The embattled industrial conglomerate has been examining different ways to offload the division over the last six months, the report said. Valued at about $7 billion, GE Transportation could become a model for how the company will trim its management load without directly selling assets, the Journal reported.
CEO John Flannery promised shareholders in October that the company would sell $20 billion in assets as a part of its ongoing restructuring. The conglomerate most recently announced plans for private equity firm Veritas Capital to acquire a GE health-care unit for $1.05 billion in cash.
Speaking Wednesday at CNBC's Net/Net event, Flannery said he is focused on restructuring GE around three of its core businesses.
"Let's narrow the scope down to our aviation business, our health-care business, our power business," Flannery said.
Spinoffs could give GE shareholders the opportunity to regain value through the turnaround of a subsidiary. Those familiar with the GE situation told the Journal that such spinoffs may resemble the Dow Chemical and DuPont deal last year, which saw the two companies combine under the expectation that the conglomerate would eventually be divided into three separate companies.
Spinoffs from U.S. industrial companies return twice the value of the broader stock market, Melius Research wrote in a note last month. The firm has a more optimistic forecast for GE's value than many others on Wall Street, with most analysts holding price targets of $11 to $16 on GE's shares.
In morning trading, GE shares edged up less than 1 percent to just above $13. The stock is down more than 56 percent in the past year.
Read the full Wall Street Journal report here.