Janine Iannarelli, president of Par Avion aircraft consulting, based in Houston, Texas, has weathered the storm, but after 17 days with international deals on hold she wasn’t excited by the solutions the U.S. Congress and executive branch came up with to deal with its debt and budget problems.
The way Iannarelli tells it, when the FAA aircraft registry shut down, sales deals shut down with it. “New aircraft couldn’t be delivered and any transactions that needed the registry basically had to wait,” she explained to AIN.
And now that things have restarted? “I saw the circular distributed by the government right after the restart and it said that all the mail, faxes, etc. received during the shutdown will be marked as having been received October 17. They don’t know what else to do. They will treat it in the order in which it was received, it said.”
For Par Avion, which specializes in overseas sales and acquisitions, the shutdown meant aircraft waiting for N-numbers for importation were delayed. “Now that things are restarting I am noticing some prioritization. The international transaction I have will close about five days after the restart, according to my escrow agent,” she said. But it’s too late for some of the interior and paint work that was scheduled for the aircraft. It all must be rescheduled, and some might have to be done at other shops, because of scheduling conflicts.
“Those are the unseen costs,” explained Iannarelli. “For those shops, that work was, well, perishable. When the aircraft couldn’t show up, maybe they were able to fill the slot, maybe they weren’t. And if they weren’t, then that time, and the money, is gone now.” In the case of her deal three vendors were impacted, losing work booked weeks in advance.
And the question remains: what happens in three months? Will we be back in the same circumstances? And how can aircraft brokers plan for it?
Iannarelli has started by inserting new language into her letters of intent, which typically have stated dates by which deals should be closed and consequences if those dates are missed. “We basically state that if, in the event of delays such as a government shutdown, beyond all parties’ control, these delays are not to impact the deal,” she said. “Our buyers are very willing to say that they are committed to the transaction, even if it goes past the expected cut-off date.”
Beyond contract language Iannarelli is working to get Par Avion's deals closed before the next deadline, in February. “I'm not fear mongering, but I'm honestly concerned,” she said. “Communication is key in an unusual situation, beyond your control. You've got to keep a dialogue open with everyone who is involved in the transaction. And as far as my business? We’ve stepped up marketing to help get deals closed before the end of the quarter, for tax reasons, and because aircraft values reset on January 1 every year. It will just be better for everyone if the deals can be transacted by December 31.”
Iannarelli, who is a long-time member of both Women in Aviation, International (Booth No. C10939) and NBAA, will be available at the WAI booth today from 2 to 3 p.m. to share insights into aircraft consulting and guidance for others seeking to advance their business aviation careers.