McDonnell May Sell Its Finance Unit : Finance: If the firm sells the Long Beach unit, it could cut in half the $1 billion in deferred federal income taxes that it now carries on its books.

McDonnell Douglas, hard-pressed to reduce debt and generate cash, is considering selling all or part of its Long Beach-based McDonnell Douglas Finance Co., according to the parent firm’s quarterly filing to the Securities and Exchange Commission.

The finance operation earned $100 million on revenue of $619 million in 1990, providing leasing and other financing for aircraft as well as trucks, real estate, medical equipment and a variety of other commercial ventures.

Howard Rubel, a securities analyst at C. J. Lawrence, Morgan Grenfell, said the operation is worth at least $400 million. If McDonnell can find a buyer, it cuts in half the $1 billion in deferred federal income taxes that McDonnell now carries on its books, because that tax liability would be passed onto the buyer.

“This is a meaningful strategic move that fortifies the balance sheet,” Rubel said. “It also says that in selling airplanes today, you don’t need a credit company.”

While the finance company has been run well, Rubel said, another company with a higher debt rating would have a lower cost of money and could operate the finance company more profitably. McDonnell debt has been downgraded four times in recent years.

The finance operation accounted for $2.6 billion of McDonnell’s long-term debt at the end of 1990. The aerospace and other segments of the company held debt of $1.97 billion.

A McDonnell spokesman said the operation employs 879, including 228 at its headquarters in downtown Long Beach.