Dubai Air Show

ExecuJet Streamlines Aircraft Financing with Simplyfly Service

 - November 12, 2011, 3:01 PM
Two aircraft, recently added to ExecuJet’s regional charter fleet– a Bombardier Challenger 850 (shown here) and a Challenger 605–are here on the Dubai Air Show static display.

ExecuJet Aviation is offering aircraft buyers a more direct and straightforward way to finance and operate business jets through its relaunched SimplyFly program. The package offers a quick decision on financing and the opportunity to have the aircraft managed under a five-year lease.

SimplyFly is based on nonrecourse financing, where the loan is secured on the aircraft so if the borrower defaults, the lender’s recovery is limited to the aircraft. It does not require additional assets or personal guarantees and ExecuJet (Stand E370) will manage and operate the aircraft. Also, should the client wish to make the aircraft available for charter to third party, the company will arrange it. The Zurich, Switzerland-based company, which has offices worldwide, said monthly costs and hourly rates can be fixed.

These days fewer banks are willing to lend funds to support aircraft purchases and those that do often require long and complex approval processes. Also, private banks in particular generally make loans conditional on clients giving them other assets to manage.

ExecuJet has secured access to a dedicated pool of capital via its main shareholder, Dermot Desmond. The funding provider is comfortable offering nonrecourse funding because it knows that ExecuJet remains in control of the asset as the aircraft operator.

SimplyFly does require a 30-percent deposit on the value of the aircraft, which is around 5 percent more than other sources of funding. However, ExecuJet CEO Niall Olver argued that the premium is justified by the simplicity and flexibility that the program brings to the market and the fact ExecuJet is interested only in managing the aircraft in a mutually beneficial way and doesn’t use the loan as bait to win other financial services work.

“We found that customers still need aircraft but not to the extent that they want to put them on their balance sheets,” Olver told AIN. He said that SimplyFly is a full turnkey solution in which ExecuJet sources the aircraft and handles all aspects of the purchase for the client. At the end of the five-year lease term, the client has the option of whether or not to renew the lease.

Funding is available for new or pre-owned aircraft valued at $20 million or more and aged less than five years. Initially, ExecuJet has access to a pool of $400 million, but more funds could be made available subject to demand.

“We are committed to making sure that customers gets the aircraft that’s right for them,” said Olver. “There is no point bringing into the [management] system an aircraft that is too expensive and that the customer is not happy with.”

With the all too real possibility of a new credit crunch triggered by the looming banking crisis in Europe, ExecuJet believes the time is right to offer an assured source of funding combined with a reliable way to operate the aircraft. “For us it is exciting because I don’t see aircraft financing lightening up since the last thing banks will be bullish about now is aircraft transactions,” concluded Olver.

Positive Activity in Middle East

Meanwhile, ExecuJet is reporting “positive” activity in the Middle East region, both in aircraft sales and local FBO business. “Aircraft sales in the region have been positive with a number of aircraft being delivered recently,” said Andrew Hoy, managing director of ExecuJet Aircraft Trading. “Our current areas of focus are the CIS countries and Saudi Arabia,” he revealed.

Two aircraft, recently added to ExecuJet’s regional charter fleet– a Bombardier Challenger 850 and a Challenger 605–are here on the Dubai Air Show static display. By mid-January, a 19-seat Embraer Lineage 1000 will join them, taking the company’s local fleet to 22. The new aircraft will be based in Dubai.

“There is a growing trend toward larger aircraft,” said Hoy. “The majority of the jets in the region sell for around $20- to $30 million. Saudi Arabia has the biggest share of the private jet market, closely followed by the UAE,” he explained.

ExecuJet’s FBO in Dubai has seen aircraft movements increase by 20 percent compared to the same time last year, and it is now handling an average of 300 movements per month. November and December are predicted to show even stronger performance. “All countries in the region have been very active but an increased demand could be seen from Saudi Arabia and Qatar. One of the busiest days in our FBO’s history was October 29, when the FBO in Dubai handled a record 31 flights,” Hoy said.

Turkey on Upswing

Meanwhile, at Turkey’s Istanbul Ataturk Airport, the FBO run by Bilen Air Service in partnership with ExecuJet Middle East is reporting a 30-percent increase in movements. Two months after signing the strategic partnership, it counts 14 new foreign customers.

The FBO’s goal is to have a 50-percent increase on the monthly traffic volume by the end of March 2012. The facility itself is growing and undergoing a full refurbishment. The latest addition is a 50,000-sq-ft hangar area offering needed parking space as the neighboring general aviation ramp is limited in that regard.

Also announced here in Dubai this week are two awards for ExecuJet: the first being the Bombardier Authorized Service Facility Excellence Award in the international category for ExecuJet’s maintenance facility in Dubai. Capacity there has been tripled over last year with the addition of a new hangar and it now employs a team of over 135 maintenance staff. The second award, to Lufthansa Bombardier Aviation Services Berlin in which ExecuJet Europe holds a 20-percent stake, was the Bombardier award in the European category.