Kirk Kerkorian Part 1: From Dropout to Aviation Mogul

In Sumner Redstone’s autobiography, he told us about his epic battle with Kirk Kerkorian over MGM/UA Home Entertainment Group. I know nothing about MGM/UA or Kerkorian, so I started reading William C. Rempel’s biography of him, The Gambler: How Penniless Dropout Kirk Kerkorian Became the Greatest Deal Maker in Capitalist History. I’ve read a third of the book so far, and it’s an incredible entrepreneurial story.

Kirk’s first business was cleaning up old cars and reselling them for a profit. After getting the flying bug, he became a pilot for the Royal Air Force Ferry Command (RAF) during World War II, earning hefty hazard pay of $1,000 a month to deliver warplanes across the Atlantic. He did all this despite having only an eighth-grade education.

After World War II, the aviation industry took off, as did the demand for pilots. In 1945, Kirk started a flight school and eventually a charter airline, too. His customers flew frequently to Las Vegas, a desert city of saloons and small casinos. Kirk loved the excitement of the city, something he’d missed since flying dangerous missions for RFA.

Kirk decided he wanted his own airline, but he was short on capital. He started buying surplus World War II military planes, refurbishing them, and reselling them. At roughly age thirty-five, Kirk was making over $100,000 a year. He learned that pilots don’t make big money, but businessmen do. He became a major player in the used airplane brokerage and charter businesses between his home base in Los Angeles and Las Vegas.

Kirk’s chartering niche to Las Vegas led to friendships with celebrities and casino bosses (including Bugsy Siegel). His clients schooled Kirk on the lucrative casino business. He wanted in and, in 1955, invested $50,000 for a roughly 1% stake in the Dunes Hotel & Country Club, which ran into trouble. Kirk’s investment went to zero, but by then he was making roughly $300,000 a year from aviation. The loss was a painful and important lesson about the casino business.

By 1962, commercial airlines were moving to jetliners, and Kirk recognized an opportunity to become the first charter service using jetliners. He wanted to be the first government contractor to move cargo worldwide via jetliners. The planes cost $5 million, money he didn’t have. He convinced Bank of America to loan him $2 million and for the aircraft manufacturer to finance the remaining $3 million (unheard of at the time). He was officially in the postwar charter business, flying loads between US military bases worldwide. The move was lucrative. His company’s annual profits soared from $250,000 to $1.1 million in year one.

By his forties, Kirk was wildly successful. A key to his success was recognizing trends early. He repeatedly found and capitalized on them, often finding other trends in the process. His relationships and early understanding of Las Vegas and the casinos would play a major role in his future.

I’m looking forward to reading the rest of this book.

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