International Lease Finance (ILFC) founder and chairman Steven Udvar-Hazy says discussions are underway with various potential investors to buy back the lessor from parent American Investment Group, with the intention to complete the acquisition by the end of the first quarter next year.
"We are looking to close on the deal by March 2009," he said at the ALTA Airline Leaders Forum in Cancun. His goal is to put together a "sophisticated investment group" to buy out AIG, which was rescued by the US Government in September.
"We are doing road show meetings with large sovereign wealth funds, institutional investors and others from Europe, the Middle East and Asia," says Hazy, who founded ILFC 35 years ago and sold it to AIG in 1990 for $1.3 billion. ILFC management will also take part in the financing group he is seeking to establish.
While the credit crash has made raising funds difficult, Hazy says the appetite for the deal is good. "There are a lot of solid, sophisticated investors that we are talking to, but I can't predict the outcome," he says.
The expected change in ownership of ILFC will have no effect on the fixed rate bonds that ILFC has issued, he says, meaning "we don't have to refinance the whole company".
Hazy explains that, while ILFC has been caught up in the credit problems of AIG, it remains a strong business, posting pre-tax profits of $913 million for the nine months of September, a 39% rise over the same period in 2007. "We have a young fleet and our average leases are in better shape than after 9/11," he says.
As of 30 September ILFC had $5.1 billion of cash giving the company "a good cash position as we go into the recession".
ILFC also has relatively low capital expenditure planned for 2009-10 compared with previous years, says Hazy. From 2002 to 2006 it spend $5-6 billion a year on some 90 to 100 aircraft per year. The number of new aircraft it is taking in 2009 is only 42, with just six being delivered in 2010.
Some customers have run into trouble in 2008, he says: "We saw eight airlines go bankrupt on us this year out of 190 customers." These included Eos, MaxJet and SkyBus, while lease terms were renegotiated on five Airbus A319s at Frontier Airlines. "However all the aircraft that came back unexpectedly have been redeployed," he adds.
For more news from the ALTA Airline Leaders Forum in Cancun see the Airline Business Daily issues from the show
Source: Air Transport Intelligence news
