Emergency landing

30 January 2006 By Rob Cox Follow @rob1cox

CEO John Mack has extricated the investment bank from its troublesome aircraft leasing unit, squeezing a price $500m higher than expected. It was Mack who took the firm into in this business, in his former role as president. By exiting on these terms, he has salvaged some pride.

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Morgan Stanley said it will sell its aircraft leasing business to Terra Firma Capital for $2.5bn in cash, a price higher than the company had originally forecast it would fetch last year.

Terra Firma is run by former Nomura buyout chief Guy Hands in London.

The investment bank took a $1bn aftertax charge in the third quarter to write down the value of AWAS, as the subsidiary is known. As a result of the sale, it will claw back as much as $550m of that.

"AWAS is a strong business with superb management, but it does not fit our strategy,'' Morgan Stanley's chief executive officer John Mack said in a statement. "We plan to invest the sales proceeds in our core businesses.''

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Emergency landing

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