Question mark over AIG plane lease unit

NEW YORK: American International Group Inc���s plane-leasing unit said it may not be able to survive without help from its parent company or new access to credit.

���Without additional support from AIG or obtaining secured financing from a third-party lender, in the future there could exist doubt concerning our ability to continue as a going concern,��� Los Angeles-based International Lease Finance Corp said in its annual report.

AIG, which received a government bailout valued at $182.5 billion, is trying to find a buyer for ILFC as the unit loses customers because of ���financial stress��� in the airline industry. Paula Reynolds, AIG���s chief restructuring officer, has said federal financing may be available to the buyer of the firm to help prop up the unit after a sale.

AIG said earlier this month it will need to ���provide support��� with asset sales or funding because ILFC���s operations are ���inadequate��� to meet debt obligations for 2009. The regulatory filing says New York-based AIG has committed to support the plane unit���s short-term liquidity needs until a sale or the end of March 2010.

The insurer, which the government has deemed too big to fail, was rescued with a federal infusion of capital in September.
AIG and the government agreed that should a qualified buyer for ILFC be found, ���there would be some form of backstop financing available through the Fed in order to facilitate that sale and carry the new owners with some secured financing over at least the interim period,��� Reynolds said March 2 on a conference call. ���It is still possible actually to move forward on that transaction.���

ILFC earned $703.1 million in 2008, a 16% increase from a year earlier, as the unit added 55 planes to its fleet and revenue from renting flight equipment rose, the company said. Fourth-quarter profit fell 34% to $115 million, and 12 of ILFC���s customers filed for bankruptcy last year.

���We have seen airlines cancel routes, eliminate jobs, and retire aircraft,��� ILFC said in today���s filing. ���This financial stress is causing a slow-down in the airline industry which will likely have a negative impact on future lease rates and could begin to influence our future results.���