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Northern California Business Aviation Association. Welcome!. Agenda. Lunch, Sponsored by Bloomer deVere NCBAA Memberships FAA Presentation Bloomer deVere Presentation Upcoming Events Room Introductions. NCBAA Membership Reminder. http://norcalbaa.org/Membership_Sign-up.html.

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Presentation Transcript
agenda
Agenda
  • Lunch, Sponsored by Bloomer deVere
  • NCBAA Memberships
  • FAA Presentation
  • Bloomer deVere Presentation
  • Upcoming Events
  • Room Introductions
ncbaa membership reminder
NCBAA Membership Reminder

http://norcalbaa.org/Membership_Sign-up.html

faa presentation
FAA Presentation

The Wright Brothers Master Pilot Award

  • The Wright Brothers Master Pilot Award recognizes pilots who have demonstrated professionalism, skill and aviation expertise by maintaining safe operations for 50 or more years.
wright brothers master pilot award
Wright Brothers Master Pilot Award

Charlie Johnson

April 2012

slide6

Today’s Luncheon Sponsor

Mark Bloomer, President Craig Bowers, Sales Director

new and pre owned market update is a recovery on the horizon
NCBAA Luncheon

Mark Bloomer, President

Bloomer deVere Group Avia, Inc.

Tuesday, April 10, 2012

NEW AND PRE-OWNED MARKET UPDATEIs a Recovery on the Horizon?
used aircraft market values of original average equipped retail

Used Aircraft Market Values

% of Original Average Equipped Retail

Used Aircraft Market Values% of Original Average Equipped Retail

67.37%

99.69%

109.53%

111.84%

Source: Aircraft Bluebook Marketline Vol. 24, No. 3. September 2011

2

slide9

Market Forecast by Class of Aircraft

7%

CAGR

15%

CAGR

21%

CAGR

20%

CAGR

Source: Rolls Royce (CAGR: Compound Annual Growth Rate)

3

slide10

Market Forecast by Class of Aircraft

7%

CAGR

15%

CAGR

21%

CAGR

20%

CAGR

Source: Rolls Royce (CAGR: Compound Annual Growth Rate)

4

what is the probability

US Corporate Profits vs. Business Jet Deliveries

# of aircraft ~ 1995 – 2013E

What is the Probability …

Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))

5

what is the probability1

Global Corporate Profits vs. Business Jet Deliveries

# of aircraft ~ 1995 – 2013E

What is the Probability …

Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))

6

boom bust recovery cycles
“Boom – Bust” Recovery Cycles

2000 Gulfstream GV Values

  • PREVIOUS CYCLE
  • Started 4Q/2001
  • 9/11
  • Enron bankruptcy
  • CURRENT CYCLE
  • Started 3Q/2008
  • Lehman bankruptcy
  • Global financial crisis
  • US elections

Retail Value

Wholesale Value

Source: Aircraft Bluebook

8

2006 g550 vs 2002 gv historical retail values and 12 month sales
2006 G550 vs 2002 GV Historical Retail Values and 12-month Sales

G550 Sales

GV Sales

Source: Aircraft Bluebook, AircraftPost and JetNet

10

market forecast
Market Forecast

“What Comes Down Quickly…

…Goes Up Slowly”

  • Price increase dynamics ~ next 6-12 months
  • Overall inventory levels decline to 10% ~ normal
  • Key market segments decline to 5% indicating a Seller’s Market
  • Seller’s hold firm ~ “Just say NO, this is my price!”
  • Inventory Buyers and Speculators return to the market
  • Credit restrictions ease

Confidence

11

what is the probability2
What is the Probability …

Dow Jones Industrials ~ Bizjet Inventory

2008 - 2012

Source: BofA Merrill Lynch Global Research, AMSTAT

12

slide19

Business Jet Industry Gross Orders

Units, % of world total, 2001 - 2010

Source: Bombardier analysis based on OEM disclosures, excluding VLJ and large corporate airliners

13

pre purchase evaluation the process and pitfalls
NCBAA LuncheonPRE-PURCHASE EVALUATIONThe Process and Pitfalls

Craig Bowers, Sales Director

Bloomer deVere Group Avia, Inc.

Tuesday, April 10, 2012

letter of intent
Letter of Intent
  • Executive Summary
    • Short document

Acquisition Decision

Letter of Intent (LOI)

Visual Inspection

Aircraft Purchase Agreement

Pre-Purchase Evaluation

  • Contains the “Basic” Terms of the Buyer’s Offer
    • Purchase Price
    • Delivery Conditions
    • Demo and/or Test Flight Requirements
    • Deposit
    • Pre-Purchase Evaluation
    • Accept/Reject Conditions
    • Transaction Timeline

4

aircraft purchase agreement
Aircraft Purchase Agreement
  • Control Document
    • Replaces Letter of Intent
    • Long document

Acquisition Decision

Letter of Intent (LOI)

Visual Inspection

Aircraft Purchase Agreement

Pre-Purchase Evaluation

  • Complete Transaction Details
    • Price, Taxes, Expenses, Warranties & Escrow
    • Indemnities, Insurance, Governing Law
    • Inspection, Delivery, Acceptance & Closing
  • Attachments
    • Spec
    • Warranty Bill of Sale
    • Technical Acceptance Receipt
    • Delivery Receipt

5

pre purchase evaluation
Pre-Purchase Evaluation
  • Workscope and Location
    • Mutually Agreed to by Buyer and Seller

Acquisition Decision

Letter of Intent (LOI)

Visual Inspection

Aircraft Purchase Agreement

Pre-Purchase Evaluation

  • Pre-Purchase Contract
    • Buyer’s Agreement with Service Center
    • Cost
  • Work Order(s)
    • Buyer’s is For Pre-Purchase Evaluation
    • Seller’s is for Discrepancy Repair
  • Discrepancy Report
    • Format
    • When to Address Discrepancies

6

pitfall 1 document disconnect
Pitfall #1Document Disconnect
  • Key Documents
    • Letter of Intent
    • Aircraft Purchase Agreement
    • Pre-Purchase Agreement
    • Service Center Work Order and Terms & Conditions
    • Discrepancy Report
  • Purchase Agreement may differ from Letter of Intent
  • Service Center has little or no knowledge of Purchase Agreement terms
  • Discrepancy Coding
    • Service Center definition may not necessarily conform to control document language

7

pitfall 2 accept reject conditions
Pitfall #2Accept / Reject Conditions

Buyer

“Sole Right of Refusal”

Seller

“Delivery Conditions”

  • Wants an “out” as late as possible
  • Up-front agreement as to “acceptable”
  • “Buyer may, at any time prior to acceptance of the Aircraft following the Inspection, and in Buyer’s sole and exclusive discretion, reject the Aircraft…”
  • “On the Closing Date, the Seller shall deliver the Aircraft in conformance with the following conditions…”
  • Nothing could possibly need “repairing”, this aircraft is perfect!
  • Wants absolutely every, single discrepancy addressed!

8

pitfall 3 discrepancy squawk list
Pitfall #3Discrepancy / Squawk List
  • Manage Expectations
    • Buyer wants every, single discrepancy repaired
    • Seller believes their aircraft is the best maintained aircraft flying – what could possible need repairing?
  • Clear Definition of a Discrepancy
    • What is “Airworthy” and “Non-Airworthy”
    • How does the Service Center code discrepancies?
    • Large number of Discrepancies are “Info Only”
    • Additional time and cost to investigate
  • Discrepancy Resolution
    • Accept/Reject Conditions
    • Correct discrepancies during inspection or wait?
    • Market conditions will likely influence ultimate agreement

9

airworthy or non airworthy
Airworthy or Non-Airworthy?

AIRWORTHY

NON-AIRWORTHY

INFO ONLY

10

the bottom line
The Bottom Line

The reality is….

Can’t force anyone to SELL an aircraft and you can’t you force anyone to BUY one.

next ncbaa luncheon
Next NCBAA Luncheon

May 8th - Hayward Airport Event

Luncheon, static displays, NCBAA Scholarship announcement, and more!

www.norcalbaa.org

may 8 th hayward airport event
May 8th - Hayward Airport Event

Where: ParkAvionHangar Complex at the Hayward Executive Airport

When: 11:00AM – 1:00PM, Static display open until 3:00PM

Lunch: Sit down, in-flight catering style heavy hors d'oeuvres starts at 11:30AM

Key note speaker:  

"When the FAA comes a knocking" by John Van Geffen, Michael Dworkin & Associates

Static Display: Vintage Grumman Albatross, Legacy 650, Hawker 4000, Falcon 2000, Challenger, Piaggio, Eclipse, 

Pending: Challenger (Solairus), G450 (Gulfstream), G200 (TWC)

Sponsors:  Ascend Development, Air Culinaire, APP Jet Center, Avantair, Embraer, Dassault, Hawker Beechcraft, CTP Aviation, Mather Aviation, SP Aviation