Airlines are benefitting from growing capital market support for new aircraft financing, with this source of funding expected to account for as much as 15 percent of all transactions this year, according to Boeing Capital. A few years ago, capital markets accounted for barely 2 to 3 percent of aircraft financing.
Given the depressed values of most pre-owned aircraft over the past several years, along with the sheer volume of aircraft available, buyers in the market might have a tough time searching out the best bargains among the many offerings. Virginia-based Asset Insight now promises to make that task simpler as it unveils a new tool.
A legal case that could hold serious ramifications for the aircraft financing and leasing industry met its end with a blow against the lenders when the U.S. Supreme Court refused to hear an appeal.
With financing for business aircraft still far from easy to secure, ExecuJet Aviation has stepped up its efforts to help get more people airborne through its SimplyFly Finance program. The plan is to offer fast-access, simplified nonrecourse financing in the shape of five-year loans or leases for up to 70 percent of the value of an aircraft worth at least $20 million and no more than five years old. An initial fund of $400 million provided by ExecuJet’s main shareholder Dermot Desmond is available to support the program.
Attendees at the National Aircraft Financing Association annual meeting late last week in Savannah, Ga., largely agreed that aircraft financing is “thawing,” but new international banking rules that will start to be phased in next year might make things worse.
The International Monetary Fund’s April 18 warning that Europe’s banks could lose some $2.6 trillion over the next 18 months lent weight to concerns of a continuing aircraft finance drought recently voiced by airline treasurers and finance bosses.
Bryan Moss, the former president and vice chairman of Gulfstream, has joined private investment firm Guggenheim Partners as the chairman of its recently restructured business aircraft investment division. The company, which manages more than $80 billion in assets, provides investment management, investment banking and capital market services among other offerings to corporations, governments and individuals.
For prospective buyers of business aircraft there’s good news and not so good news.
The good news is that there are some great bargains on pre-owned turbine-powered aircraft languishing in a stubbornly large inventory of unsold aircraft. Many companies and even sole proprietorships may be able to afford a corporate or personal jet that they wouldn’t even have contemplated acquiring just three years ago before prices tanked.
Barely two years ago prospective business aircraft buyers in Europe were among the most sought-after clients for a banking industry attracted both to the high rates of growth in this market sector and to the exceptional strength of asset values, driven largely by soaring demand and long delivery backlogs.
Sources for financing of corporate aircraft purchases may be harder to find this year than last, but Toennies von Limburg, director of international sales with Bank of America Corporate Aircraft Finance (Booth No. 394), said there is value to be had in what has turned rapidly from a buyers’ to a sellers’ market.