IN AIG'S HANGAR: A JET TYCOON WITH A GREAT SENSE OF TIMING
Steven F. Udvar-Hazy is not one to let friendship stand in the way of business. Just ask America West Airlines Inc. founder Edward R. Beauvais. Hazy, chief executive of International Lease Finance Corp., helped Beauvais get off the ground in 1983 with three leased Boeing 737s. They became pals, even skiing together. But when America West ran low on funds in 1991, Hazy had no qualms about yanking back ILFC's planes and a $4 million deposit. The next day, America West filed for bankruptcy. Says Hazy: "We benefited from America West's failure and managed to stay out of their bag of snakes."
Good timing and a keen eye for profits have long marked Hazy's career. As a high-flying aircraft lessor, he made his biggest deal ever when American International Group Inc. bought ILFC in 1990 for $1.26 billion in cash and stock. The high price tag raised eyebrows on Wall Street, especially after Iraq's invasion of Kuwait sent airlines into a deep slump. But as travel has slowly recovered, Hazy, who, along with his two co-founders, agreed to stay on for a "generous" pay package based on ILFC's profits, has become one of AIG's most prolific money-makers. Smiles AIG Chairman Maurice R. Greenberg: "ILFC is doing very well. Quite well."
TRAILING SMOKE. Indeed, ILFC now makes up some 10% of AIG's pretax profits, earning $165 million in the first nine months of the year on $516 million in revenues (chart). With money coming in so fast, Hazy is now preparing to cash in on the troubles of Irish archrival GPA Group PLC, which is trying to restructure $3 billion in loans. Hazy suggests that ILFC may pick up some of GPA's aircraft on the cheap. "We don't want to see GPA fail," says Hazy, "but we would like to see them as a second-tier competitor."
Even if he doesn't snare any GPA craft, that won't hurt Hazy's plans to expand his 180-plane fleet, worth $6 billion. He expects in December to wrap up $4 billion in orders for some 90 Airbus and Boeing jets for delivery beginning in 1994. But he's hardly paying top dollar. Sources close to the negotiations with Boeing Co. and Airbus Industrie say ILFC may get discounts as big as 30% off current asking prices for a fleet of soon-to-debut 777s and more.
A Hungarian who fled after the 1956 Soviet occupation of his homeland, Hazy launched ILFC after meeting Louis Gonda while the two were college students in Los Angeles. In 1973, Hazy, Gonda, and his father, Leslie, pooled their savings, bought a DC-8 for $150,000, and leased it to Aeromexico. From then on, Hazy avoided the troubles plaguing GPA and many weakened carriers by building carefully. With airlines expanding in the easy-money 1980s, carriers and ILFC's leasing competitors vied to pay inflated prices for aging planes. But ILFC moved slowly, avoiding weak carriers and sticking with newer aircraft.
With one of the best fleets aloft, Hazy expects ILFC's revenues to surpass $1 billion next year. Yet it has a work force of just 39, the most important of whom clearly is Hazy himself. Like AIG's Greenberg, he's a hands-on manager-dealmaker. Dapper, charming, fluent in Hungarian, English, and Spanish, Hazy pilots the company's Lear jet around the globe in search of business. "He's the best negotiator in the industry," says John Leahy, vice-president of Airbus Industrie of North America, who in 1988 sold Hazy $1.3 billion worth of planes in one order.
In one recent all-night session in a hotel near Gatwick Airport, Hazy orchestrated the takeover of failing European carrier Dan-Air Services Ltd. by British Airways PLC. Arguing BA would get new routes at a bargain price, he persuaded the line to pay off Dan-Air's debts and take over nine ILFC-owned Boeing 737s and three others owned by Citibank.
Hazy also used the opportunity to lease three more planes to BA. With Hazy, keeping ILFC's planes flying is mission No. 1.Eric Schine in Los Angeles