Commentary: Ryan set to encounter turbulence

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Dr Tony Ryan, chairman of GPA, the Irish aircraft leasing company, is said to have been in subdued mood since the flop of its dollars 1bn share offer in June. There is no guarantee he will be in any better humour after today's shareholders' meeting in Shannon.

The purpose of the meeting is to bring shareholders up to date with GPA's three-pronged strategy for keeping its creaking finances on an even keel. This consists of raising dollars 750m ( pounds 385m) through a fresh securitisation programme, rescheduling its firm aircraft purchase commitments down from dollars 11bn to as little as dollars 5bn, and tapping shareholders for a further dollars 300m or thereabouts.

This last element of the refinancing is most critical to the future of the world's largest aircraft leasing company. It is also the part that may prove most difficult to sell.

A number of its existing shareholders, including Aer Lingus and Air Canada, had wanted to offload most of their equity in June at the public offer price range of dollars 10-dollars 12.50. Instead, they ended up reluctantly agreeing to a 'lock-in' arrangement under which they would retain most of their shareholdings for a further year.

If these shareholders were restive then, the passage of time has scarcely made them less so. Since the flop of the public offer, the price of GPA shares on the grey market has slumped to dollars 7-dollars 8; the price at which GPA debt is traded in the secondary debt market has fallen; and the world aviation industry has demonstrated no real signs of recovery - as the four partner governments in Airbus pointed out yesterday. To cap it all, GPA is exposed to a number of weak airlines, notably America West.

GPA's forthcoming leasing securitisation programme should not present too many problems as the group has recently successfully undertaken a similar exercise.

Nor should it be impossible to reschedule its daunting order book, even though it will require ingenuity on GPA's part and understanding on the part of the aircraft manufacturers if GPA is to escape paying crippling cancellation penalties.

But for GPA to secure support for a rights issue, even a deeply discounted one, will require an act of monumental faith on the part of its shareholders.

Their options are simple: either they can play hard-ball and risk unsettling GPA's jittery bankers further, or they can throw in more money in the knowledge that there is unlikely to be much in the way of either a return or an opportunity to exit for some considerable time.

It is not an easy choice. Nor is it obvious which way shareholders will jump.