March 03, 2009

The world's two largest aircraft leasing companies are facing potential funding problems, just when their cash-strapped airline customers need them most.American International Insurance Corp. (AIG) conceded Monday that its International Lease Finance Corp. unit may need to rely on backstop funding from the U.S. government to facilitate a sale - potentially to a consortium of private equity firms and sovereign wealth funds - and meet its obligations this year.

The warning comes amid speculation that General Electric Co. (GE) could still lose its prized AAA credit rating, a move that could cascade down to its General Electric Commercial Aviation Services arm.The 1,000-plus jet fleets of ILFC and Gecas dominate the aircraft leasing industry.The two companies are the largest customers for Boeing Co. (BA) and Airbus, as well as the engines produced by GE's in-house unit, the Pratt & Whitney arm of United Technologies Corp. (UTX) and Rolls-Royce PLC.