pat Bergin has seen the unit grow from a small aircraft leasing business to the owner of one of the world’s largest commercial fleets. Image credit: Pat Bergin. Top image: When AirAsia founder Anthony “Tony” Fernandes started building his airline in the early 2000s, AirAsia had just two jets. Today it has an 180-plane fleet, 7,000 employees and a $2 billion valuation. Images credit: Charles Pertwee/Bloomberg.