SEATTLE (Bloomberg) - American International Group Inc.'s (AIG) Steven Udvar-Hazy stepped down as CEO of the bailed-out insurer's plane-leasing unit he founded 37 years ago as the parent company prepares to sell jets to help repay debt.

John Plueger, president and chief operating officer, will take over today as acting CEO of International Lease Finance Corp. (ILFC), AIG said in a statement last night. Mr. Udvar-Hazy, who sold the company to AIG in 1990, gave up the chairmanship of the unit to AIG board member Douglas Steenland in December.

ILFC, based in Los Angeles, has been unable to tap its usual sources of funding since the insurer's bailout, forcing AIG to prop up the unit with a $1.7 billion credit line in March and $2 billion in October. Mr. Udvar-Hazy was in talks to buy as much as a $4.5 billion chunk of ILFC's fleet to start a new firm, people familiar with the matter said in October.

"We anticipate selling some ILFC assets in the future," AIG CEO Robert Benmosche said in the statement. "We continue to review other options, including accessing the capital markets through secured debt financing."

Mr. Udvar-Hazy, 63, and Mr. Plueger, 55, declined to comment. Mark Herr, a spokesman for New York-based AIG, also would not discuss the matter.

Private-equity firms Onex Corp. and Greenbriar Equity Group LLC backed Mr. Udvar-Hazy in his bid to start a new company, the people said. ILFC has about 1,000 aircraft in its fleet valued at more than $44 billion.

"Maybe Steve has to actually step out and become an outsider before he can step back in to what's a new, recast organisation," said George Hamlin, president of Fairfax, Virginia-based Hamlin Transportation Consulting. "There's a very strong chance that Steve will stay in the business, but maybe he's got something else entirely in his mind."

AIG is selling assets to repay a $182.3 billion government rescue. The company has struck deals to raise more than $12 billion, divesting a US auto insurer, an equipment guarantor and a Japanese office tower. MetLife Inc., the biggest US life insurer, is in talks to buy a non-US life unit from AIG.

ILFC, the biggest customer for both Boeing Co. and Airbus SAS, has more than $4 billion of debt maturing in the first nine months of 2010. It was cut to the lowest investment-grade level by Standard & Poor's on January 25 on the prospect the insurer may take "several years" to sell the business. Moody's Investors Service cut the company to junk in December on concern that AIG may cut off funding this year.

"The factors that were beating up most of ILFC's portfolio were taking place with or without him," said Richard Aboulafia, an analyst at the Teal Group, a Fairfax, Virginia-based aviation consulting firm. "What he does next will have an impact on perceptions of ILFC's value."

The uncertainty around ILFC's ownership and financing prevented the company from placing any orders last year and weighed on sales at Airbus and Boeing. In prior slumps in air travel, leasing companies increased their pace of buying as airlines scaled back.

As of September 30, ILFC had contracts to buy 125 aircraft from the two planemakers through 2019 with a purchase price of $14 billion. The company had about $31 billion in total debt at the end of the third quarter.

Mr. Plueger has worked at ILFC for 23 years and has been president and COO since 1995, responsible for worldwide sales and marketing efforts and relationships with the manufacturers, AIG said. Mr. Steenland, who will remain non-executive chairman, was CEO of Northwest Airlines Inc. until the carrier was bought by Delta Air Lines Inc. in October 2008, and became a director of AIG in June 2009.

Mr. Udvar-Hazy is among more than 50 AIG managers to leave after the 2008 bailout. Edmund Tse stepped down in 2009 as a senior vice-chairman after 48 years with the firm. Matthew Winter was named by Allstate Corp. in October to run its life insurance business after being AIG's vice chairman of transition planning and administration.

Kevin Kelley left AIG in 2008 to become CEO of Ironshore Inc.