Steven Udvar-Hazy, the Hungarian born founder and long time Chairman and CEO of ILFC (International Lease Finance Corporation) has retired from the company after being unable to close a deal for a partial buy-back transaction.
Steven (or István or Steve) Udvar-Házy was born in Budapest, Hungary in 1946, but his family fled Hungary not long after the failed 1956 uprising against Soviet occupation and settled down in California. Steve graduated from university at UCLA, already having started an airline consulting firm.
In 1973 (still only 27 years old!!) with a savings of USD 150,000 he teamed up with fellow Hungarians Leslie and his son Louis Gonda to take a USD 1.7 million bank loan to establish ILFC. Their goal was to help out airlines that needed new, more expensive jet aircraft, but didn’t have the capital upfront to purchase them. ILFC would cover the initial capital investment by financing the purchase of the jets and would lease them to the airlines. They started the company with a single aircraft, a used Douglas DC-8, which they leased to AeroMexico and invented an entirely new business: the aircraft operating lease company. Today ILFC owns almost 1,000 modern Airbus and Boeing airliners worth an estimated USD 41.8 billion and is the single largest customer of Boeing and Airbus. The company expects that in the near future nearly half of the worlds fleet will be leased.
But back to the history of the company, in 1983 they went public and have been doing quite well ever since. In 1990, International Lease Finance Corporation was acquired by the America International Group Inc., better known as AIG – for USD 1.3 billion. Besides taking out 8,667 times more money than his original investment, Udvar-Hazy remained Chairman and CEO. The problems came with the beginning of the current economic downturn, when AIG collapsed in September, 2008, and the future of ILFC was in doubt – even though it was well in the black with USD 685.7 million in the first three quarters of 2009. Unfortunately by several large loans it was tied to parent AIG – including federal bailout money.
In September 2009 media reports suggested that Udvar-Hazy was in talks to purchase (back) a share of ILFC with other partners, but the negotiations ended without a deal. Reuters reports claimed that the consortium led by him wanted to buy a 10% stake in ILFC for USD 4 billion. He could easily do this as he’s #305 on the 2009 Forbes Billionaires’ list, with an estimated wealth of USD 2.2. billion.
Unable to arrange the purchase of the aircraft leasing giant that he started, Udvar-Hazy retired from ILFC, on February 5, 2010, last Friday.
AIG announced that Current ILFC President and COO John Plueger, who has held those positions since 1995, will take on the role of acting CEO. Former Northwest Airlines President and CEO Doug Steenland joined the ILFC board last September and quietly replaced Udvar-Hazy as chairman in December, paving the way for his departure. Late in January, 2010, the Financial Times reported that AIG had decided not to divest ILFC for the time being.
“On behalf of AIG, I would like to thank Steve for his tireless service to ILFC. We are grateful for the work he has done to continue ILFC’s leadership in the industry,” AIG President and CEO Robert Benmosche said. “We anticipate selling some ILFC assets in the future, and we continue to review other options…” Probably behind the nice words, the disagreement between the parties may have been quite dramatic if Udvar-Hazy decided (or was asked?) to leave the company he founded…
Employed by ILFC or not, his name could also be familiar to the more than 7 million people who have visited the Steven F. Udvar-Hazy Center near Washington-Dulles Airport since it opened in December 2003. Started with Udvar-Hazy’s generous USD 65 million donation to the Smithsonian Institution’s National Air and Space Museum, the new facility is home to many of aviation’s greatest treasures, including Boeing’s Dash 80, the Concorde, the Stratoliner, the Lockheed Blackbird or the Space Shuttle “Enterprise”. Named after him, the Center now houses 163 aircraft, 154 large space artifacts and more than 1,500 smaller items.