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Morgan to Sell Plane Leasing Division

January 31, 2006|From Bloomberg News

Morgan Stanley agreed to sell its aircraft leasing division for $2.5 billion in an effort by Chief Executive John Mack to seek higher returns by shedding a unit that doesn't fit the company's main business.

Terra Firma Capital Partners, run by London financier Guy Hands, will buy Seattle-based AWAS and assume an undisclosed amount of debt, Morgan Stanley said Monday. The move allows Mack to cut by half the $1-billion charge he took last year to write down AWAS to a market value of $2 billion.

Mack, who took over from Philip Purcell seven months ago, decided in August to exit the aircraft business and reverse a Purcell-era decision to spin off the Discover credit card unit.

Mack revamped his board, urged traders to take bigger bets and fired about 1,000 brokers who weren't producing enough profit. He's now in talks to buy a majority of BlackRock Inc. to double the size of asset management.

AWAS, whose 155 planes make it the world's No. 7 aircraft- leasing company, says on its website that it has customers in 45 countries, including carriers such as AMR Corp.'s American Airlines.

Morgan Stanley acquired the 20-year-old company, formerly known as Ansett Worldwide Aviation Services, in 2000. Its jets include Boeing Co. 737s and 747s and Airbus A320s.

"AWAS is a strong business with superb management, but it does not fit our strategy," Mack said in a statement. "We plan to invest the sale proceeds in our core businesses."

Morgan Stanley bought AWAS from News Corp. and Netherlands-based TNT Post Group in 2000.

Hands built up Nomura Holdings Inc.'s buyout business in the 1990s before quitting to run his own firm with Nomura's backing in 2002.

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