LOS ANGELES—International Lease Finance Corp., American International Group Inc.'s aircraft leasing unit, is likely to be the next, and last, major asset to be sold by the insurer, observers say.

But in light of the tough economy, a sale is likely not imminent. It is also possible the unit's planes may be sold off piecemeal, say some observers.

Los Angeles-based ILFC, which owned 993 jet aircraft as of year-end 2009, is seeking to borrow $1.3 billion by syndicating a $750 million five-year loan and a $550 million six-year term loan secured by leases.

According to Moody's Investors Service, $26.7 billion of ILFC's $30.1 billion debt as of Dec. 31 matures by year-end 2013.

ILFC reported $895.6 million in net income in 2009, a 27.4% increase from 2008.

AIG intends to provide support to ILFC through February 2011, according to ILFC's 10-K filing this month. The 10-K states that “without additional support from AIG, or if we fail to obtain secured financing from a third-party lending, in the future there could exist doubt concerning our ability to continue as a going concern.”

However, Christopher DeNicolo, an analyst with Standard & Poor's Corp. in New York, said this does not represent a legal commitment. The Federal Reserve also will have a say on this issue, said Mr. DeNicolo.

Prospects are poor for an immediate sale of the entire unit, say observers. Cliff Gallant, an analyst with Keefe, Bruyette & Woods Inc. in New York, said, “I'm sure if an offer came for ILFC this afternoon...they would do it, but I guess I'm not expecting that any time soon.”

Some observers believe ILFC is likely to be sold piecemeal. In its 10-K, ILFC states it is pursuing potential aircraft sales of up to $3.5 billion.

Stewart Johnson, a portfolio manager with Stamford, Conn.-based investment bank Philo Smith & Co., said, “I'd kind of hoped we'd see a sale of ILFC in one big piece,” but in today's environment, financing “is tough to come by.”

The other issue for ILFC is it had been able to tap AIG's former AAA credit rating, “which gave it a funding advantage,” said Mr. Johnson. “Without that AAA funding advantage, a new buyer would have to adjust profit expectations.”

“Clearly, ILFC is operating in a market where transferring its ownership to another party is difficult,” said Mark L. Wasden, vp with Moody's in New York, noting that AIG's efforts to auction the unit last year failed. “In the meantime, ILFC has some fairly profound liquidity issues that it has to deal with,” he said.

Mr. Wasden said, “By the time AIG gets around to reinvestigating opportunities to sell ILFC again,” which will be after it has sold some assets and has a restructured funding profile, it is likely to be a smaller company. “All of that could make it more attractive” or easier to sell to another party, he said.

He said, however, “I don't see the company selling assets at such levels as to undermine its competitive position. I think through this entire transition, both AIG and ILFC are very interested in maintaining their competitive positions, and so they'll be judicious in terms of what assets they sell and how much they sell.

“But I do think it will be meaningful and it will be necessary in order for the company to generate the liquidity they need in the face of upcoming debt maturities,” Mr. Wasden said.

Clark Troy, Chapel Hill, N.C.-based senior analyst with the Aite Group L.L.C., said another possibility is that former ILFC CEO Steve F. Udvar-Hazy, who retired last month, may arrange the financing to purchase ILFC.

“He built the business and the idea that he is going to walk away from what he built, in an industry in which he's regarded as a major player” is unlikely, said Mr. Troy. “I wouldn't be surprised at all to see within the next six months” that he has assembled a team to offer to buy all or part of ILFC.

Mr. Wasden said it is difficult to estimate at this point how much ILFC ultimately will fetch. “It depends on what the composition of the company is when they decide to sell it,” he said.