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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. - PowerPoint PPT Presentation
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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•An individual employed by a business aircraft operator or who is directly involved in the operation of business aircraft (examples: corporate flight department personnel, charter operator, owner operator, dispatcher, charter marketing department). This membership includes voting rights.
Regular Member Individual $60.00
•An individual NOT employed by a business aircraft operator or directly involved in the in the operation of a business aircraft however this person is involved in the Air Transport Industry in some capacity. (examples: vendor or service provider, FBO, flight planning service provider, insurance, marketing). This membership does not include voting rights.•All of the above membership dues include a $15.00 contribution for the Scholarship/Mentoring Program
Associate Member Individual
$60.00
•An individual employed by a Government Agencies, or attending an aviation related field of study in an Educational Institution (Students must have valid student ID)/ a person retired from the aviation industry but still wants to be involved and contribute (examples: airport manager, ATC, FAA, student working on an aviation degree or certificate, retired pilot, retired ATC, retired aircraft management or service provider).•This membership does not include voting unless the person is actively involved in NorCalBAA organization or committee of the NorCalBAA)
Exempt Member Individual (free)
http://norcalbaa.org/Membership_Sign-up.html
FAA PresentationThe 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
Charlie Johnson
April 2012
Mark Bloomer, President Craig Bowers, Sales Director
Today’s Luncheon Sponsor
NEW AND PRE-OWNED MARKET UPDATEIs a Recovery on the Horizon?
NCBAA Luncheon
Mark Bloomer, PresidentBloomer deVere Group Avia, Inc.Tuesday, April 10, 2012
Used Aircraft Market Values% of Original Average Equipped Retail
Used Aircraft Market Values% of Original Average Equipped Retail
Source: Aircraft Bluebook Marketline Vol. 24, No. 3. September 2011
99.69% 111.84% 109.53%
2
67.37%
Market Forecast by Class of Aircraft
Source: Rolls Royce (CAGR: Compound Annual Growth Rate)
20%CAGR
21%CAGR
15%CAGR
7%CAGR
Last 10-years Next 10-years ChangeAircraft 7,512 10,588 41%Value $bn 157 284 81%
3
Market Forecast by Class of Aircraft
20%CAGR
21%CAGR
15%CAGR
7%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
Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))5
What is the Probability …Global Corporate Profits vs. Business Jet Deliveries# of aircraft ~ 1995 – 2013E
Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))6
7
“Boom – Bust” Recovery Cycles
PREVIOUS CYCLE• Started 4Q/2001 • 9/11• Enron bankruptcy
CURRENT CYCLE• Started 3Q/2008• Lehman bankruptcy• Global financial crisis• US elections
2000 Gulfstream GV Values
Retail ValueWholesale Value
Source: Aircraft Bluebook8
ULTRA-LONG RANGE
LARGE CABINHIGH SERIAL NUMBER/LOW TIME
SUPER MID-SIZE CABIN
LARGE CABINLOW SERIAL NUMBERS / HIGH TIME
MID-SIZE CABIN
9
“Boom – Bust” Recovery Cycle
2006 G550 vs 2002 GV Historical Retail Values and 12-month Sales
Source: Aircraft Bluebook, AircraftPost and JetNet10
G550 SalesGV Sales
“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
Market Forecast
11
What is the Probability …Dow Jones Industrials ~ Bizjet Inventory2008 - 2012
Source: BofA Merrill Lynch Global Research, AMSTAT12
Business Jet Industry Gross OrdersUnits, % of world total, 2001 - 2010
Source: Bombardier analysis based on OEM disclosures, excluding VLJ and large corporate airliners13
PRE-PURCHASE EVALUATIONThe Process and Pitfalls
NCBAA Luncheon
Craig Bowers, Sales DirectorBloomer deVere Group Avia, Inc.Tuesday, April 10, 2012
Pre-Buy Evaluation
Who Cares About the Pre-Buy?
2
Acquisition Decision• Define
Mission
• Target Aircraft
• Buy or Lease
LOI
Visual Inspection• Records and
Logbooks• Interior &
Exterior • Demo Flight
Aircraft Purchase Agreement
Pre-Buy Evaluation
I Want to Buy An Airplane!
3
Letter of Intent
• Executive Summary– Short document
Acquisition Decision
Letter of Intent (LOI)
Visual Inspection
Aircraft Purchase Agreement
Pre-Purchase Evaluation
4
• 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
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
5
• 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
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
6
• 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
Pitfall #1Document Disconnect
• Key Documents– Letter of Intent– Aircraft Purchase Agreement– Pre-Purchase Agreement– Service Center Work Order and Terms & Conditions– Discrepancy Report
7
• 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
Pitfall #2Accept / Reject Conditions
Buyer “Sole Right of Refusal”
Seller“Delivery Conditions”
8
• 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…”
• Wants absolutely every, single discrepancy addressed!
• Nothing could possibly need “repairing”, this aircraft is perfect!
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?
9
• 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
Airworthy or Non-Airworthy?
DISCREPANCYSealant missing in areas on R/H engine between nose inlet cowl and acoustical lining AFIS printer will not print from MCDU #1Intermittent Water Tank level indication on Galley switch panelCopilot’s windshield has discoloration on outboard and inboard sides Right Wing fixed trailing edge lower surface has a single dentDesign eye locator is chipped up Fuel leakLeft APU Igniter Plug is worn to 0.011” exceeds the 0.09” limit Right APU Igniter Plug rattlesLeft side Thrust Reverser-Outboard PDLA bearing inspection found the Fwd bolt corrodedBrake accumulator gauge lens is cracking at mounting holes
AIRWORTHY
NON-AIRWORTHY
INFO ONLY
10
The Bottom Line
The reality is….
Can’t force anyone to SELL an aircraft and you can’t you force anyone to BUY one.
Thank You
Mark Bloomer, PresidentCraig Bowers, Sales Director
www.bloomerdevere.com
Next NCBAA Luncheon
May 8th - Hayward Airport Event
Luncheon, static displays, NCBAA Scholarship announcement, and more!
www.norcalbaa.org
May 8th - Hayward Airport Event
Where: ParkAvion Hangar Complex at the Hayward Executive AirportWhen: 11:00AM – 1:00PM, Static display open until 3:00PMLunch: 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 & AssociatesStatic 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
eBay Scholarship Auction
Doug Rice – NCBAA Advocacy Committee