Pod Insights How I Built This with Guy Raz Air Lease Corporation: Steven Udvar-Hazy About this episode Before Steven Udvar-Hazy was out of high school, he started working as an airline consultant. You could do that sort of thing back in the 1960’s, if you knew the industry—which indisputably, he did. Born in Communist Hungary, Steven was obsessed with aviation at an early age, memorizing plane serial numbers and schedules for fun. In his early 20’s he started his own small airline in California. But he quickly learned the big money was in aircraft leasing, so at the dawn of the jet age, he started his own leasing company. Today he runs Air Lease Corporation, which has made him a billionaire, and given him the resources to finance the dazzling extension to the Smithsonian’s Air and Space Museum in Virginia - named of course, the Steven F. Udvar-Hazy Center.
This episode was produced by Kerry Thompson, with music by Ramtin Arablouei.
Edited by Neva Grant with research help from Sam Paulson.
You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected] .
See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Transcript 12,000 words · 4 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Guy Raz? Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2 a.m. kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan,
0:46 Guy Raz? build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.
1:32 Guy Raz? Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems. But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned, money that could have gone back into the business. Path B, you pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back
2:16 Guy Raz? on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,
3:00 Guy Raz? new Delta SkyMiles Reserve American Express Card members can earn two Delta Comfort Round Trip flights for travel within the 48 contiguous US states, Puerto Rico, or the US Virgin Islands. Plus, you can earn 50,000 bonus miles towards your next getaway. And who doesn't appreciate an elevated airport experience? Delta SkyMiles Reserve Card members get access to the Delta Sky Club, your pre-flight oasis to recharge, with 15 visits and four one-time guest passes each medallion year when flying Delta together. That's up to $950 in annual value. Value estimate based on $50 per visit rate to purchase additional visits
3:45 Guy Raz? or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the car that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day. And it reminds me a little bit of the founders I talk to on this show, because the best
4:27 Guy Raz? ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port fuel-injected engines. Actual results may vary. Visit mobilefuels.com for details. Hey, it's Guy here.
5:11 Guy Raz? And before we start the show, I recently heard a great business story from the music world. I was interviewing the rapper Macklemore, and he took me back to a time when record labels were offering him millions of dollars. And he had to make a choice, whether to stay independent with more risk and more reward, or take the upfront money and the security that comes with that. To hear how it played out, check out my interview with Macklemore on my other podcast, The Great Creators. Just search for The Great Creators with Guy Raz wherever you listen to podcasts. And now, on to today's show.
5:50 Speaker 01 Running an airline is a miserable thing. It's 24/7 and everything goes wrong. And I said, "The guy that was making money off this project is the guy in Arizona."
6:02 Guy Raz? Not you.
6:03 Speaker 01 Not me.
6:05 Guy Raz? You're losing money on every flight unless it's totally packed.
6:08 Speaker 01 Yeah, or almost say 90% full. And that was a turning point mentally in my life. I was losing money and he's making money.
6:25 Guy Raz? Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
6:37 Guy Raz? I'm Guy Raz, and on the show today, how Steven Udrvarhazy fled communist Hungary as a kid, started two companies worth billions, and became a force in global aviation.
6:55 Guy Raz? You might not know who Steven Udrvarhazy is, but there's a good chance you've flown on one of his planes. That's because around half of all commercial flights happen on planes that are leased, not owned by an airline. And Steven's company, Air Lease Corporation, does a lot of that leasing. It owns more planes than Air France and British Airways combined. And it's a big business, a business that's made Steven Udrvarhazy a billionaire many times over. I first heard of him about a decade ago when I went to one of the most amazing aviation museums in the world. It's called the Steven Udrvarhazy Center, and it's just outside Washington, DC.
7:36 Guy Raz? Inside that museum, there are some of the most historic spaceships and aircraft ever flown. And it was his massive donation that helped finance the museum. Stephen, who also goes by Steve, was actually born in Hungary. But after the Soviet Union invaded the country in 1956, his parents managed to get him and his brother out. As a teenager, Steve would go to airports around Los Angeles and watch planes take off and land. He'd memorize schedules and timetables. And by the time he got to college at UCLA, he was offering his services as a consultant to airlines. This was the dawn of the jet age, and Steve soon realized that the gold wasn't in the gold mines,
8:20 Guy Raz? but rather, it was in selling the pickaxes and shovels. And in his case, owning the planes and charging the airlines to use them. How he made his money is a story of an obsession, an obsession with airplanes that started from an early age.
8:37 Speaker 01 When I was six years old, my father took me to an airshow, which was completely mesmerizing for me as a six-year-old. And there was civilian aircraft, aerobatic aircraft, military aircraft flying and on display. And in living in a communist totalitarian Marxist country, I found that airplanes and aviation was sort of a fascinating dream, almost, to be able to ultimately get away from this communist Marxist country that I was living in.
9:13 Guy Raz? Steve, were your parents political in any way?
9:17 Speaker 01 No, no. My father refused to join the Communist Party, and that did not enable him to progress in his activities. Because if you're not a member of the party, you're not a part of the elite. And so therefore, we lost all of our possessions. My parents had to make do with whatever they could earn. And the Russian army came in and basically retook complete power.
9:49 Guy Raz? So your family eventually decides to get out, to leave Hungary for good. But it was really hard for Hungarians to get out of the country at the time. So what did you do? How did you guys leave?
10:03 Speaker 01 So my father lined up a guide on the Austrian border. Austria was the only country that was a non-communist country with a border.
10:14 Guy Raz? Yeah.
10:15 Speaker 01 We took a train out to the west. Maybe I don't remember exactly which station we got off, but my guess it was about 10 to 15 miles from the border. And then my dad hired this gentleman. I remember had these like big boots to get through the mud. And then he had a horse with a like a wagon. And he took us, my guess is maybe a couple of kilometers from the border. And we start walking. And as we kept walking toward the border, it kept snowing harder and harder.
10:55 Speaker 01 And I remember this guide became more like agitated. He became more and more concerned because there were minefields on both sides of the barbed wire. And we kept going for maybe another half hour or so. And I could already see the opening in the barbed wire fence because other people must have gotten out there. And this gentleman was just increasingly worried. He just made a decision kind of at the last moment. He said, look, this is now, we're risking our lives. You know, one of us is going to get blown up. So my parents were very scared that something might happen. And we turned back.
11:40 Guy Raz? So you had to go back to Budapest, basically.
11:42 Speaker 01 Yes, yes, yes. At that time, we tried to figure out a way to get out.
11:48 Guy Raz? And I think the way your family eventually did get out is essentially you got an exit visa to Sweden, but I mean, it was complicated because I think at the time, the Hungarian government wouldn't allow entire families to leave the country together, right? So your family, you and your brother and your parents, I guess you got passports under separate names?
12:10 Speaker 01 Yes. We kind of went through separate. In those days, there was no TSA-type screening. We went through, and I remember my mother told me when we got dressed in the morning, she says, "Wear three layers of shirts because we're only going to have one bag for each of us." And she said, "Look, your name is Istvan Kutszler," which is my mother's maiden name. And she explained, "Look, that's who you are."
12:39 Guy Raz? Yeah.
12:39 Speaker 01 And we're going to act like we don't even know each other when we're at the airport.
12:43 Guy Raz? That must have been so nerve-wracking for your parents. I can't imagine how scared and how nervous. I can't imagine.
12:52 Speaker 01 But actually, I was looking forward to flying. They were worried about being detained, and I was like, all excited to fly in this Douglas DC-6.
13:01 Guy Raz? Yeah.
13:02 Speaker 01 And fly that four-engine propeller plane, you know, anywhere.
13:06 Guy Raz? How did the Hungarian authorities not catch you? I'm just, were they just incompetent?
13:11 Speaker 01 They were incompetent and probably half-drunk, and they were more interested in the soccer game that was going to take place later that day. And they just, I mean, we were lucky. God was watching over us.
13:23 Guy Raz? I mean, the Hungarians would never have allowed an entire family to leave. Did you, do you remember being at the airport just ignoring your dad and your brother, like, not pretending like you didn't know them?
13:33 Speaker 01 On the way to the airport, my mom kept telling me, "Do not acknowledge your brother." Do not acknowledge your dad, just totally ignore them. Yeah, and and when they get in line, don't don't even get close to them like they're they're a bunch of strangers.
13:49 Guy Raz? I'm just like, because you guys could have been, I mean, your parents could have been arrested.
13:52 Speaker 01 Yeah, and maybe, you know, it could have been ten years in prison or work camp or whatever. But look, this is the quest for freedom that millions of people experienced coming out of Eastern Europe.
14:05 Guy Raz? Yeah.
14:05 Speaker 01 Uh, and I wish more young people today in in America and in Europe would understand that that uh, the socialism, communism, Marxism was not a friendly, you know, desirable place to grow up as a as a as a child. So that that was really a a turning moment when that plane took off and headed north to Denmark. We knew we made it. And so that was really a very emotional experience for me.
14:34 Guy Raz? Yeah.
14:35 Speaker 01 As a twelve and a half year old.
14:37 Guy Raz? I can't even imagine it. Um, so you you stay in Stockholm in Sweden for for a few months. And then I guess around nineteen fifty eight, uh, your family's eventually able to make its way to the US because I guess you're you're like your dad had a sister in New York. And and so you you landed there?
14:58 Speaker 01 Yes, but when we landed at at that time, it was called Idlewild Airport, which is now John F. Kennedy Airport.
15:05 Guy Raz? Yep.
15:06 Speaker 01 And they were friendly, the the officials, you know, stamped your paperwork, everything else. And my my aunt was waiting for us. She had a nice Buick car, which I'd never seen before. I think it was like a nineteen fifty seven Buick. You know, she drove us into Manhattan. And then, once we get into Manhattan, I see all kinds of people that look completely different than where I grew up. There there was all kinds of interesting uh, kaleidoscope of people that I'd never seen before as a twelve year old.
15:43 Guy Raz? Yeah.
15:43 Speaker 01 So it was kind of a culture shock. I didn't speak the language. I knew about ten words. So it was kind of a a shock for a child.
15:55 Guy Raz? So, all right, so your family kind of settles in Manhattan where I guess you initially lived on your mom's salary. She was, she was working as a seamstress, from what I understand. And I guess, I guess you assimilated pretty fast into American culture, right? You went to a Catholic school and, and did you, did you do well there?
16:15 Speaker 01 Yes, yes.
16:17 Guy Raz? And from what I, and from what I understand, you already arrived to the US with this fascination with airplanes, which, which a lot of kids have, you know, at 10, 11, 12 years old. But yours was a little bit more intense. Like, I read that you used to go, just walk, just go to LaGuardia, like, take the subway out there and just watch the planes take off and land and sometimes even, like, get into the control tower.
16:42 Speaker 01 Yes. In the afternoon, I would work at my aunt's office. And then I would tell my parents that I'm going to the library to study. And instead of going to the library or going to my aunt's office, I would take the subway out to Queens. And, and the station was, I don't know, about a mile away from LaGuardia. And at that time, there was no security. And I would talk to the ticket agents, I'd talk to the station managers, I'd go to the American Airlines hangar, which was just left of the terminal. A couple of times, I talked my way into the control tower, saying that I was doing a term paper
17:21 Speaker 01 for school, for science class. And so that's what I would do. And I had a little notebook where I would write in what airline was flying, what kind of plane and where it was going, almost like a little memo of, of airport activity. And I would be out there for like two or three hours. Then I would go back home. And I would never tell anyone I went to the airport. And I was totally obsessed with the different airlines and airplanes. And, and then I would, I would go to the library and dig into it some more. Like, if I saw a certain kind of airplane, I would go to the library and try to get more information on it. So this became almost like a obsession,
18:06 Speaker 01 or a passionate obsession, let's call it. So when I started going to school in America, there was this void in my life because I wasn't into baseball or basketball or American football, whereas a lot of my friends were doing that.
18:24 Speaker 01 So the aviation almost filled that vacuum.
18:27 Guy Raz? Yeah. Did you, and this was obviously the pre-Jet Age, right? These are propeller planes and some of them beautiful planes, Constellations and Corvairs. And did you, I mean, as a kid, right, looking at going to LaGuardia and watching those planes take off and land, did you dream of being a pilot?
18:46 Speaker 01 Yes, yes. In fact, I had a girlfriend. Her name was Erica. And sometimes I would dream that I'm flying a DC-7. And she's waiting for me at the airport somewhere up in New England. And I'm actually this pilot of this DC-7. And I would taxi in in front of the terminal with the window open, the cockpit window open and my arm hanging out. And this young lady would be waiting for me. This is the kind of stuff I would dream about, which is totally, you know, oddball and different. But it was all part of this fascination about aviation.
19:20 Guy Raz? So today, if you're sort of a 15-year-old kid, really obsessed with airplanes and, you know, would go to the airport and check it out, like, you know, it would be cool, but you might be a little bit odd, or, you know, because most kids that age wouldn't do that. But maybe at this time in the mid-'60s, like, air travel was still so new. It was so...
19:43 Speaker 01 More glamorous. It was very glamorous. Yep, yep.
19:46 Guy Raz? Yeah. And so your obsession, like, when your parents are like, "Oh, you know, Steve is, he's really into air. He goes to the airport and just like writes down serial numbers." People weren't like, "Oh, that's a little odd." They would be like, "Oh, cool." I mean, how would they react?
20:01 Speaker 01 My dad sort of felt, "Look, he needs to pursue whatever his passion is." And my mother said, "Why can't you be like a normal person and become a doctor or an engineer?" And that made no sense to me at all.
20:16 Speaker 01 And my dad said, "Let him be a rebel. He's going to be okay." And of course, I didn't tell my parents everything I was doing vis-à-vis aviation because they felt that was taking away from my academics.
20:31 Guy Raz? All right, so your family eventually moves to California, to LA. I think your brother attended UCLA there. So when you, I mean, you continued this in high school? Like you would go to LAX or you'd go to Santa Monica Airport?
20:48 Speaker 01 I'd go to Santa Monica, Burbank. I'd go to LAX all the time. I'd collect all the timetables. In those days, you know, we have no electronic access to schedules. So I would go to all the terminals at LAX, collect all the timetables. I would go to the maintenance area where there was Continental Airlines and Flying Tiger on the west end of LAX. And I would talk my way in there, again, saying I'm doing a term paper, I'm doing something for school. And I just basically pushed my way in. So I was still in high school and there was a small airline based in San Francisco called Pacific Airlines. They were flying these 40-seat small planes.
21:33 Speaker 01 So I became obsessed with this airline because I, in my 16-year-old mind, I thought I could run this airline better than the guys that were running it. So I analyzed their schedule, turned them blue in the face, and they had about 20 airplanes. And I said, with 15 airplanes, I could put together a better schedule than what their schedule was. So I actually put together almost like a spreadsheet of a new schedule, saying, you know, this flight leaves San Diego at 7:05, it flies to LAX, then it goes here, Bakersfield or Fresno. I put this schedule together. The turnaround times were shorter. And I sent it to this president of the airline called Harry White in San Francisco at the
22:18 Speaker 01 airport. And I said, "Look, I'm an airline consultant." I didn't tell him how old I was.
22:24 Guy Raz? I'm a 16-year-old airline consultant?
22:26 Speaker 01 Yeah. And here's a schedule I think is optimized. And I think the airline would be much better operating this type of a schedule than what you have now, the status quo. And he wrote me back a very nice letter saying, "We don't need consultants. Thank you, but we're not really interested in pursuing this." Okay? So it was a real slam because I thought I put all this work in, dozens of hours, and this guy thinks I'm an idiot. So about three or four months later, I'm at LAX collecting schedules.
22:59 Guy Raz? And these are paper schedules?
23:01 Speaker 01 Paper schedules.
23:02 Guy Raz? Like you would just go and pick them up like a brochure?
23:04 Speaker 01 They were like maybe four inches by eight inches.
23:07 Guy Raz? Okay.
23:08 Speaker 01 And you'd fold them out. Anyway, I go to LAX three or four months later. I don't know exactly when I pick up their schedule. I didn't pay any attention to it. I get home, didn't do anything. That weekend, I look at this stupid schedule and you won't believe it. Eighty percent of the schedule is what I sent them.
23:25 Guy Raz? To Pacific Airlines?
23:26 Speaker 01 Yes. At least four out of the five. And I mean, it was like arrive in Redding, California at eight thirteen in the morning and depart at eight twenty eight. That's not something any crazy person would know. It was an exact copy. Not a hundred percent, but at least eighty percent of my schedule.
23:44 Guy Raz? Wow.
23:45 Speaker 01 Was adopted by the airline. So that to me was a turning experience, even though there was no monetary benefit.
23:53 Guy Raz? Hmm.
23:53 Speaker 01 I realized that maybe I could add some value to this industry, that I thought aviation was a growth industry, that I felt that aviation with the jet age. Remember in October nineteen fifty eight, Pan Am had its first flight on a seven oh seven from New York to London.
24:11 Guy Raz? Hmm.
24:11 Speaker 01 And then about half a year later, the Douglas DC eight took the skies with, I think it was Delta, United, National with the first three airlines. Just about this time that I'm translating my passion to some kind of a inquisition into the knowledge of airlines, that's when the jet age began.
24:32 Guy Raz? I have to say, just as an aside, your memory for details is quite remarkable. I've interviewed thousands and thousands of people and you have a very, very good memory of these details. It's amazing. So.
24:45 Speaker 01 Yeah, my wife says I'm crazy that I remember the serial numbers of airplanes we bought in nineteen seventy seven. And I say to her, well, each plane is like a child to me. So I remember them very distinctly.
24:57 Guy Raz? Yeah. You followed your brother to UCLA for college. And I think, I mean, you were there, like, you had a very different experience. But you were at UCLA like around the same time as like Jim Morrison and the guys from The Doors, like, who had a completely different experience and took something different out of it. But you were very single-minded, like, you were there to get your degree and figure out what you were gonna do in airlines.
25:26 Speaker 01 Yes. Remember I told you the story about Pacific Airlines and the schedule?
25:31 Guy Raz? Sure.
25:31 Speaker 01 I had a similar sort of vision about an airline in Ireland called Aer Lingus. And it wasn't about their schedule, it was the hodgepodge fleet that they had of different airplanes.
25:43 Guy Raz? Okay.
25:44 Speaker 01 And I thought I could come up with a streamlined fleet. And I wrote to them and sent them telegrams and stuff like that.
25:52 Guy Raz? Writing to them saying, hey, I think you have too many different kinds of airplanes?
25:56 Speaker 01 Yes, yes, yes. It's a government-owned airline.
25:58 Guy Raz? And this information was not easily, like, there was no internet. Like, you would have to go to the library to find out what planes Aer Lingus had flew?
26:05 Speaker 01 Yes, yes. And get their schedule.
26:09 Guy Raz? Okay.
26:09 Speaker 01 And then do the research and then send them telegrams.
26:13 Guy Raz? Saying, saying what?
26:15 Speaker 01 Without revealing how old I am or anything else.
26:16 Guy Raz? Saying what in the telegrams, like?
26:18 Speaker 01 Well, I set up, I set up a company when I was 19.
26:22 Guy Raz? Okay.
26:22 Speaker 01 It was called Airlines Systems Research Consultants. How do you like that?
26:27 Guy Raz? I like it.
26:28 Speaker 01 ASRC. Airlines Systems Research Consultants.
26:31 Guy Raz? Okay.
26:31 Speaker 01 And I had letterhead made up and everything else. And I took out one of those offices, which is like a P.O. box on Sunset Boulevard in Los Angeles. And so this, this looked like a legitimate consulting firm.
26:44 Guy Raz? Yep.
26:44 Speaker 01 So Aer Lingus, I sent them an outline of what I was thinking. And they said, oh, this, this is actually very interesting.
26:52 Guy Raz? Wait, what were you thinking, that they should, they should have fewer, fewer aircraft types? Okay.
26:57 Speaker 01 Yeah, they, they had, they had Fokker F-27s, they had three DC-4 carveaters that were converted to be able to fly cars across the Irish Channel. It was a hodgepodge fleet. Of airplanes, which I thought was crazy and they were losing a lot of money. So I sent them an outline. They said, okay, this sounds really creative. And they sent me a ticket and it said, come over.
27:22 Guy Raz? Wait, based on this telegram, they sent, because they're thinking, oh, this is a smart consultant from the United States. Let's, and he's, he's, he's just cold proposing this idea. Let's bring him in.
27:33 Speaker 01 Yeah, exactly.
27:35 Guy Raz? Okay.
27:35 Speaker 01 So I flew, I flew to, I flew to Dublin.
27:39 Guy Raz? They send you a flight, they send you a ticket to go to Dublin to.
27:43 Speaker 01 A round trip.
27:44 Guy Raz? Okay. And was there a contractor?
27:46 Speaker 01 On first class.
27:47 Guy Raz? And they were gonna, they were gonna pay you a consulting fee to work with them for some time, basically.
27:51 Speaker 01 But it was not defined. It wasn't defined what the consulting fee would be.
27:55 Guy Raz? Okay. And you were, and by the way, you were how old?
27:57 Speaker 01 Twenty.
27:58 Guy Raz? Okay.
27:59 Speaker 01 Right. So I show up in Dublin.
28:02 Guy Raz? They didn't know this, but yeah.
28:03 Speaker 01 I show up in Dublin, they're in shock.
28:06 Guy Raz? Because you're not barely shaving.
28:08 Speaker 01 Yes. I went to lunch with them for like two hours.
28:11 Guy Raz? Okay.
28:12 Speaker 01 And they were pretty, I would have to say they were pretty impressed. And.
28:19 Guy Raz? Because you knew about their business?
28:23 Speaker 01 Well, one of them said, you know more about our airline than we do. So I really did my homework. I felt if I didn't do my homework and knew my stuff, this would be a bust.
28:34 Guy Raz? Yeah.
28:35 Speaker 01 So they immediately hired me that afternoon and said, we'll pay you $4,000. That was a lot of money then.
28:42 Guy Raz? This is like 1965, 66.
28:44 Speaker 01 Yeah, 66. They said, you can come as often as you want, either from New York or Chicago, we'll give you a ticket. I mean, because the plane was only half full anyway, so it was no big deal. And, and you work on this fleet plan, we send you $4,000. Next day, they wrote me a check, a check in US dollars. They said, when you go home, you can cash the check. So I worked on their fleet plan. And they pretty much followed it.
29:11 Guy Raz? And the plan was basically you were going to say to them, this is what you need to buy. And this is what your fleet needs to look like over the next five years. And that was your basically all you had, not all, but that's what you were gonna do.
29:24 Speaker 01 That was the essence of it. Yep.
29:26 Guy Raz? So, all right, so you have this consulting business and you got this first gig with Aer Lingus. And now you get a second gig with Air New Zealand. How does, what is that gig? What's the story?
29:37 Speaker 01 So here's what happened. I got a, a, a letter from Air New Zealand saying that they planned to sell a Lockheed Electra, which is a four-engine turboprop. And they want to sell that aircraft because they wanted to order an additional DC-8 from Douglas. So they said, if you're interested in this Electra, please let us know.
29:57 Guy Raz? Cause you let them know that you were a buyer looking for a plane.
30:00 Speaker 01 Yes, yes.
30:01 Guy Raz? Okay.
30:01 Speaker 01 Or a broker, an agent.
30:03 Guy Raz? A broker. Okay. Gotcha.
30:04 Speaker 01 So then I found an airline in Alaska called Rivolution Airways. So what I arranged is that I got free tickets again for him, the airline owner in Alaska and myself, to go down to Auckland, New Zealand to inspect this plane and potentially buy it. So we get to, we get to New Zealand. I'd never been there before. These guys have a heart attack when they see me. Cause I was like 21.
30:31 Guy Raz? Okay.
30:32 Speaker 01 21. Okay. The gentleman from Alaska.
30:35 Guy Raz? By the way, did you have a mustache?
30:37 Speaker 01 Yes.
30:38 Guy Raz? You did. Okay. So you looked a little older.
30:40 Speaker 01 My girlfriend at the time wanted me to have a mustache.
30:42 Guy Raz? Yeah. Okay.
30:43 Speaker 01 Okay. So anyway, we get to Auckland. The guy from Alaska, Bob Ree, falls in love with the plane. It's clean. It looks like new. He says, I'm interested, but I also need a spare engine and a spare propeller and some other stuff. So they said, fine, $1,050,000 for the whole lock, stock and barrel.
31:03 Guy Raz? Yep. And was that a good deal at the time? I mean, it seems like.
31:07 Speaker 01 I thought it was a good deal for a quality airplane.
31:09 Guy Raz? Got it. Okay.
31:09 Speaker 01 I still have models of the plane before and after. Anyway, Air New Zealand and I make a deal. They're gonna pay a 5% commission.
31:18 Guy Raz? To you. So you're like the real estate broker?
31:20 Speaker 01 Yeah, 5%.
31:21 Guy Raz? Okay. Pretty good.
31:22 Speaker 01 This is January of 1968.
31:25 Guy Raz? Yeah.
31:25 Speaker 01 Okay. 50 grand. Today, I don't know what's half a million dollars. I don't know what it is. I was still in college. I was, I was like a junior.
31:35 Guy Raz? $50,000 you would get off that in 1968.
31:38 Speaker 01 Yeah, from making one trip and a few telegrams.
31:42 Guy Raz? That's, and as you say, it would be like half a million dollars today.
31:45 Speaker 01 You know how much the hotel cost was in New Zealand? I think it was like $12.
31:49 Guy Raz? That's crazy. So you, I mean, you were making, you were gonna make more money from that one deal than your parents had ever seen in a lifetime.
31:55 Speaker 01 Yes, yes. Okay. And then a few months later, a company called Hughes Air West was, was trying to sell a 727, and I found an airline in Brazil called Cruzeiro. And on that deal, I made $45,000.
32:12 Guy Raz? Wow.
32:13 Speaker 01 And I never even went to Brazil. They came up to California. So anyway, I thought I was smarter than I really was because I was dumb.
32:23 Guy Raz? And now you had $95,000 bucks.
32:25 Speaker 01 Yeah. And I said, I'm gonna take half of that money and start an airline, which is the stupidest thing I ever did. Plus, I bought a Mercedes 280SL, which is a two-seat convertible Mercedes, really jazzy.
32:39 Guy Raz? So you, you, so you're like a, you're like a player now. You're like, hey, I'm rich, I'm a player, I'm 22, I'm gonna buy my son. And, and what did your, by the way, I'm just curious, what did your parents think? I mean, they must have known, they're like, our son has, you know, almost a, you know, $100,000. I mean, that's crazy money.
32:59 Speaker 01 Yeah, yeah. Part-time, part-time. But I was a full-time lifeguard in the summer for the county of Los Angeles. And I loved that job down in Manhattan Beach, Redondo Beach. And I would make probably about $1,200 a month.
33:14 Guy Raz? Yeah.
33:15 Speaker 01 For three months, which I thought was pretty cool. And I had a convertible Mercedes, you know, I was a cool.
33:20 Guy Raz? People must have been like, wow, how does this lifeguard have a convertible Mercedes?
33:24 Speaker 01 I was, I was an oddball. I'm sorry, you know?
33:27 Guy Raz? I mean, it's unbelievable. You have $95,000 from doing-- and you're a student at UCLA.
33:32 Speaker 01 Yes.
33:33 Guy Raz? It's-- I mean, I'm trying to think like today, if you were just a solo person and you wanted to be a consultant for airlines, like, it would be almost impossible to get those gigs because they're corporate. But back then, what, you could just write to some name that was publicly listed and say, hey, I'm a consultant. Do you want to hire me? And it was like that?
33:52 Speaker 01 Yeah. Yeah, now it's KYC. They would have to do a background check. They look on Wikipedia. They would check you out.
33:59 Guy Raz? Request for proposals. You'd have to go through a nine-month process.
34:02 Speaker 01 They want references. Today, it would be a bureaucratic nightmare. It couldn't be done today.
34:08 Guy Raz? Yeah. All right. So you're now flush with $95,000 in cash, and you decide, around this time, to start your own airline.
34:17 Speaker 01 Yeah, exactly. That was the dumbest-- that was the dumbest idea I ever had.
34:25 Guy Raz? When we come back in just a moment, how Steve loses a good chunk of that $95,000, but in the process, figures out a way to make much, much more. Stay with us. I'm Guy Raz, and you're listening to How I Built This.
34:50 Guy Raz? Does your team want a website that looks and feels handcrafted but is still fast to ship? Well, Framer is built exactly for that. With Framer, you design on a visual canvas with responsive layouts, hosting, and a CMS built in, so the work is production-ready from day one. And you can get it done with help from Framer's AI agents. Framer is the AI website builder that helps creators, teams, and businesses ship production-ready sites faster than ever while getting every detail right. Prompt, inspect, edit, and publish in one place at a whole new pace. AI agents and humans work together. The agents bring
35:33 Guy Raz? speed and scale, and people bring taste, judgment, and control. Learn how you can get more out of your site from a Framer specialist or get started building for free today at framer.com/built for 30% off a Framer Pro annual plan. That's framer.com/built. Rules and restrictions may apply. AI isn't just opening new business opportunities, it's changing the way businesses get work done. The questions they ask, the decisions they make, the routine tasks they can hand off. That's the idea behind NetSuite Next, the next generation of NetSuite with AI woven into the tools your business already relies on.
36:17 Guy Raz? NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.
37:02 Guy Raz? If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.
37:21 Speaker 02 Football is back, and PrizePix is bringing out their best offer yet. New users who sign up will get $150 in lineups if you win your first $5 lineup. That's right, if you win your first $5 lineup, you'll get $150 in lineups. On PrizePix, you simply pick two to six players, pick more or less on their stat projections, and submit your lineup. Then sweat it out as you watch your picks play out live. It's the best way to get more locked in on game day. Make all the picks you want, this football season, all in the same app. And now, PrizePix is available nationwide. So what are you waiting for? Lock in for kickoff, because everyone and everything is on PrizePix. What you on?
38:06 Speaker 03 Download the PrizePix app today and use code WONDERY, that's code WONDERY, to get $150 instantly in lineups if you win your first $5 lineup. PrizePix, run your game. Must be present in certain states. Visit PrizePix.com for restrictions and details.
38:22 Guy Raz? One more thing before we get back to the show. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show, and it's totally free.
38:38 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 1969. Steve is in his early 20s and has about $95,000 in the bank from his consulting business. And with some of that money, plus help from a few friends and family, he raises a little over $200,000 to start his own airline, and he calls it-
39:00 Speaker 01 Astroair.
39:02 Guy Raz? That's a great name. Modern, future Astroair.
39:05 Speaker 01 And the logo was like, almost like a science fiction logo.
39:09 Guy Raz? Like a neutron, or like an atomic-
39:13 Speaker 01 My girlfriend at the time came up with the name. She was an art major. She says, "I like that name, Astroair." So anyway, we had to apply to the California Public Utilities Commission, PUC. We had to go through hearings. We had to deal with the FAA. There was a lot of bureaucracy, which I hated. But here we are, and we get licensed to be an airline. And we were going to fly to an airport that's very close to Vandenberg Air Force Base.
39:41 Guy Raz? Sure, in California, yeah.
39:42 Speaker 01 We charged $15 to go from LAX to a city called Lampo.
39:47 Guy Raz? And the idea was you were going to service, you were going to basically serve these military folks. It was going to be a cheap way to get around for them.
39:55 Speaker 01 Yeah, and contractors, and also serve Santa Maria, California, and Lampo, which is about halfway up the coast.
40:01 Guy Raz? And you had a, what, one plane that you leased?
40:04 Speaker 01 Yeah, we had one plane. It was a Carsted Jetliner, which was a stretched De Havilland Dove with turboprop engines.
40:13 Guy Raz? How many people could it seat?
40:14 Speaker 01 15.
40:15 Guy Raz? Okay, so if it was full, if your plane was full-
40:17 Speaker 01 We made a little money. If it was 3/4 full, we'd lose money.
40:22 Guy Raz? Three quarters full, you would lose money.
40:24 Speaker 01 Yep. If we had 12 passengers, I, the break even was probably about 13 passengers.
40:31 Guy Raz? And you leased this plane. You did not buy, you couldn't buy. It would be.
40:34 Speaker 01 It would be rented. And it was $4,500 a month for the lease.
40:39 Guy Raz? The rent, okay.
40:40 Speaker 01 Yeah. And it was leased from a company in Phoenix, Arizona called Apache Airlines.
40:44 Guy Raz? Yeah.
40:45 Speaker 01 And I met the guy who was the president and he said, look, I can do with one less plane because, you know, business is a little slow.
40:52 Guy Raz? Yep.
40:52 Speaker 01 So I'll lease you this plane for 4,500 a month. And this was a turning point in my life. Because whether five passengers showed up for our flight, or 10, or 12, this guy got 4,500 a month, no matter what.
41:06 Guy Raz? If all your seats were full, he got 4,500 a month. If one of your seats were filled, he got 45. It didn't matter.
41:12 Speaker 01 Yeah. Or if the weather was bad and we had to cancel flights.
41:16 Guy Raz? Yeah.
41:17 Speaker 01 You know, if the airport up there was fogged in, he still got this 4,500. And that was a turning point mentally in my life where I decided, running an airline is a miserable thing. It involves people, regulations, fuel, airports, reservations. It was just a nightmare to run an airline. It's 24/7 and everything goes wrong. And I said, the guy that was making money off this project is the guy in Arizona.
41:51 Guy Raz? Not you.
41:52 Speaker 01 Not me. I was losing money and he's making money.
41:55 Guy Raz? You're losing money on every flight unless it's totally packed.
41:59 Speaker 01 Yeah, or almost say 90% full.
42:01 Guy Raz? Because your fixed costs were higher than your.
42:04 Speaker 01 Exactly. Insurance, rentals, airport charges, pilots. The chief pilot was 750 a month and the other pilots were 600 a month.
42:17 Guy Raz? Yeah.
42:17 Speaker 01 So anyway, we finally decided this thing is losing money. I found a buyer for the airline out of Las Vegas. And so I decided then and there, I'm not even going to have an airline again. I'll work with airlines.
42:30 Guy Raz? Yeah.
42:31 Speaker 01 But I don't want to be an operator on airline.
42:33 Guy Raz? So you basically lost most of that 95 grand that you'd earned.
42:38 Speaker 01 Yes. I would say I lost about half of everything I've earned.
42:44 Speaker 01 Up to that time on the airline venture. But I also had a lot of people, relatives and friends of my parents and other acquaintances that invested in the airline, some, you know, a thousand dollars, some five thousand dollars. And I made a pledge to pay them back. So over the next several years, starting in nineteen sixty-nine, seventy, seventy-one, when I was about twenty-three, twenty-four, twenty-five years old, I paid everybody back.
43:16 Guy Raz? Hmm. So, so, I mean, when, when that, when that all sort of fell apart, you must have felt really terrible. I mean, there's your family, friends and other people who had invested money in this venture.
43:30 Speaker 01 Yes. So there was two sides to it. It's, there's, there's a sense of failure.
43:36 Guy Raz? Yeah.
43:37 Speaker 01 Uh, and a recognition that, uh, at that age, a person is somewhat naive. But at the same time, I thought it was a very valuable lesson about running a business. And I did have an appreciation that I went through this experience early in life rather than, than later.
43:57 Guy Raz? Hmm. Right. Okay. So this was, so nineteen sixty-nine, you begin to wind down Astro Air.
44:03 Speaker 01 Yes.
44:03 Guy Raz? You're twenty-three, um, and you had seen who was making the money. The, the, the person, the people making the money when you were running Astro Air wasn't your airline. It was Apache Airlines, the leasing company that was leasing you this airplane because they had to be paid whether you landed or not, whether you had a full plane or not, whether the, the weather halted your flights or not. They got their money.
44:24 Speaker 01 Exactly.
44:25 Guy Raz? And so that, and that experience sort of planted a seed in your mind, like, that's where the money is. I gotta go there. I've got a, I've got a service. I've got to sell the pickaxes and shovels, not try to dig for the gold.
44:38 Speaker 01 Exactly. But the key to that was it required capital on a much larger scale.
44:45 Guy Raz? Yeah.
44:46 Speaker 01 Both equity and debt capital. And so I felt that for a few years, I need to continue amassing capital through the various transactions that I was doing before.
44:59 Guy Raz? Right.
45:00 Speaker 01 And in fact, I increased the intensity of that activity.
45:04 Guy Raz? You went back to helping airlines find planes to buy and essentially taking a broker's fee.
45:10 Speaker 01 Exactly, and also helping them with their route planning.
45:13 Guy Raz? Consulting.
45:14 Speaker 01 Yes.
45:15 Guy Raz? And so you do a bunch of these deals and over time you start to accumulate some cash for the business that you really want to build, which is your own leasing company. You want to be the guy leasing planes. You want to do what Lockheed did.
45:28 Speaker 01 Right, exactly. So, maybe I'll give you an example. And one of them was Aeromexico, which was the government airline to Mexico, and they needed a DC-8. I found an airplane in Miami that was owned by National Airlines. And I talked Bud Maytag, who was president, into selling that plane to us with four brand-new engines for about $2.2 million. I didn't have $2.2 million, but I figured I'd put up around $150,000 equity and then get a bank loan. Aeromexico didn't want to buy it. They wanted to lease it. I went to a lot of banks. They
46:10 Speaker 01 all said, "No, thank you. We don't want to finance a plane that's going to be registered in Mexico." So I went around, went around, went around, until I found one bank in California called United California Bank that said, "Yes, sir. If you get a government agency guarantee, then we will give you a $1.7 million term loan." So I went down to Mexico City and I asked Aeromexico to arrange a meeting with a government agency that had credibility. And they made an appointment for me at 10 o'clock at night. I remember Mexico City with the head of that agency. There were armed guards and so on. And there was a conference
46:54 Speaker 01 room with two bottles of tequila on it, nothing else. The end result is by midnight, I convinced this gentleman that signing this, cosigning the lease and guaranteeing the lease payments of another government-owned entity was not a risk. And I said, "This would bring in thousands of tourists and will help the Mexican economy and blah, blah, blah." So he, after five glasses of tequila...
47:21 Speaker 01 He asked his secretary to bring out his big seal and the wax and the ribbon. And he just put that they'll unconditionally guarantee the lease. Bingo. I went back to LA. The bank said, okay, this is exactly what we wanted. And on September 20th, 1973, I bought a Douglas DC-8 for 2.2 million dollars from National Airlines. And leased it to Aero Mexico, which today is one of our best clients in Latin America.
47:54 Guy Raz? All right. So in, in 1973, you have the seed money to start your company, what became International Lease Finance Corporation. You actually went into business with, with two friends of the family, Leslie and Louis Gonda. And these guys were Hungarian, he was a Hungarian businessman, it was a father and son. And, and I guess they became co-investors and, and partners?
48:19 Speaker 01 Yes, yes. Yeah.
48:22 Guy Raz? And you were?
48:22 Speaker 01 And I was the president.
48:24 Guy Raz? Got it.
48:25 Speaker 01 We were not in a position at that time to buy any new aircraft. We didn't have the resources for that.
48:29 Guy Raz? You had one plane that you could buy?
48:31 Speaker 01 Yeah, we had one plane, yeah.
48:32 Guy Raz? And it was, and it was a 727?
48:34 Speaker 01 No, a McDonnell Douglas DC-8.
48:36 Guy Raz? Forgive me, DC-8, yeah.
48:38 Speaker 01 Yeah. It looks almost like a Boeing 707.
48:40 Guy Raz? Right. Okay. So you had, so you had that one plane. And when, when you started the company with the Gondas, what was the, what was your thought? I mean, did you think this was going to be a relatively, you know, small to medium sized business where you might have five, 10 aircraft that you were?
48:58 Speaker 01 Exactly.
48:58 Guy Raz? That was, that's what you thought?
49:00 Speaker 01 Our ambition was maybe we could have eight to 10, maybe 12 planes. And we'd make a nice living off of it. And I could still continue to do some of the other stuff, brokering, consulting.
49:13 Guy Raz? Yeah.
49:14 Speaker 01 We had no idea that within a few years, we would develop into the largest aircraft leasing company. We had none of these.
49:22 Guy Raz? Ambitions.
49:23 Speaker 01 I think, I think we had ambition, but we underestimated. The potential of the market.
49:30 Guy Raz? I think so, basically, it sounds like for the first couple of years, you're working with Aero Mexico, right? You had that plane.
49:36 Speaker 01 Yeah.
49:36 Guy Raz? And then, I mean, did you, how soon after that were you able to buy the second plane? You had cash flow coming in.
49:44 Speaker 01 By November.
49:45 Guy Raz? By November?
49:46 Speaker 01 Yeah, a month and a half later.
49:49 Guy Raz? Wow.
49:49 Speaker 01 It was another interesting coincidence. So that, I may have mentioned to you that there were these airlines in the Western US that merged together and became Air West. And then Howard Hughes bought that company, became Hughes Air West. And they had around twenty-some of these forty-seat turboprop, what was called Fairchild F-27s.
50:15 Speaker 01 And they were transitioning to more jets and phasing out these turboprop Fairchild aircraft. And so we made a deal to buy ten of these planes, okay? We didn't have three million dollars or 2.8 million.
50:28 Guy Raz? Ten of these planes, yeah. So you didn't have the cash?
50:30 Speaker 01 We made a deal with Hughes Air West to buy ten of them.
50:33 Guy Raz? Okay.
50:34 Speaker 01 Like, one a month.
50:36 Guy Raz? So how did you do that with no cash?
50:38 Speaker 01 Well, we gave them a $10,000 per plane deposit.
50:42 Guy Raz? Okay.
50:43 Speaker 01 So while you're going through that routine, you concurrently run a marketing campaign and try to locate potential customers. We give them a $100,000 deposit. And then North Canada Air was, was willing to lease three of them for like $7,500 a month each.
51:04 Guy Raz? Right. I mean, this speaks to the idea, and I've heard this from people before, which is,
51:12 Guy Raz? you can actually invest in things and buy lots of things without any money. If you can figure out how to do the deal, like, and very wealthy people buy properties and make huge investments without money because they will figure out a way to do a leasing deal or something like this. I mean, this, essentially, you didn't have the money to buy the planes.
51:34 Speaker 01 But I had a piece of the action.
51:36 Guy Raz? Yeah, right.
51:36 Speaker 01 And so to speak, yeah.
51:37 Guy Raz? Right. Wow, all right. So as you're building this business up, something happens, which I have to imagine had a massive impact on your business, which was the Airline Deregulation Act in 1978, which, I guess the result of that was it would increase, it did increase competition and it did lower costs, deregulated the airline industry. How did that affect your business?
51:59 Speaker 01 Well, it had a major effect. So in 1977, a year before deregulation, we bought our first brand-new plane, brand-new, 737 from Boeing, and we leased it to a British airline called Britannia Airways, which was the largest charter airline in Europe. So we, we already reached a level of activity where we could buy a $7.5 million brand-new plane. It accelerated the fleet modernization of airlines in the late 70s, early 80s. And that really gave our company a tremendous amount of tailwind. And just as a side note, we were very, very prudent with our money. I mean, when we started international lease
52:43 Speaker 01 finance, I remember our salary was $600 a month, and maybe three or four years later, it was still like $1,000 a month. So we were not very extravagant.
52:54 Guy Raz? Yeah.
52:54 Speaker 01 And also, it's a very volatile industry. You have several years of positive growth and profitability.
53:02 Guy Raz? Yeah.
53:03 Speaker 01 Then you have oil price runaways, or high interest rates, or a recession. And the airline industry is very vulnerable to those changes. And so you could have multiple years where airlines are suffering and losing money.
53:16 Guy Raz? Yeah.
53:16 Speaker 01 So you have to endure and survive these, this roller coaster.
53:23 Guy Raz? So, so I mean, were you guys financially healthy during this period? I mean, were you profitable or not profitable?
53:31 Speaker 01 Oh, no, we were profitable, but we could scale up using limited partnerships. And Leslie Gonda was extremely supportive of this company, and he brought in some of his friends to invest $50,000 or $100,000 in a, in a, in a deal. International East Finance Corp would be the general partner and we would also invest money. But the limited partners would invest most of the equity. And then we would get a management fee. So in other words, for every million dollars of equity we had. We really had five or six million of equity. Because we leveraged it with these limited partnerships.
54:11 Guy Raz? Right, because you basically could get these partners who had cash, who could finance these planes, yeah.
54:16 Speaker 01 Right, and they all made money. No one ever lost a penny. They all made money. They all did very well. Now, then we had a number of companies like EF Hutton and other Solomon Brothers came to us. From Wall Street saying, why don't you guys go public? You've got a great future, blah, blah, blah, blah. So we gave that a try in 1982, but the markets were very.
54:42 Guy Raz? Yeah, that was a recession year, yeah.
54:44 Speaker 01 Yeah, and so we decided this is not a good time to go public. But the following year, I suggested to our team. That we focus more on the smaller investors rather than the big institutions. We did lots of road shows to probably like forty different cities. And we raised twenty six million dollars in an IPO on NASDAQ, you know.
55:10 Guy Raz? Yeah, and that presumably supercharged your ability to grow, to buy more planes.
55:16 Speaker 01 Yes.
55:17 Guy Raz? And so basically, nineteen eighty-three, you become a public company and you become the CEO, right? A CEO of a publicly traded company.
55:25 Speaker 01 Yes.
55:26 Guy Raz? You had eight people when you went public, so did you need, by the way, did you need many more people? I mean, given that now you had more money to buy more planes, did you have?
55:34 Speaker 01 Yes, yeah, we needed more people. In fact, the underwriters were teasing us that we should hire a couple of part-time, like college kids or something. So we could say that we had more than ten employees and then let them go the day after the IPO. But we didn't do that, so. But it was kind of oddball to have a public company with eight employees, including the three founders.
56:01 Guy Raz? So tell me about, I mean, we're going to come to 1990 when you were acquired or the company was sold, but in that period between 1983 and 1990, when you went private again, what, I mean, was it just, again, just growing, growing, growing every year, like buying, you know, five, 10 new aircraft a year? I mean, what, give me a sense of what that period was like.
56:25 Speaker 01 I think the major change, which had never been done before, was that in 19, what we did after going public is we would buy new and used aircraft when we could match them up to an airline. But then I realized that we could get much better leverage and discounts and, and, and basically more weight if we could buy aircraft in bulk. And that was really a landmark gutsy decision because it was the first time that Boeing would sell quantities of aircraft, aircraft less sore, who couldn't even identify where these planes
57:08 Speaker 01 are going to go. But we had a lot of confidence that we would place the aircraft. And then we did a deal with Boeing and ordered 130 brand new planes, speculatively. People thought I'd lost my mind, including 747 400, which was the largest plane in the airline industry.
57:30 Guy Raz? So you, obviously, as you were growing, you caught the attention of, I mean, you were a public company, but you caught the attention of some suitors, including AIG, the huge insurance group. And they made an offer to you to sort of buy you out. I guess it was a, a, a stock merger, essentially, where you could, you could get.
57:55 Speaker 01 Yes, correct.
57:56 Guy Raz? And it was, and it was a huge offer. It was like a $1.3 billion offer.
58:01 Speaker 01 For a company that went public for 26 million, less than seven years before that.
58:07 Guy Raz? Yeah.
58:08 Speaker 01 So it was a 50 times greater.
58:10 Guy Raz? So your investors were going to get a huge return.
58:13 Speaker 01 Yes. I think 68% of the company was still owned by the insiders.
58:18 Guy Raz? Wow.
58:19 Speaker 01 The Gondas and myself and my family. And the public had, I think, 32%. So they did really well. We decided.
58:29 Speaker 01 That we would each take one and a half million cash, the three of us, and the rest, we would exchange our shares for AIG stock.
58:38 Guy Raz? Wow. And so then, at that point, you become, I mean, AIG becomes your boss, right? But essentially, you continue to run ILFC. I mean, you were, I mean, did it substantially change how you ran it? I mean, did you have oversight from AIG?
58:56 Speaker 01 No. The benefit was that, I think, there were only one of half a dozen companies in the world that were AAA rated.
59:04 Guy Raz? Right.
59:04 Speaker 01 Credit rating. So immediately, ILFC's credit ratings, which were separate, AIG never guaranteed one penny of our debt.
59:15 Speaker 01 Our credit quality immediately went up.
59:17 Guy Raz? Which meant that you could get massive loans to buy more planes.
59:20 Speaker 01 And we could get it cheaper than our competition.
59:22 Guy Raz? Right.
59:23 Speaker 01 AIG was doing extremely well in the 1990s. And I was like, I was like, the third largest shareholder of AIG. So by the time AIG stock peaked, it was in 2000. Our holdings in AIG stock were considerable.
59:43 Guy Raz? Yeah.
59:44 Speaker 01 It was about five times more than when they acquired the company.
59:48 Guy Raz? Wow.
59:50 Guy Raz? When we come back in just a moment, a perfect marriage of timing and opportunity turns into a perfect storm when the 2008 financial crisis hits. Stay with us. I'm Guy Raz, and you're listening to How I Built This.
1:00:13 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So during the 1990s, Air Lease Corporation is in pretty great shape. Its new parent company, AIG, is doing well. And because Steve Hawsey is now a major shareholder in AIG, he is also doing well. So well, in fact, that he gets approached to make a major philanthropic donation.
1:00:35 Speaker 01 A couple of gentlemen called my assistant in Century City, California, and said, "We'd like to have an appointment with Mr. Hawsey. We want to talk to him about an aviation museum."
1:00:47 Guy Raz? Yeah.
1:00:48 Speaker 01 "To take a big plot of land at the Dulles Airport to eventually build a new museum that would open in 2003." Which would be the one hundredth anniversary of the first flight of the Wright Brothers. So I listened to this and I said, oh, that's really nice, blah, blah, blah. And I said, well, what is this thing gonna cost? They said it's gonna cost anywhere from a hundred and twenty to a hundred and thirty million dollars. And that was their estimate.
1:01:19 Speaker 01 So I said, okay, uh, in five minutes, I just thought about it. I said, okay, I'm in for sixty. Okay, so these two older gentlemen thought that what I meant is I would contribute sixty thousand dollars. Yeah. That's kind of what they expected. And I said, no, no, no, not sixty thousand, sixty million. And they just about had a heart attack. This took about five minutes. Wow. I said, if I don't do it, nobody else is gonna do it. Somebody's gotta jumpstart this project. So they were in shock. And then later on, a few months later, uh, they said to me, well,
1:02:00 Speaker 01 the regents and the government and, uh, the Smithsonian board, they wanna name this museum after your family? I said, well, that's not the reason I'm doing this. The reason I'm doing this is I want other young people in the US and visitors to be captured by the the thrill of flying and aviation and space. And then they said that the budget had gone up to a hundred and thirty million. So I said, okay, we'll go to sixty five million. And then the project was go full steam, three shifts a day. And I just felt for what America has done for me and my family,
1:02:43 Speaker 01 this was the least I could do to to give back something to America that had value to millions of people and children.
1:02:53 Guy Raz? Yeah, it's just incredible museum. And so that really was kind of your first public, I mean, you know, the first time you were sort of public, right? Because you were relatively, you know, quiet, private, and still are to this day, but still.
1:03:08 Speaker 01 Yeah, we're low profile. We try to be low profile.
1:03:10 Guy Raz? Yeah. And do you, I mean, by 2007, right, you have, ILFC has, I think, something like 820-plus Boeing's and Airbus's. That was more than, by far, more than any airline in the world. I read that.
1:03:27 Speaker 01 That's correct.
1:03:28 Guy Raz? That you owned more than Air France, Lufthansa, and British Airways combined.
1:03:32 Speaker 01 Correct.
1:03:33 Guy Raz? And so, things are going well. I mean, it's, you know, ILFC is a great company, it's a strong company, but you're about to hit a massive dark cloud.
1:03:42 Speaker 01 Very dark, yeah.
1:03:44 Guy Raz? A dark cloud may be an understatement. I mean, I mean, a disaster. And AIG is right in the middle of that disaster, because the financial crisis hits, and AIG is the insurer of all of these banks.
1:04:00 Speaker 01 And guarantees, and instruments, and subprime mortgages that were then packaged into various derivatives that were bought by all kinds of investors.
1:04:12 Guy Raz? And when you found out about this, because I have to assume that you didn't really know, I mean, that's not your business, insurance. You were in, you were running the airline division, essentially, of AIG. I guess AIG was insuring these loans that seemed secure, but that had a massive impact on your ability to run your business.
1:04:32 Speaker 01 Yes, so, here's what happened. AIG was a very, very capable insurance company.
1:04:38 Guy Raz? Yeah.
1:04:39 Speaker 01 But they went off tangent with this guaranteeing other people's obligations. And they really had no business guaranteeing subprime loans. And so, when everything started to crumble around September, October of 2008, AIG would have become insolvent immediately, had everybody called in the guarantees.
1:05:04 Guy Raz? Yeah.
1:05:06 Speaker 01 Okay, and that's precisely why the US government did an emergency rescue of AIG by injecting one hundred and eighty-five billion dollars, which was more than the whole automotive industry, the whole high-tech industry received. No other company got as much financial bailout as AIG. And of course, Congress and the government came down really hard. How could you have allowed yourself to be in this situation to begin with? And here we are, a company just made a billion-dollar profit, and we're now right in the middle of this thunderstorm.
1:05:42 Guy Raz? You're talking about your company, ILFC.
1:05:44 Speaker 01 Yeah, ILFC, yeah.
1:05:45 Guy Raz? Which was essentially, you're sort of a subsidiary, right, of AIG?
1:05:51 Speaker 01 Yes, but we had our separate debt book.
1:05:54 Guy Raz? Right.
1:05:55 Speaker 01 And so they owned our equity, we owned AIG equity.
1:05:59 Guy Raz? And you owned, and they owned all your airplanes, which was collateral.
1:06:02 Speaker 01 Yeah, and that basically AIG turned out to be a huge disappointment that almost caused the collapse of the global financial system. There's nothing I could do to...
1:06:13 Guy Raz? You were part of a toxic brand.
1:06:15 Speaker 01 Yes, yes.
1:06:17 Guy Raz? So all of the money you were making was now going to pay back the government's bailout?
1:06:22 Speaker 01 Exactly, and we became paralyzed. We couldn't buy, we couldn't sell, we couldn't finance. We had our existing book of business, airlines continued to pay rent. You know, we had an ongoing business, but it was like in a cage, like, you know, an animal that's in a cage.
1:06:41 Guy Raz? And Steve, I have to assume that your personal wealth was, took an enormous hit because you had enormous shares in AIG stock?
1:06:50 Speaker 01 Yes.
1:06:51 Guy Raz? I mean, their stock price plummeted probably seventy, eighty percent, maybe more, I don't know.
1:06:57 Speaker 01 Yeah, I think it was more than that, yeah. It was a great tragedy, and the company would have gone under had it not been for the US government.
1:07:07 Guy Raz? So you decide...
1:07:10 Guy Raz? Basically, I'm done, I'm out of here. And you resigned.
1:07:15 Speaker 01 Well, I retired.
1:07:16 Guy Raz? Retired, forgive me, you retired in 2009?
1:07:20 Speaker 01 Yes, we had a family council gathering with my wife and our children. And we said, okay, we can either continue this status quo, or we put this chapter behind us and start fresh.
1:07:33 Guy Raz? Yeah.
1:07:34 Speaker 01 And the unanimous decision was made to start fresh. So on February 3rd or something of 2010, I submitted my retirement papers.
1:07:47 Guy Raz? Yep.
1:07:48 Speaker 01 And that was it. They were in shock, but I said, look, we've had our fun. I've tried.
1:07:54 Guy Raz? Yep.
1:07:55 Speaker 01 And this is not what I want to, you know, spend the next 10 years working for the government.
1:08:00 Guy Raz? Yeah. So you stepped down from ILFC, this company that you founded. And, but you, you knew, you must have known that you were going to start a new company pretty soon after, right? I mean, already in your mind, you probably.
1:08:16 Speaker 01 Yeah, the next day, we filed the incorporation of Air Lease in Delaware.
1:08:21 Guy Raz? Air Lease Corporation. So you basically said, I'm done running ILFC.
1:08:25 Speaker 01 Yeah.
1:08:26 Guy Raz? I'm going to start my own company again, doing essentially the same thing.
1:08:31 Speaker 01 Yeah, but maybe on a smaller scale. I didn't want to have a thousand aircraft and $50 billion balance sheet.
1:08:40 Speaker 01 But we learned a lot in those 35 years. And even in the years before International East Finance. So we said, okay, let's start it. At that point, I didn't really involve any of the other people at the company. I didn't want.
1:08:54 Guy Raz? And you had no, you had no non-compete clause? You were allowed to do this?
1:08:58 Speaker 01 Nor was I soliciting any employee or officer.
1:09:02 Guy Raz? So you were going to start with a completely new team?
1:09:05 Speaker 01 Completely new team. But we were across the street from ILFC in a new building.
1:09:11 Guy Raz? In Los Angeles?
1:09:12 Speaker 01 Yeah, in Century City. And so as word got out that Steve Hozie's starting a new aircraft leasing company, my phone started ringing. And so most of the senior officers said that they they've had it with with AIG as well.
1:09:29 Guy Raz? And they wanted to come work with you.
1:09:30 Speaker 01 They wanted to come.
1:09:31 Guy Raz? Wow. It does speak to the loyalty that you engendered and the people around you. I mean, I mean, I'm sure there were times where, you know, maybe you you got mad at people or you've lost your temper. I don't know, maybe not, but but clearly you have you had and still have a lot of people who are loyal to you.
1:09:48 Speaker 01 Yes. Well, and and it was also, I think, an opportunity to create a new a new enterprise and to create to create wealth because not only my family lost a lot on this, but every executive at ILFC that had AIG stock.
1:10:08 Guy Raz? Lost probably everything.
1:10:09 Speaker 01 Yep. So they understood what was going on.
1:10:13 Guy Raz? You had you were coming to the table with so much experience at this point and and such a great track record that you were able to raise money quite quickly and and I mean, from from big banks, like over a billion dollars, you were able to raise that.
1:10:28 Speaker 01 Correct. We raised about 1.2 billion.
1:10:33 Speaker 01 And I said, we will provide 100 million dollars of equity, cash equity. And then we'll raise another billion from outside investors, including banks. And well-known private equity firms and international institutions. And that was oversubscribed. So we we raised about 1.2 billion within a few weeks after the company was formed. We didn't have any airplanes, but we already had capital lined up.
1:11:08 Guy Raz? And obviously, you knew how to source those planes. And within a year, you went or a little over a year, you went public.
1:11:16 Guy Raz? And you're after the races. You raised like 800 million dollars.
1:11:20 Speaker 01 I think it was almost 900 million. We raised JP Morgan and Credit Suisse were the two underwriters.
1:11:27 Guy Raz? Did you see ILFC as your competitor now? Were you were you trying to were you chasing them?
1:11:34 Speaker 01 A little bit. We, look, the clientele that we had.
1:11:41 Speaker 01 Were generally airlines that also were leasing planes from ILFC. But I would say that once we left and started Air Lease, most of the airlines went with us. They did either no or very little future business with ILFC, particularly since it was still under this government AIG umbrella.
1:12:05 Guy Raz? Yeah.
1:12:06 Speaker 01 So I would say a large number of the customers that ILFC had migrated to Air Lease on their own volition.
1:12:13 Guy Raz? Yeah. I have to assume that you recovered your losses more than recovered them with your, certainly with your new business. And now you have, I mean, you're, you know, you're, you're still running this business and you are, you're not an old guy, but you're not, you know, 23 anymore. And I wonder, I mean, you have obviously enormous resources to do whatever you want and you've got a foundation, but I wonder, what do you think you're gonna do? I mean, you can't possibly spend a fraction of the money that you've made in your lifetime. So what do you think you'll do with it?
1:12:50 Speaker 01 That's a good question. Look, the idea of retirement doesn't have a lot of appeal. I'm not a good golfer. I'm not a retiring type.
1:13:01 Guy Raz? Yeah.
1:13:02 Speaker 01 So I plan to continue to work and, and hopefully add some value to the industry and creating this spark in young people about aviation and aerospace.
1:13:14 Guy Raz? Yeah. Steve, when you think about, you know, what, what you built and, and, you know, starting this business so young and where you are now, and, and you really are, I think I've read, I mean, people consider you to be the most influential person in aviation, full stop. How much of where you are today do you attribute to, to how hard you worked and, and your intelligence and how much do you think had to do with luck?
1:13:40 Speaker 01 I think you need all of those. I was fortunate that my father exposed me to aviation at such a young age and that I immediately connected myself to that. I think having come from a background where I grew up in a communist oppressed country.
1:14:05 Speaker 01 But then you have a certain amount of energy that propels you to achieve greater things. And that comes from within. It's not something you can learn in school. So I'm very grateful for what America has enabled our family to achieve. And having this passion for aviation and the airline business is just, that's been the fuel that kept things going.
1:14:37 Guy Raz? That's Steve Uvarhazy, founder and executive chair of Air Lease Corporation. By the way, do you ever get scared in an airplane when you're flying today?
1:14:46 Speaker 01 No.
1:14:47 Guy Raz? Never? Even massive severe turbulence or whatever?
1:14:50 Speaker 01 No, because I know how airplanes are designed and built. So I adapt really quickly and I can sleep easily anywhere. I'm like a horse. I can sleep standing up.
1:15:02 Guy Raz? Hey, thanks so much for listening to the show this week. Please make sure to click follow on your podcast app so you never miss a new episode. And as always, it's totally free. This episode was produced by Kerry Thompson with music composed by Runtin Arablui. It was edited by Neva Grant with research help from Sam Paulson. Our production staff also includes J.C. Howard, Casey Herman, Elaine Coats, John Isabella, Chris Messini, Carla Estevez, and Ramel Wood. Our engineers are Gilly Moon and Patrick Murray. I'm Guy Raz and you've been listening to How I Built This.
Previous When your headphones listen to you with Ramses Alcaide of Neurable Next Threading the future of circular fashion with Peter Majeranowski of Circ Page updated October 26, 2026 · transcript and summary are machine-generated
