Given that civil aviation has been a welcome good news story of the financial crisis, it has always been an anomaly that International Lease Finance, that titan of the operating lease business, has never been far from the headlines. But ever since its parent company, the insurance giant AIG, had to be effectively nationalised by the US government in 2009 with a $180 billion-plus bailout designed to prevent more financial chaos spreading from the collapse of this too-big-to-fail institution, ILFC has been on the sale block along with AIG's other non-core assets.
Thus the announcement that AIG has negotiated to sell up to 90% of ILFC in a deal valuing the lessor - which owns 960 aircraft - at about $5.3 billion comes as no surprise. At least one analysis, by Wells Fargo, reckons that AIG did well to negotiate a "full price" for the business, given that the book value of its fleet may be generous and that its return on equity trails some peers.
And, while the book value of ILFC's fleet was nearly $35 billion at end-September, $128 million has been written off this year - after $3.3 billion in 2011 and 2010. With second-hand prices weak, especially for eight- to 10-year old aircraft, further substantial charges may be inevitable.
But while the money involved may be a bit of a better trade for one side than the other, what has the deal raising eyebrows is the fact that the buyers, who will get 80.1% of ILFC and an option to buy another 9.9%, are Chinese.
In the short term, the deal will give the new owners instant mass in the operating lease market. Those new owners are a consortium including ICBC, one of the "big four" Chinese state-owned banks, and the China Aviation Industrial Fund, a lessor set up in 2010. ILFC accounts for 14% of the world's leased fleet and owns about 6% of all widebody and narrowbody airliners flying today, according to data from Flightglobal's Ascend consultancy.
Indeed, further out on the horizon, a "local" lessor will provide Chinese airframer Comac with the necessary platform to eventually market its C919 narrowbody. Thus Chinese ownership of ILFC could end up being a meaningful factor in China's bid to break the Airbus-Boeing airliners' market duopoly. With the C919, scheduled to fly in 2014 for service entry in 2016, Comac hopes to break into the single-aisle market dominated by the A320 and 737.
That natural sales channel could also apply to China's attempt to break into the market for narrowbody aero engines. The first C919s will be powered by the Leap engines from CFM International, that hugely successful joint venture between Snecma of France and one of the USA's biggest export success stories, GE. But Avic has its sight set on producing its own engine, and is working with Germany's MTU on a concept called the CJ-1000A.
The potential impact of this sale should not be understated, even though the plan is for ILFC to remain in its Los Angeles offices under the management of chief executive Henri Courpron and president Frederick Cromer. One leasing industry insider puts the prospect of the transaction actually going through at just 50-50, with Boeing and others likely to be very uncomfortable that such a prominent partner might go to China: "For sure there will be lots of lobbying to the White House."
And, adds this source, "Boeing will not be too impressed" that the Chinese would know exactly how much ILFC is paying for aircraft. ILFC owns nearly 300 737s and has more than 100 on order.
Moreover, ILFC was founded in 1973 and is often credited with more or less creating the operating lease industry, so the buyers acquire, at a stroke, invaluable market experience - which is just as crucial as deep pockets for success in aircraft leasing. "The Chinese would gain the 'best in class' knowledge through the purchase," says a leasing source.
The transaction could close in the second quarter of 2013, though it must first clear US and Chinese regulatory scrutiny - which may be no foregone conclusion, as US sensitivity to Chinese acquisition of important assets is running high.
But whether or not the deal passes muster, it should stand as a prime example of how the excesses of the pre-crisis boom years have left the US economy in hock to foreigners. Debtors do not control their destiny.