Aircraft-leasing firm replaces chairman
Steven Udvar-Hazy has been succeeded as chairman of International Lease Finance Corp., a move that analysts said eliminates a potential conflict of interest in his bid to buy back a portion of the aircraft leasing business that he co-founded and grew into one of the world’s largest.
Udvar-Hazy, who retains the title of chief executive, was quietly succeeded as chairman by Douglas Steenland, former president and chief executive of Northwest Airlines. ILFC did not announce the move, which took place last month.
It has fueled rumors that Udvar-Hazy will soon leave the Century City company he co-founded in 1973, and start a rival business. He sold the company to insurance giant American International Group Inc. in 1990 but stayed on to manage it. Steenland is on AIG’s board of directors.
The sale to AIG made Udvar-Hazy a billionaire and one of the richest men in Los Angeles.
For about a year, Udvar-Hazy has been looking to acquire about 10% of ILFC’s aircraft portfolio for roughly $4 billion with backing from a group that includes private equity firms Greenbriar Equity Group and Onex Partners, according to reports. ILFC owns about 1,000 passenger jets that it leases to airlines.
But AIG, ILFC’s parent company, appears to be reluctant to sell amid the depressed market. With air travel slumping, the demand for and the price of aircraft have dropped sharply. Before the downturn, ILFC -- one of the biggest buyers of both Boeing Co. and Airbus aircraft -- was one of AIG’s more profitable units.
The sale of ILFC would come at a time when AIG needs to unload assets to repay the $182.5 billion in bailout money it received from the federal government. The bailout was the largest ever.
“AIG doesn’t seem to be actively marketing ILFC for sale in its entirety,” said Philip Baggaley, senior transportation credit analyst at Standard & Poor’s in New York. “It looks like they plan to sell when the aviation and capital markets improve, which could be a period of years.”
On Monday, S&P cut ILFC’s credit rating to the lowest investment-grade level, BBB-minus from BBB-plus.
“Uncertainty over ILFC’s eventual ownership, its potential need to sell aircraft at a loss, and a reported potential departure of its co-founder and CEO Steven Udvar-Hazy to start up a new aircraft leasing company, have somewhat diminished the company’s long-term competitive position,” S&P said in a statement on the downgrade.
ILFC referred questions to AIG, which declined to comment.
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latimes.com
