Leasing magnate buys big at air show
Leasing legend Steve Udvar-Hazy kicked off a stampede of savvy financiers into the Farnborough Airshow on Monday, as aircraft lessors opened their cheque books to help pull the industry out of recession.
Hazy, the mastermind of the aircraft leasing industry who recently started afresh after leaving U.S. insurance group AIG, placed a $4 billion order for 51 Airbus A320-family narrow-body planes and said he would buy more planes soon.
Hazy's former arch-rivals at the leasing arm of General Electric weighed in with an order for 100 similar planes -- 60 from Airbus and 40 from Boeing -- worth $8 billion, and delegates said Hazy could lift the combined tally to 200 planes.
Add those to a $9 billion order for 30 Boeing 777 large passenger jets from Emirates and the sleepy southern English aircraft town was buzzing with talk of recovery after riding out the industry's worst ever recession.
Leasing firms, which buy aircraft to be lent out to airlines, are the first to flee the market when traffic and business decline and first to come back when activity improves.
Right now you are looking at a very strong return for those leasing companies. There is a strong demand for these products and they seem to be taking advantage, said Richard Aboulafia, Vice President at Virginia-based consultancy Teal Group.
COMEBACK
Hazy is credited with inventing the specialist industry when he started his own aircraft leasing business in 1973 with his college roommate and only $500,000 in the bank.
His company, International Lease Finance Corp, eventually became the biggest customer of both Boeing and Airbus. Udvar-Hazy sold it to insurer AIG in 1990 for $1.3 billion, only to see it put on sale when the insurer had to be bailed out.
Monday's orders marked the comeback of one of the industry's most influential figures, one who once told Airbus and Boeing how to design their planes.
The orders are part of a tentative upswing in civil aircraft demand, driven mainly by emerging markets and low-cost carriers.
But lingering concerns about the broader economy were keeping some analysts and executives cautious.
Boeing Commercial Airplanes chief Jim Albaugh said he saw an uneven recovery in the global economy with the United States lagging, but was reasonably confident about the impact of the European sovereign debt crisis on the company's business.
CLOSED-DOOR DEALING
Farnborough hosts a massive aviation and arms jamboree every other year, rotating with Le Bourget near Paris.
Much of the real business done or prepared at the show is in invitation-only chalets of defense companies, even though several have reduced their presence to display belt-tightening, and arms makers are bracing for heavy Western defense cuts.
This week's star attraction is the Boeing 787 Dreamliner, which arrived on Sunday, thrilling crowds of enthusiasts.
The aircraft promises greater fuel efficiency and its lightweight materials and innovative design have captured public imagination. But glitches have delayed it more than two years.
Airbus was showing off its A400M military transporter plane and trying to draw a line under its delays and cost overruns.
Pilots nicknamed the plane Grizzly when it took off for the first time and this week workers sprayed grizzly bear paw prints over the Farnborough grounds in a marketing ploy.
Marketing stunts, a feature of air shows, are just the tip of the iceberg in an increasingly bitter feud between top planemakers over trade, defense and jet orders.
Boeing has said a World Trade Organization report last month meant European nations must rectify illegal subsidies paid in the form of loans to Airbus for plane development projects.
The European Union will launch an appeal against the decision this week, two sources familiar with the case said.
The same companies are locked in an ill-tempered contest for a $50 billion deal to supply tankers to the U.S. Air Force and each is likely to press its case to worldwide media at the show.
(Editing by Dan Lalor)
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