International Lease Finance says it’s paid back government loan
International Lease Finance Corp. said Monday that it paid back the $3.9 billion it borrowed from the U.S. government, freeing up one of the world’s largest aircraft leasing companies to purchase new planes once again.
But a spending spree isn’t expected any time soon. Rather, the Century City company will no longer have the short-term government debt that had weighed it down ever since its parent, American International Group Inc., received $182.5 billion in federal bailout money in 2008.
“We reacquired our financial freedom,” said Henri Courpron, ILFC’s chief executive.”We feel we’re at the end of the tunnel and back in the open again.”
The aircraft leasing company was able to pay back the money it borrowed under the bailout after it was able to raise $4.4 billion from a bond sale. The bond market had been virtually frozen for the commercial aviation industry amid a slowdown in air travel.
With the airline business on the rise again, the bond sale and paying back the government couldn’t have come at a better time, Courpron said.
After suffering losses of $9.4 billion in 2009, airlines are expected to bounce back with $2.5 billion in profits this year, its first since 2007, according to a recent forecast by the International Air Transport Assn.
Passenger traffic is expected to grow 7% and cargo traffic 18.5% this year, the study said.
That means airlines are going to need more planes to meet the growing demand, Courpron said. ILFC owns about 1,000 planes worth about $40 billion that it leases to airlines.
But the company does not have any immediate plans to ink any big deals, Courpron said, noting that it already has outstanding orders for 115 new planes worth $13.5 billion.
ILFC didn’t announce any new deals at last month’s Farnborough International Airshow in England, one of the world’s largest aerospace showcases, while other leasing aircraft companies ordered nearly $30 billion worth of aircraft.
One of the biggest buyers at the air show was Steven Udvar-Hazy, ILFC’s co-founder and former CEO. Unhappy with being under government control, he left ILFC in February to start rival company Air Lease Corp., also based in Century City.
Udvar-Hazy’s orders were potentially worth $9 billion based on list prices and accounted for a third of all deals at the air show.
Because of new competitors, ILFC is unlikely to get the kind of volume discounts it used to get when it was often the only aircraft leasing company buying dozens of planes at a time, said Richard Aboulafia, aviation analyst with Teal Group Corp., a Virginia research firm. “I’m not sure they can be the market leader they once were.”
But investors seem to think ILFC will be able to retain its share of the aircraft leasing market, said Scott Hamilton, an aviation industry consultant and managing director of Leeham Co. in Issaquah, Wash.
“If people are willing to put billions of dollars into a company, it shows that they think it has a pretty bright future,” Hamilton said.
william.hennigan@latimes.com
