Air Transport World

Bad times are good times for ILFC.

Willie Sutton robbed banks, he said, "because that's where the money is." International Lease Finance Corp., Beverly Hills, Calif., leases commercial jet transports, rather than operating them with the same logic. The money is in leasing.

ILFC is one of those classic, immigrants-make-good-in-the-U.S. business stories. The three founders--Chairman and Chief Executive Officer Leslie Gonda, 65; President Steven Udvar-Hazy, 39, and Executive Vice President Louis Gonda, 36--all are Hungarian refugees. However, none was in rags when he came to the U.S. The senior Gonda, in fact, was quite successful in Latin America, where he lived between leaving Hungary and coming to the U.S. His son, Louis, and Udvar-Hazy met during their university years in Southern California.

The two younger men became interested in aviation and worked in various aspects of the field before going into business together. They convinced Leslie to join them. Each one invested $50,000 and founded ILFC in 1973. The original plan was supposed to involve two or three aircraft transactions a year, enough to enjoy themselves while each pursued other interests.

Last month marked the 12th anniversary of the first ILFC aircraft deal. In 1973 the company bought a McDonnell Douglas DC-8-51 from then-National Airlines Chairman L.B. Maytag, himself a master of equipment trading, for $2.25 million. The plane then was leased to aeromexico for four years.

Unique in the business

By the end of this year, ILFC will have accumulated close to $600 million worth of aircraft assets. Its lease fleet totaled 33 as of August 1: seven Boeing 737-300s, 14 737-200s, six McDonnell Douglas MD-82s, two DC-10-300s, 14 737-300s will be added by yearend.

Of the 33 planes, only three were not under operating leases. Despite the word "finance" in its name, ILFC normally won't write finance leases. That makes it unique in the leasing business. ILFC owns the planes, uses the tax benefits from the planes, uses the tax benefits from the planes and sell the aircraft when they are no longer profitable to lease on a medium-term basis. They are sold when there is still sufficient residual value to claim a good price, which is always more than ILFC avoids not only lease-financing, but also maintenance, crew and other services provided by competitors such as Guinness Peat Aviation. Says Chairman Gonda: "We don't even own a screwdriver." This does not indicate a casual attitute toward assets. …

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