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Ailing AIG puts City Airport stake on runway

The stricken US insurer American International Group (AIG) has agreed to sell part of its minority interest in London City Airport to its joint-venture partner, The Sunday Telegraph has learned.

London City Airpor
AIG is looking to offload some of its assets, such as its airline leasing business Credit: Photo: PA

AIG, which is being bailed out by the US government with an $85bn emergency loan after it ran into financial problems, is to offload a 25 per cent stake in the airport, the fastest-growing in Britain, for about £250m.

The buyer is Global Infrastructure Partners (GIP), whose shareholders are Credit Suisse, the banking group, and General Electric, the US conglomerate.

GIP and AIG Financial Products Corp, the arm of AIG which participated in the deal, paid just under £750m for the airport in December 2006, since when passenger numbers have soared and profits have almost doubled.

Jimmy Kowalishin, the AIG executive who sits on the airport’s board, was unavailable for comment last night. AIG, City Airport and GIP all declined to comment.

This week, the US insurer is expected to put International Lease Finance Corporation, its airline leasing business, up for sale as part of efforts to restore it to financial health.

Other assets likely to be put on the block include its asset management arm. Blackstone, the buyout firm, is understood to be working on the disposal of AIG’s financial products arm while JP Morgan is said to be working on the sale of Transatlantic Re.

It is understood that AIG is keen to hold onto its core insurance, reinsurance and life insurance businesses and its 100 per cent-owned Lloyd’s of London insurer, Ascot Underwriting.

However, it is thought that AIG may have to consider the sale of its Asian business, which would be attractive to rivals such as HSBC, Prudential, Aviva, China Life and ING.

Potential bidders for AIG’s other assets include European insurers, which may have had some exposure to the collapse of Lehman Brothers and AIG, but generally have strong balance sheets. Possible predators are Zurich, Allianz, Axa, Generali, Swiss Re and Munich Re.

A spokesman for AIG declined to comment on the auction list.