GE Falls as Analyst Sees Fresh Warning Sign for Finance Arm

(Bloomberg) -- General Electric Co. shares took another dive on Monday, after Gordon Haskett analyst John Inch said the bankruptcy of helicopter lessor Waypoint Leasing could spell trouble for GE’s finance arm.

Inch highlighted Waypoint’s struggles amid an energy industry pullback in rotorcraft usage because of distress in the offshore oil and gas sector. Lessors have too much capacity and too little demand, Inch wrote in a note to clients.

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GE acquired Milestone Aviation Group for $1.8 billion in 2014, and -- assuming no writedown since then of goodwill -- the business would account for nearly 75 percent of GE Capital’s reported goodwill of $984 million as of the third quarter, the analyst added. “A writedown of its Milestone assets could prove highly material to GE Capital,” he said. He has the equivalent of a sell rating on GE.

In an emailed statement to Bloomberg, GE said Milestone continued to perform well and is expected to be profitable in both 2018 and 2019. It is a part of GE Capital Aviation Services, which is expected to earn $1.2 billion this year, GE said. “Milestone serves a number of industries and its fleet utilization currently stands at approximately 90 percent,” the company added.

GE shares were down 0.3 percent at 3:50 p.m. in New York, after dropping as much as 4.1 percent earlier. The stock is now down 57 percent so far this year.

To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Morwenna Coniam, Scott Schnipper

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