25 January 2010

High Noon At ILFC - Founder To Exit This Week?

According to the Wall Street Journal - ILFC's founder and current CEO Steven Udvar-Hazy will exit the world's largest aircraft lessor (with over 1000 aircraft in its portfolio). Thus ending a storied relationship perhaps as early as this week.

At a time when the dismemberment of the AIG empire of which ILFC was seen as a jewel is having quite a lot of trouble this could not have occurred at a worst time. In December Moody's lowered ILFC's status to effectively junk status.

The company has seen a battle going on behind the scenes with two potential suitors Allied Aviation Services and Udvar-Hazy himself. In recent months, Udvar-Hazy, 63, has been trying to line up financial partners to buy a small part of ILFC's vast aircraft assets.

Udvar-Hazy has been rumoured to acquire about 10% of ILFC's aircraft portfolio for approximately $4 billion with backing from private equity players Onex Partners and Greenbriar Equity.

With the troubles at ILFC above and the general difficulties for the world's airlines, the market for aircraft is not looking too rosy at the moment. With troubles at Airbus becoming more serious it has several programs in trouble. For Boeing the issue of subsidies may come back to bite it. It would be a very interesting proposition if both Boeing and Airbus were disqualified from bidding on the KC135 replacement contract. Could we see IL76s in USAF colours... nah... but I got you thinking....

Cheers

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