20 February 2010

Founderless ILFC Hits Turbulence

This week I took a little detour and a few days off and went to Arizona. I got to indulge myself with some viewing of the Davis Mothan AFB Boneyard. I also tried to get into the Evergreen maintenance facility aka the aptly named Pinal Air Park but was turned away. I even saw an old Pan Am 707 the USAF had purchased. But I digress...

Without the pioneering spirit of its Hungarian born founder and now former leader, ILFC seems to have hit some turbulence.

At the end of last year citing issues of the leadership and the seeming lack of direction by bailout king AIG, Moody's downgraded AIG's bonds to a very low state. This week Fitch's ratings (yes those people who didn't seem to know what was going on before) downgraded ILFC's bonds to junk (BBB from BB status).

In the mean time Steven Udvar-Hazy seems quite far along the comeback trail. Those private equity and venture funds who backed him for his aborted efforts to buyout ILFC from the insurance giant recognize that there is a value in the marketplace for some "re-ordering" of the assets for aircraft. As I have mentioned before, there is an over stuffing of the supply pipeline at the moment. As a result some existing lessors (usually banks) are seeing to monetize their assets and reduce their exposure to the aircraft market. The aircraft manufacturers need to ensure that more orders come in and that they are not left with white tails.

Stay tuned - there will be more

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