There is good news and bad news when it comes to financing for pre-owned business aircraft. The good news is that financing is available for aircraft buyers; the bad news is that banks are primarily lending only to those with exceptionally good credit who are buying an aircraft that is less than 20, and even in some cases less than 10, years old, according to a panel of aircraft financiers at the recent NBAA Aircraft Registration, Finance and Legal Conference in St. Petersburg, Fla.
Subprime mortgage crisis
American International Group has agreed to sell up to a 90-percent stake in International Lease Finance Corporation (ILFC) to a group of Chinese investors led by Weng Xianding, the chairman of New China Trust Company, AIG announced today.
The first quarter “was a mixed bag of results” for the business aircraft pre-owned market, indicating that “recovery still remains elusive,” according to business aviation information firm Amstat. “On the one hand, inventories generally continued to contract, but year-on-year transaction activity remained largely unchanged and average asking prices in many parts of the market continued to face downward pressure,” the Tinton Falls, N.J.-based company said.
Business aircraft buyers can expect loans to be harder to find and more costly, according to Adam Warner, president of Key Equipment Finance, Downers Grove, Ill. “There are fewer players in the finance market because some banks simply don’t have capital to lend,” he said. Those that have money are more selective and now less willing to finance 100 percent of an aircraft’s value.
Business aviation financiers exhibiting here at EBACE’08 have arrived in Geneva largely uncertain about the full implications of the ongoing squeeze on the global credit market and the availability of funds to pay for aircraft purchases. Last month, EBACE Convention News approached six banks listed as exhibitors, but only two–Citi Private Bank (Booth No. 1441) and Bank of America (Booth No.
None of the world’s major helicopter manufacturers stands to lose more than Eurocopter should the U.S. economy falter. The company is making large capital investments throughout the country to sustain its huge production, support, warehouse and training operations in Texas, Ohio and elsewhere. The last thing it wants is a recession wiping away sales already in its order book.