In view of the unique environment created by the COVID19 pandemic, Jay Mesinger discusses the new challenges that business aviation buyers and sellers are facing, and how they need to operate differently than they have during previous aircraft transactions, in order to place themselves in a strong position to successfully complete their deal. As virtually every element of the acquisition and / or sale of an aircraft is being affected by current events, Jay discusses how one needs to approach the market to successfully conclude a transaction in today’s COVID-19 environment. Areas covered include:
Jay Mesinger is the CEO and Founder of Mesinger Jet Sales, an international aircraft brokerage firm, with over 46 years of experience in the aviation industry. Mesinger Jet Sales has modernized the formula for buying and selling aircraft providing their clients with the best market intelligence for aircraft sales pricing and correct acquisition expectations leading to successful transactions.
Jay is an industry leader and figurehead. He was a Member of the Board of the National Business Aviation Association (NBAA), and the Chairman of the Associate Member Advisory Council (AMAC). He was the first aircraft broker to serve on the NBAA board and served on the AMAC committee for 10 years ending in October, 2013. Jay has also been on the Customer Advisory Boards of Jet Aviation, Airbus North America and Duncan Aviation. Jay is and has been a member of Gulfstream’s “Key Player” team and Bombardier’s “Influencer” group since their respective inceptions. Jay is also a member of the European Business Aviation Association (EBAA) and the Colorado Aviation Business Association (CABA). And, Jay serves on the Board of Directors of The Morris Animal Foundation.
In addition, Jay regularly speaks at industry gatherings, writes the monthly Mesinger Pulse newsletter, and started the very first aviation brokerage website over 25 years ago.
Mesinger Jet Sales has modernized the formula for buying and selling aircraft providing our clients with the best market intelligence for aircraft sales pricing and correct acquisition expectations leading to successful transactions. Transparency, a hands-on process, forward-thinking intelligence and analysis, technical support throughout the transaction and an unwavering commitment to protecting our clients’ best interests are just some of the things that set us apart and all part of what leads to our success for our clients.
Welcome to another Asset Insight podcast covering the aircraft ownership life cycle. I am Tony Kioussis, president of Asset Insight and your host. I’m speaking today with Jay Mesinger, who is the CEO of Mesinger Jet Sales and he’s also a well-known individual within the business aircraft acquisition and sales arena. Jay, welcome to our series of educational podcasts covering the aircraft ownership life cycle.
Jay Mesinger (01:01):
Thanks Tony. I’m very proud to be included in this educational series
Tony Kioussis (01:06):
As you and I discussed recently, these are unique times for business aviation and for the world really, and understanding the new challenges that buyers and sellers are facing and how they need to operate differently than they have during previous aircraft transactions will be the key to placing them in a strong position to successfully complete their deal. You also mentioned to me that virtually every element of the acquisition or the sale of an aircraft is being affected by current events. I would like to discuss how you believe one needs to approach the market to successfully conclude a transaction in today’s COVID-19 environment. Let’s start off by talking about why one would use the services of an experienced broker in general, but specifically today.
Jay Mesinger (01:56):
I was on a call yesterday with a potential client who said to me, as many do, “Well, I was on controller.com and I saw all these airplanes, tell me what value you’d bring to me in this process?” And I also spoke to an aviation attorney who said, “You don’t need a broker. I can do this for you.” I’m always interested to be able to answer that question because one of the answers is the cost to hire a broker is so much cheaper than the cost to not have one and to make a myriad of mistakes, all of them enormously costly, but today is especially interesting. And before I got on the phone with you to record this, I do what I do every couple of weeks, I’ve called a couple of title companies, escrow companies and I said, “How are we doing? What’s going on? What kind of deals are closing?”
Jay Mesinger (02:46):
And they said, “Oh, now we’re seeing another huge, terrible thing.” We had several fraudulent deals this week alone, where somebody had represented to a buyer that they had the exclusive right to be selling an airplane, gave the buyer wire transfer instructions. These were different people doing it. So it wasn’t one person doing it three or four times. It’s now becoming pervasive and giving them wire transfer instructions that got money nowhere to the airplane, but to these fraudulent people. So why especially today, desperate times bring out desperate people doing desperate things. But the other important piece is yesterday, back to that conversation where people say, “Well, what value can you bring me? I just want the cheapest airplane.” And I remind them that the cheapest airplane is never typically the best choice. People don’t understand that pedigree, maintenance integrity, where it’s been operated, how it’s been operated.
Jay Mesinger (03:49):
These airplanes were only equal the day they were built. From that point forward everything about them becomes different. So why do you need an experienced aircraft broker? You need somebody that has relationships in the industry because there are no recommendation bodies for the price of airplanes when they sell. So sellers say they got more, buyers say they paid less. You’ve got to really be in the market and have relationships and friendships. My son, Adam, who handles that piece of our business, the valuation side, was invited to join what is an every Friday conference call between himself and about 30 aircraft researchers and what great friends. And they started this friendship at NBAA. So the friendships and the relationships that they have get accurate, or at least much more accurate information on the selling prices of airplanes or the motivation or the expectation of a seller, even before it’s filled. Again, why haven’t experienced broker. Go to controller.com and look up airplanes, no policing on that, which is a public side of where anybody could go in and see what’s for sale, but they’re not necessarily airplanes that are really still for sale or airplanes that have any pricing guidance whatsoever or any real attention or attraction to somebody that has the right to sell it.
Jay Mesinger (05:06):
My other most favorite thing is off-market airplanes. Again, why would you have an experienced broker? I would never bring a client of mine and off-market airplane that I didn’t know the serial number of, understand who owned it, understand if the person representing it or bringing it to me had a responsibility or an ability to bring it to me. These are the kinds of things that experienced brokers can smoke out, used to have somebody working for you. That’s the bottom line.
Tony Kioussis (05:34):
The value of a broker is often understated, but only by those who have not experienced the challenges of working in this industry. The inexperienced buyer is often the one that discounts the value of the broker. The experienced buyer knows the value of the broker quite well.
Jay Mesinger (05:51):
To that point, the problem is the inexperienced buyer who believes they need the broker is not only looking for the cheapest airplane. They’re often looking for the cheapest broker and when something goes wrong, they blame it on the broker, as opposed to their own inability to have sourced and paid the right price for a broker. Then all of a sudden the brokerage side of the business is as terrible as every other part of the airplane side of the business in their mind. And if they feel like they didn’t get their money’s worth when they hired the cheapest broker, it just means the next time they hire a broker, they want to hire one even cheaper because their expectation is even less.
Tony Kioussis (06:29):
Let’s talk about price for a few minutes and especially how it’s been affected by the COVID-19 crisis.
Jay Mesinger (06:36):
We tend to talk about pricing as pre-COVID and current, and we can’t talk about it yet as post-COVID because we don’t know. And clear pandemic events, though maybe not viruses, you could certainly look at 2008 and 2009 and the global collapse, economic collapse. And you could see that airplanes literally went down 50 to 70% overnight. Now let me tell you that leading up to 2008, starting in 2003 as the global economy really took off and the emerging markets just went into high gear places that had not really been large airplane buyers and owners and operators like the middle East, China, Russia, Latin America, areas of the world where business aviation had not taken hold and started it take hold. And these countries either never really understood whether or not the reason that they like new airplanes was because they thought if they got older they’d fall out of the sky or because their wealth was new so everything they wanted to buy needed to be new, but it puts such demand on new and like new airplanes that people were paying premiums, five, 10, 15, 20% premiums.
Jay Mesinger (07:47):
So when I say that the market went down 50 to 70%, remember it had gone up falsely because of the premiums and the next interesting period, because then the market began to recover. Prices never come back. And we’ll talk about that in a minute. The next interesting time for our aircraft valuation was starting in 2015. And I wrote an article at the beginning of 2015 that says careful what you wish for. And it was about three things for the United States, greater energy independence, a low price of energy itself, of fuel itself and a stronger dollar. And I went on in that article to say, “Damn, if we didn’t get them all in the same day.” The price of fuel went from $150 a barrel in round numbers to $25 a barrel. The United States had tremendous energy independence starting then. And the strength of our dollar went through the roof and all three of those together made every energy related country and energy producing company and the companies that provided the goods and services to those countries and companies almost overnight stopped capital expenditures.
Jay Mesinger (08:55):
So that meant that these companies that were going to go or countries go buy new airplanes, just said, “Whoa, we’re not going to do it.” And that affected the value of our airplanes for the entirety of 2015, the entirety of 2016 and the first quarter-ish of 2017 at the tune of four to 6% residual loss rate per quarter, 25, 20, 25% a year. Unsustainable, of course, but that’s what it did to the value of our planes. Now you come fast forward to today. I don’t know what it’s going to mean. I’m cautious about leading our industry down a path of getting a buyer to have reactive pricing guidance and throw darts at the wall for prices. And I’m hesitant to get sellers to believe what they should begin to accept yet until we have a little bit greater vision of what I call right now, a science experiment, where we’re trying to open up our country and we need to see how successfully that can be on the basis of any reinfection or waves or spikes.
Jay Mesinger (10:02):
But I can tell you that historically the price of airplanes do not come back up at the end of an event. They just slow their descent. And so sellers that say, “I’m going to wait because the prices are going to go up,” are wrong. It’s going to be worth more today than it will be in the future, whether or not the pandemic continues to go on and affect it, or whether we just get back to what is a traditional residual loss rate. Because it’s just a piece of equipment that everyday gets older. Every hour gets higher time. But when I hear sellers say, “I’m just going to park my airplane and not use it for a year and come back in.” I assure them that it’s going to be worth less a year from now than it is today. I have been very cautious to say, as I’ve heard some of my fellow brokers give a percentage, 20%, 30%, I don’t think we can say yet. What I am seeing is somewhere between five, 10 and 15%, at least now. And I think if we could keep that residual loss rate in those numbers, we’ll have come out fairly unscathed as an industry, dealing with the value of our assets.
Tony Kioussis (11:07):
The idea that you’re going to park an airplane and then come back and get more money out of it is just frightfully wrong. And I agree with you completely. The fact of the matter is when you park an airplane, you create more problems for yourself than any money you might be able to save. Well, what about the way buyers are prepared or not prepared today for the conditions that they’re facing? What about buyer preparedness overall?
Jay Mesinger (11:32):
I wrote an article recently about what it looks like to be a buyer, and it’s a reality, and it’s a perception. And as sellers are having to deal with taking less for their airplane, less than it was worth three months ago, and trying to understand what it’s worth, where they need to go and say yes to or no to, there’s so much responsibility on the buyer side. And I say to buyers, “Be responsible, don’t be reactive. Don’t take a dart and throw it through all and say, “Well, I believe it’s worth 25 cents on the dollar, 50 cents on the dollar.”” That’s a reactive opportunistic situation that is not going to be well received by the seller. Also as a buyer in your preparedness, don’t go out and make three or four offers on the same day on three or four airplanes, just to see who will take your opportunistic number.
Jay Mesinger (12:20):
Sellers are not going to respond to that. You must be reasonable, not reactive in both what you’re willing to offer, which again is why it’s so important to have a good, smart partner, like a broker that understands the market and understands the values to go into the market. So you could be taken seriously by a seller. Another conversation I’m having with several of the escrow agencies are the number of deals that are being canceled or not completed. That’s really what’s abundant right now, not the deals that are completing, but the deals that are canceling and falling apart and they’re falling apart for all the wrong and right reasons. Many of the buyers had no business going into the market. They currently were not in a position to fulfill a complete transaction because their own financial situation had not put itself out yet so they didn’t understand really where they’d be through the course of a process of buying, or they’re just afraid halfway through a deal that the market is eroding and so they should be paying less so they want out.
Jay Mesinger (13:19):
Today, interestingly enough, not many places you can travel anyway. So as a buyer, what do we need to do as sellers to motivate you to come into the market today ahead of understanding where the end is, but going ahead and making a deal and making a deal that you can complete and will want to complete. That’s a real trick. And much of that is due to where a buyer believes they will need and use a piece of this kind of equipment either because I’m never going to get on a commercial flight again, or I’m tired of charters and whatever the reason we need to embrace that buyer, but that buyer needs to come in with a gentleness and a respect for a process and not just come in as an opportunistic person.
Jay Mesinger (14:04):
I was on a call yesterday with another prospect who said, “Well, if I buy today, can I be sure that six months from now, or a year from now, or 24 months from now, the price doesn’t go down dramatically and I’ve overpaid?” And I said, you absolutely cannot have any confidence in that. If that’s what you’re hoping for, I’d probably wait 24 months to buy and just hope that there’s something there for you to buy. If you could really use the piece of equipment you want, and you’re willing to be reasonable and responsible in the kind of offer you’d make. So it goes down another 5% or 10% over the course of the next 12 months. If you haven’t gotten that kind of value out of the use of the asset, you shouldn’t have come in today. You should probably never come in. Just charter or buy a fractional chair.
Tony Kioussis (14:47):
I think people very often forget about the use of asset. They just look at the price of the asset at any given point in time, the snippet in time so to speak. How do you address the whole aspect of viewing the aircraft and moving the asset around to an inspection facility for a pre-purchase inspection? There’s got to be some new challenges associated with that.
Jay Mesinger (15:09):
It’s like you said when you introduced me, every single thing about this process is different. Getting a person to travel, get on the airlines, go see an airplane, go into somebody else’s hanger or facility. That’s a challenge in and of itself and that’s different. And many of the sellers are still hunkered down at home in terms of their flight department personnel. And they’re not at the hanger to let somebody in, even if you could get somebody to travel and then to accompany them and to sit with them for three days and review the record. Sometimes the idea of what comes first changes. Typically we’ll give a seller and LOI. It will be conditioned on many things, of course price and terms, but also on our ability to come to the aircraft’s home base and perform what we call a site visit.
Jay Mesinger (15:58):
We just did it on a Gulfstream last week, rather than send my technical person on an airline to fly to California, I hired somebody on the technical side of that business at that airport that I knew by reputation that his ability to understand a Gulfstream and the records was very high. I hired him to go in, nobody had to travel. He had to meet the terms and agree to the terms of that hangar and those people there, meaning he had to have his temperature taken before he entered. He had to wear a mask, wear gloves, keep the social distancing. That’s very different than sending three or four people, the buyers pilot, somebody else from the buyer’s side, our technical person, and just traveling and everybody meeting and staying in hotels. That’s very, very different. The next thing is, once you do the site visits and you agree to move forward, your contract has to also be different. That would be the next thing you do is you’d contract the airplane before you go to pre-buy.
Jay Mesinger (16:56):
One of the things that’s changing is supply side. An airplane that we are working with right now has loaner engines on it. And the loaner engines would have been changed to the permanent engines, both of them were being overhauled, prior to closing. And we were notified by the engine overhaul company that because of supply side during this time parts weren’t available and the time to overhaul was going to be elongated by an additional two months. So we had to, as a buying team, get comfortable contractually and emotionally with the idea of buying the airplane with loaners on it and flying it until sometime in the future. And the overhaul facility could not give us firm dates or even proposed dates. That’s very different too. That’s an emotional and contractual issue to have to overcome. The other is a force majeure in the contract. How long will you have a force majeure clause different than what you might’ve had traditionally that might’ve been 30 or 45 days due to supply side or facilities being closed because of infection. You just don’t know. So that’s a difference. And that’s another issue that buyers and sellers have to work carefully together in order to get a deal done.
Tony Kioussis (18:15):
How much of your contract has actually changed because of the current environment? Is it a large portion of the contract that you’ve been used to or is it just a couple of sections here and there?
Jay Mesinger (18:27):
It’s really probably a couple of sections here and there. I mean, like I said, the force majeure section. You might be more tolerant of having a loner part on an airplane than you would have in a normal transaction. You might have a longer drop dead date for the time that the process will take. If you walked into a maintenance facility in the days prior to this, you’d walk in and there might be six or seven people working on the airplane in tight quarters with each other. Avionics people working with maintenance people working with engine people and they’re all in the airplane. That can’t be today. And these facilities are practicing social distancing among what many of them call a pod, P-O-D, of people where it might be three people assigned to the airplane. And those three people always work together. If anybody got sick, the whole group of three will have to go home and quarantine.
Jay Mesinger (19:18):
And that could create a delay because there’s not just another group of three people standing in the corner waiting to come to the airplane. Much of the contracting that we were used to that was important to memorialize, create within the four corners of a document, most of that is the same, but it’s just being thoughtful about those differences. So we don’t focus so much on what’s the same. We focus on the differences and try to minimize the differences, manage the differences, work collaboratively with both sides on the differences. And these are new challenges for the aviation attorneys, for the brokers, for the maintenance facilities to work within those four corners of what’s been papered. It’s a real team effort to get to that.
Tony Kioussis (20:04):
And I’m not suggesting that the maintenance facilities would be doing anything wrong, but I’m curious, do you think you’re going to see an increase in the cost to do inspections just because of the requirements on personnel, other than the airplane being on the ground, perhaps a little bit longer, because you can’t have an army of people working together, besides that, do you see any change in the cost to run inspections?
Jay Mesinger (20:29):
Not yet, but those are great points Tony, and, I think that the maintenance facilities and all providers are actually going to be challenged as to what they do with respect to those costs and how they treat them. For instance, I’ve heard that some of engine program providers are looking at when your payment is due, because for a lot of people that are not using their airplane and have, for instance, no revenue coming in from charter or can’t use the plane and they parked it, they’re going to allow for lower minimums this year. They’re going to allow for an abeyance in payment of up to 90 days with some of them. So though their costs may go up, I think they’re trying to keep their market share up. And that’s a real balancing act. What do you do? You can’t drive people away with too many higher costs?
Jay Mesinger (21:18):
I think that one of the things that I know the maintenance companies and the companies that do a modernization are trying to take advantage of is those people that can’t fly right now that had some maintenance coming up and they know that as soon as they can fly, they’re going to want to hit the air and not be grounded are going in the shop and saying, “Get me up to date for the next three months,” or, “I’m going to go ahead and do this interior refurbishment that I had put off because I’ve got the time and it won’t impact my schedule.” So there’s some of that going on and you wouldn’t want to dissuade that with higher costs. You’re going to want to just keep a cashflow coming in and a revenue stream coming in. It’s a real balance. Balance is a word that we can find a place for in many sentences right now.
Tony Kioussis (22:02):
When someone’s looking to buy an aircraft, what do you see them focusing on? Is there anything specific to the current environment that they’re focusing on that you have not seen in the past, let’s call it pre-COVID-19?
Jay Mesinger (22:15):
I think they’re focusing in many cases on what’s coming with respect to supply, will there be a greater amount of supply? Will that lead to lower costs, lower prices for the airplanes? Will they be willing to take aircraft that they might not have been willing to take before? For instance, something with less of a pedigree, more of a story, less certifiable good maintenance just to get price. I think that that piece is the piece that probably won’t come to fruition. Although people talk about it. I think the piece that does come to fruition and is a sincere one, is what kind of supply will there be with NetJets and some of the other fractional providers going to the manufacturers and canceling or pushing back orders. Is that going to mean that there’s some new aircraft inventory that’s going to be available? That’s going to do two things, give a greater opportunity for price with respect to the new plane pricing and will an abundance of new planes or white tails on the market drive pre-owned prices down?
Jay Mesinger (23:19):
I’ve spoken to all the manufacturers and really, I don’t think that a big, even though there have been some cancellations, I don’t think that there’s going to be a big white tail problem. Honestly, I think there might be a few extra planes, so I don’t see that really impacting it, but that’s on people’s minds and that’s a discriminator about what they should buy, what they should pay and when they should act.
Tony Kioussis (23:41):
Are you seeing people reaching for larger aircraft because they think that some of the larger aircraft are undervalued? And we’re talking specifically now about the used market, not the new market.
Jay Mesinger (23:55):
I’m not seeing people overbuy. In fact, I had seen that start to stop pre-COVID. I had seen for instance, the 650 market slowing down and the 550 market picking up. The Rolling Stones have a great song, “You don’t always get what you want, but you get what you need.” And I think there were people that were buying bigger planes because they could, even though they didn’t need them. their legs were four hours, they want 15 hour legs. So I saw some emphasis on need versus want shifting pre-COVID anyway to people being a little smarter and buying more closely aligned to mission fulfillment than just buying big. How that will play out post-COVID we’ll see, right now there are so few transactions anyway, that it’s very hard to show a trend.
Tony Kioussis (24:46):
That’s part of the problem, isn’t it? We’re all dealing with a small pool of examples that we’re trying to gauge where the market’s going. And that’s always challenging if not dangerous. Are there other areas that buyers and sellers should be considering, new practices or even novel arrangements or anything like that?
Jay Mesinger (25:06):
I don’t think that any of this has taken us to practices outside of what has been good behavior and usual and customary, save some of the changes and complexities of viewing a plane or moving into an inspection facility. But I think good behavior in a deal, I haven’t seen that change. I’ve heard some cases of fraud and bad actors always tend to come up. I’ve seen some behavior that wasn’t buyer and seller related among brokerage communities, where somebody says, “I want to steal an airplane,” and five brokers talk to this person and nobody gets an exclusive and everybody’s out chasing planes that are not really existing or not really at those prices. And the rumor mill picks up about what you can pay. And I think that’s unfortunate and that sends buyers and sellers out with false expectations, but I don’t think I’ve seen much change other than specific processes that just have to change to meet either the stay at home or the different guidelines that are set up for each State individually. But we aren’t at the end of this. So I don’t know where we might be led with respect to behavior and practices and any redefinition of usual and customary.
Tony Kioussis (26:20):
From a value standpoint, do you see value in the hourly cost maintenance programs? And I’m specifically really focused on engine and APU programs as opposed to the airframe programs that are out there.
Jay Mesinger (26:34):
Oh, I continue to see value in those. I think that as the fleet ages and the airplanes begin to pass on from their first owners and get into the hands of people who will then be tasked with the financial expenses, performing hot sections or overhauls in some cases for the first time that the financial impact or risk of not having them can be huge. The value of the airplane is enhanced by programs, not more than what the program costs to enroll on, but when you go out to market an airplane, those planes that have programs I think shine and rise above those that don’t, even though they can be added. It’s just one more thing to have to think about. I think that parts programs are different because parts programs really don’t have an equity to them like equity that’s built up over years of paying into an engine program. Those are more of an annual program. You take it on, you let it go. It doesn’t have a cash value. I don’t think it adds as much to the value of the airplane is it did to the person that had it during the course of the operation.
Tony Kioussis (27:34):
I tend to agree, the airframe programs are challenging to value at best and as an appraisal firm we try to do that, but it’s not an easy thing to do. Let’s talk about the financing environment for a second. How are you finding it? And I guess perhaps even just as importantly, how are your clients finding it?
Jay Mesinger (27:53):
In 2008, 2009 after the global crisis, and we started to come back around and get to an industry that was beginning to get a little healthier. Lenders would all say, “We’re open for business.” And I remember one day I was making a speech at a Teterboro, I think, at an NBAA forum. And I said to a couple of the lenders, “Come on up, tell us about what it means to be open for business.” And they came up and they said, “Yeah, we’re ready to lend money on 10-year-old and newer airplanes on this kind of balance sheet, on this kind of this and this kind of that.” And I said, “Wait a minute, you’re open for business for a tiny segment of the market that needs you to be open for business. What about the rest of them? Those people that have 11-year-old airplanes or 15-year-old airplanes, or aren’t willing to sign a personal guarantee?”
Jay Mesinger (28:46):
And when you narrowed it down open for business, really didn’t define open for business. And you’d think because rates are down at all time historic lows, that what a great time to buy a plane. But I think the lenders in many cases are diverting some of their portfolio dollars away from aviation and to other segments of the industry. And it’s not easy to get a loan on an airplane. I mean, there’s some tremendous people out there who I don’t want to say nobody’s making loans on planes, but it’s not as fast, it’s not as cheap, and it’s not as easy.
Tony Kioussis (29:23):
We’re hearing that from a number of different sources and I’m not blaming the financial services community. They’ve got to do what’s right for them clearly as well, but it’s not as easy as it’s been. And there is an aspect of this COVID-19 environment that has to make them nervous.
Jay Mesinger (29:42):
What they don’t know is the residual value of the airplane and where they need to be from a debt to equity ratio.
Tony Kioussis (29:50):
Are you finding any difference in the thought process of the client between loan financing and in lease financing because of that specific reason, not to take the risk on the residual?
Jay Mesinger (30:01):
I guess I have to go back to tell you that there just isn’t a lot of real activity going on right now. So to be able to draw real parallels is not as easy today as it might be four weeks from now, as more business begins to crop up and people come off the fence. But I think that a lot of what’s going on right now, frankly, are cash buyers. And those people that are coming in with a big need for financing right now are not coming in to talk about airplanes because they’re paying attention to the rest of their world. And I don’t know if they want to add debt to their portfolio at this juncture. So I’m not seeing as much of that as I am seeing people that want to come in and just pay cash. Now that doesn’t make that what they buy priced any better, because frankly you get cash as a seller the day it closes anyway, but I am seeing more people just saying, “I’m going to pay for it and if I want to finance it later, I will.”
Tony Kioussis (30:56):
And that’s one of the things that skews the financing statistics, just as an aside, you get a cash transaction so it’s labeled as a cash deal. And of course 10 days later, they use one of their credit lines to basically pay for the airplane that they just pay cash for. I know that you’ve closed on a few transactions during this period. What else relative to your firm’s capabilities and services would prospective aircraft buyers and sellers, what should they know about your firm’s services and capabilities?
Jay Mesinger (31:25):
I can tell you that we’re 46-year-old company. We’re a family business. I would never bring my family into a business that would put them at any kind of negligent risk. We come to work every day to make sure that our client is served first. We are very transparent. We do not engage in back-to-back transactions. We do not engage in off-market airplanes whose primary purpose is to just have a financial impact in the middle. We care about what we do, and we would be the first to tell a client. And we work each year with a lot of first time buyers that buying an airplane is not going to work for them. And nobody pays us a dime for that, but it’s the right answer. So we look for right answers. We’re client centric. We are transparent and we focus on what we believe are the right things for a successful transaction.
Tony Kioussis (32:20):
This has been another Asset Insight podcast covering the aircraft ownership life cycle. Please visit our ever-growing podcast library at assetinsightpodcast.com and select from any number of topics discussed with business aviation industry experts. This is Tony Kioussis and as always, thank you for listening.
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