Udvar-Hazy On His Way Out at ILFC, Differing Opinions on Firms Future

Last Updated Jan 29, 2010 10:37 AM EST

The man who effectively invented the aircraft leasing game, Steven Udvar-Hazy, is out at ILFC, and there are differing opinions about what that means for the business. Is ILFC a salvageable business or is Udvar-Hazy simply jumping off the Titanic? We just don't know yet.

ILFC, as you likely know, is owned by government-bailout posterboy AIG. Until recently, it had been expected that ILFC would be sold off and allowed to attempt to regain its former luster under new ownership. But it now looks like that's not happening, and Udvar-Hazy is taking off.

The chairmanship of the company has already been given to former Northwest exec Doug Steenland, and it's expected that John Plueger will take over as CEO, though it hasn't been made official. Originally, Udvar-Hazy was said to be looking at putting together investors to take ILFC off AIG's hands, but AIG pulled ILFC off the market. But why exactly did they do that?

Clearly, it's not the best time to sell an aircraft lessor. The leasing market is pretty soft right now as airlines continue to show capacity constraint. Japan Air Lines' decision to shed its 30+ 747s will only make things softer at the bigger end of the market. So, might AIG just be waiting for a better time? That's what many think, but not all.

At least one person, Doug McVitie, thinks AIG is "crippled" and nobody is going to want to touch it.

While AIG has needed $180bn or so of taxpayer bailout just to keep it afloat, ILFC is the true basket-case. Udvar-Hazy made it so with his over-aggressive expansion of the portfolio, his 20-year cozying-up to Boeing and in particular Airbus and his fervent belief in his own publicity (and in the Steven F. Udvar-Hazy Center at the Smithsonian Institute, for goodness' sake).
It's true that ILFC has plenty of airplanes that it probably would rather not own right now, but there is certainly something of value there. Maybe AIG will end up selling off pieces as it can or maybe the aircraft market will rebound enough to help them squeeze out from under that debt. At this point, however, Steven Udvar-Hazy won't be involved.