Donal Boylan chief executive of Odyssey Aviation and chief operating officer of Hong Kong Aviation Capital, fondly recalled his first big break.

“I was a twenty-something trainee engineer working at a GE-equipped power plant outside Muscat, Oman. A plant manager I was friends with, told me that there was another plant close by which had been commissioned some years previously but which GE licensee John Brown engineers had never gotten to work. When my shift was finished each evening I would head up to the plant and potter around to see what the problem was.”

Boylan quickly saw that a situation which had confounded John Brown and GE engineers was, to him at least, rather basic. Exhaust was leaking onto some thermocouples which, as a result, were registering very different temperatures and shutting down the plant. There was, as he put it, “a $25 solution to a $300m problem.” And when he alerted his superiors he became a hero of sorts both with GETSCO (GE Technical Services Company Overseas) and the Oman ministry of water and electricity.

Boylan’s gumption and industriousness have helped him achieve a respectable measure of success in life. But getting to where he is today appears to have been a hard slog.   At school he would divide each evening, between working in the local garage, playing sport (he was captain of the school rugby and local soccer team) and studying. He went on to study engineering at University College Dublin (UCD), where many of his projects focused on the automotive field. He would spend the weekends building race cars and race car engines and running motor racing teams.

Old Fashioned

But in the dark days of early 1980’s Dublin, Boylan knew he would have to emigrate. Like many Irish people of his generation he wasn’t too ambitious and wasn’t terribly confident. But he said: “As the eldest of five children I felt I needed to set some sort of example. But I was rather old fashioned in my approach. I thought, so long as you put the hours in and you dedicated yourself to understanding what you were going to do; success would emerge.”

Success emerged eventually and Boylan was picked up by GETSCO for a traineeship that began in upstate New York. He said it was a formative experience. Trainees got a lot of personal attention and he had the opportunity to work in South America, the Middle East and the UK.  But it wasn’t until his discovery in the new but non-commissioned power plant outside Muscat that he went from being a diffident trainee to a respected senior engineer. GETSCO soon offered him a job as senior manager for North East Asia including North West China.

Though tempted by the offer, part of Boylan was hankering for a more settled life. He had personal commitments waiting in Ireland and he missed his involvement with motor sports. So he took a job instead as a business development manager and technician with an Irish hydraulics firm. He got a fraction of what he would have earned with GETSCO.

Late nights and hard graft

After acquiring some valuable commercial experience, Boylan moved to Air Lingus in a development engineering role and then to Guinness Peat Aviation (GPA), an aircraft lessor set up by Tony Ryan of Ryanair fame. Boylan was hired by Ryan and discovered that aircraft leasing could be just as exciting as power plant engineering.

Boylan was impressed by the attention GPA paid to engineering technical detail. “It was far ahead of its rivals. They got all the stuff that would burn you in this sector if you were a financier. They had guys that knew airplanes.” He also saw that the company was innovative at raising money and had a strong capital markets group.

“By the mid-80s aircraft had become very heterogeneous. There could be 25 different seat manufacturers, and the instruments in the cockpit, would be different in different airlines. But GPA’s approach was: ‘if you’re not getting paid for it, don’t put it in.’ Thanks to GPA, aircraft started to be finished more simply for many airline lessees.”

Though Boylan was impressed by GPA, he saw plenty of areas where they could do better. He said the company was growing at a rate of noughts and didn’t have a strong hold either on cost or on what it owned. Boylan set up databases and systems so that aircraft, serial numbers, and maintenance costs could be recorded and looked up in an instant. He also handled repossessions and helped make lease agreements more friendly and homogeneous.

The culture at GPA suited Boylan. He said the sheer graft of the place was huge and that, like many of his colleagues, he would often work until two or three in the morning.

Boylan also liked the fact that GPA allowed its employees to take responsibility. “If you did something wrong you got whipped but that would be the end of it. There were no grudges borne. You were allowed to make mistakes.”

GPA made costly mistakes between 1991 and 1992. The company was set for floatation on the Tokyo, London and New York stock markets following the 1991 Gulf War, and fears about the share price appetite of US institutions meant the flotation was cancelled at the 11th hour. Tokyo and the UK were still fully subscribed.   The company found itself laden with billons of dollars in debt, and wasn’t able to finance a new aircraft order book with a huge manufacturer.  So it was restructured; GE Capital Aviation Services (GECAS) bought $1bn worth of its aircraft and took over the operational management of GPA's fleet. Boylan went to GECAS and stayed with them until 1998.

Striking out on his own

In 1998 Boylan set up his own aircraft leasing and services business, Dartry Aviation. With the help of a core set of private investors including former GECAS vice-chairman Jim King, Dartry Aviation bought, upgraded and then remarketed aircraft that big airlines wished to phase out.

Boylan gave one example. “We bought around 10 Boeing MD 80 aircraft for $6m each from Japan Air System which was later to merge with Japan airlines. The aircraft had an old analogue cockpit from Douglas DC 9s so we got a huge discount. Airlines were interested in the planes but couldn’t fly an old analogue cockpit. We spent around $2m per plane converting the cockpits to digital and sold each plane for over $11m.”

While running Dartry Aviation, Boylan advised several airlines and lessors, and in the year 2000 entered discussions with the Royal Bank of Scotland (RBS) on the possibility of setting up an air leasing company. “Our plan was to roll out the company in 2001 as a lessor and a debt provider. We predicted the US airline industry would decline and banks would leave the market. Of course we never saw what was going to happen on September 11.”

Survivors and thrivers

RBS Aviation Capital was set up in 2001. Boylan was chief technical officer but had a wide commercial brief. The company’s success was predicated on a business plan called “survivors and thrivers.” Boylan explained: “We developed a new credit matrix for analysing everything to do with an airline; its basic operating cost, where it was vis-à-vis competitors and where it sat from a regulation perspective. We offered half a billion dollars each to the 10 airlines which came out on top. Though with firm conditions attached.”

RBS Aviation Capital started with 5 employees, grew to 13 employees and within two years had 31 employees. Boylan said: “By the end of 2004 we had a portfolio of $20bn. In 2001 GECAS and International Lease Finance Corporation (ILFC) had portfolios of just over $30bn dollars. No other party in the industry had a portfolio of more than three billion.”

From the end of 2004 onwards the company sold down $11bn worth of airplanes. Boylan said: “It entered 2008 at $8bn and they had kept the good stuff, Air New Zealand, Air France. Good names and good aircraft. The company is still in the money today.” Boylan was eventually to leave RBS Aviation Capital so that he could develop his own interests in the jet leasing business.

Misplaced optimism

Since Boylan’s stint at RBS Aviation Capital the aircraft leasing industry has experienced a deep recession, which was followed by a speedy recovery. Boylan has strong opinions on the current state of the industry. “The recent growth is based as much on high profile names as good business plans.  Avolon raised its initial funding by trading on the names of GE Capital’s Dennis Nayden, and my former colleague Domhnal Slattery, whom I regard highly and fondly. Air Lease Corporation raised its capital by trading on the name of ILFC’s founder Steve Hazy.”

On these new start-ups Boylan said: “The business plans themselves are nothing special, they have no special angle, they are not buying cheap.  Airlines are losing money, aircraft are not especially cheap, and residual values will have to hold up. There will be no 25% returns on equity in the commercial airline leasing business. This will probably be an eight to 12% return on equity sector and only when managed well.”

Current interests

Boylan is currently chief operating officer of Hong Kong Aviation Capital (HKAC) and chief executive officer of Odyssey Aviation.  He said that HKAC is focused on support from the Chinese banks. “They are providing capital and give high loan to value for Chinese leasing companies.”  But Boylan added that people shouldn’t overestimate the Chinese market’s contribution to the air leasing industry.

Odyssey Aviation focuses on the private or business jet arena. Aside from advising companies and people who are thinking about buying private jets, Boylan explained: “the company acts as an outsourced asset finance activity to private banks who decide to finance a handful of private jets for their preferred private clients.” He continued: “And it has one arm, Red Diamond Aviation, which concentrates on the private jet market in China.  There are 1900, US$100 millionaires in China which suggests there is a quick market for close to 1900 private jets. There are 10,000 business jets in the US, there are 50 in China. Eight years ago there were none. The potential for growth there is huge.”

And does Boylan have the same working habits he had back in the heady days at GPA? “As you get older you can read documents and indeed read people much quicker. In my early years I wasn’t a good delegator. But at RBS I spent most of my time developing other people and leaving work in good hands.”

This means that Boylan is still able to divide his time between a wide range of interests. He says that he is “still a grafter.” But he has time for helping out at the local Gaelic Athletic Association (GAA) club where his children play hurling and gaelic football (games native to Ireland), keeping an eye on his thorough-bred race horses and attending Munster rugby matches with his family.