But Will Have Added Autonomy

International Lease Finance Corporation (ILFC), the world's largest aircraft leasing and remarketing company, will remain a core holding of American International Group, Inc. (AIG). Robert B. Willumstad, AIG Chairman and Chief Executive Officer, and Steven F. Udvar-Hazy, ILFC Chairman and Chief Executive Officer, agreed that ILFC should remain part of AIG following a just-concluded business review.

Following his June 15 election as Chief Executive Officer of AIG, Willumstad announced that he would conduct a comprehensive review of AIG's businesses. "Steve Udvar-Hazy and I concluded that a review of ILFC should be a priority so there will not be uncertainty about this important business," he said. "After reviewing an analysis of ILFC's business and the value of AIG as a corporate parent, we both concluded that ILFC should be part of the AIG portfolio.

"ILFC is the leading company in its business and it is in the best interests of both AIG and ILFC for ILFC to be a part of AIG," Willumstad added. "AIG will continue to work with ILFC's leadership on ways to enhance ILFC's business to the benefit of both organizations. ILFC is well positioned with a strong management team, sound customer base, geographic diversification and a market-leading portfolio of aircraft."

As ANN reported, Udvar-Hazy suggested last month his highly-profitable company could spilt from the insurance group, due to AIG's staggering financial slump. AIG posted a record $7.8 billion quarterly loss earlier this year, due to losses stemming from insured properties obtained through subprime mortgages, that have since gone into default.

According to the Wall Street Journal, under terms of the agreement for ILFC to stick by AIG the aircraft lessor will have additional freedoms to conduct its own business affairs. Perhaps most importantly, ILFC employee compensation rates will also be tied to how their company performs... and not how AIG does.

"The discussion and strategic review of our business which we had with Bob Willumstad has resulted in an understanding of the benefits that each of our organizations provides the other," Udvar-Hazy said. "As a result of its relationship with AIG, ILFC can capitalize on attractive business opportunities when others cannot. Together, we have identified opportunities to improve the global competitiveness of ILFC, which we believe will generate additional value both to AIG and ILFC."

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