Helo financing still available, but lending criteria stricter

February 22, 2009
Rotorcraft, Aviation Financing

Credit is tight, but money is available. That’s the message from Jim Pulie, director of business development for Center Capital’s general aviation division.

Lenders are not exactly getting down on their knees and begging helicopter buyers to accept their money, he said yesterday in an interview with HAI Convention News. But he was also adamant that the helicopter industry is not at the “fall off the cliff” stage that the fixed-wing aircraft industry is facing.

Connecticut-based Center Capital, with the backing of parent company Webster Financial, is making loans to helicopter buyers, but like other lending institutions is taking a closer look at the applicant financials–liquidity, long-term contracts and collateral. And in terms of items like collateral, Pulie said lending institutions are considering the stability of that collateral in light of current economic market volatility.

The lender is also taking into consideration profit potential. For example, he explained, if a charter operator requesting a loan has long-term charter contracts with stable and well-established clients, the loan request will be viewed more favorably than if the operator is dependent on selling individual seats to the general public. They also take into consideration the value of what Pulie called “sweat equity” in the company by the owner or owners. “That’s something that a lot of people in the helicopter industry have, and it makes a lender take a more favorable view.”

Smaller loans of $500,000 to $10 million are viewed more favorably. “The big loans of $200 million or $300 million for a multi-ship purchase just aren’t there now,” he said.

A lot of the larger lenders have been shedding their helicopter business, which Pulie sees as a mistake. “They look at the fixed-wing industry and tend to lump everything that flies into the same bag. But the truth is that the helicopter industry has always been more stable, in good times or bad.”

At this point, he noted, of the total helicopter fleet in service, only about 5 to 10 percent is for sale. A year ago, he said, that figure was below 5 percent. Industry observers believe that, at this point, as much as 20 percent of the fixed-wing fleet is for sale. It’s a mistake, he said, to paint the entire aviation industry with the same broad brush.

 

Those interested in current credit availability matters would be well advised to attend the Financing and Leasing Workshop here at Heli-Expo. The session, led by Sharon Desfor of HeliValue$, is scheduled today at 9:30 a.m. to 11 a.m. in Room 202B. Pulie will be among a number of panel members.  

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