Parent Company Posted $7.8 Billion Loss

Sometimes, it's truly frightening how interconnected the global economy is today. Consider the following: International Lease Finance Corp. -- the world's largest lessor of commercial airliners -- may split from parent company American International Group, due to the insurance company's staggering financial slump.

The cause of AIG's misfortunes? A record $7.8 billion quarterly loss, due to losses stemming from insured properties obtained through subprime mortgages, that have since gone into default.

Citing a report in The Wall Street Journal, Reuters reports ILFC is considering a split from AIG due to the insurer's poor performance of late, and fears that red ink could make it harder for ILFC to compete in an increasingly crowded aircraft leasing industry.

AIG has posted losses for two consecutive quarters, and shows little sign of rebounding soon. ILFC reportedly wasn't prepared for the latest news to be quite as bad as it was, according to sources close to the matter.

There are signs, however, the writing has been on the wall. ILFC chief Steven Udvar-Hazy -- who also has a large amount of stock in the company -- went to AIG headquarters in New York recently to express his concerns.

It's possible ILFC could be spun off as a separate entity, or sold to a group of investors. So far, however, no one is commenting publicly.

FMI: www.ilfc.com, www.aig.com