I am writing you from an airplane as I fly home after showing a Falcon 900EX that we are representing for sale. This is an exciting time in our business as buyers come back in and I am proud to say that we are working on many pending transactions both buying and selling. Everyone wins as buyers start buying again. A seller finds a buyer. A buyer finds a good aircraft at a great value. A service center gets business for a prebuy inspection. Brokers help facilitate the sale. Attorneys help contract it. Insurance agents sell new policies. Flight departments are built, sustained or expanded. Fuel is sold and so on.
At the same time, I was reminded today of the harsh reality that we are not out of the woods yet. We have been representing an incredible Challenger 601-3A for a long time. In 2007 we sold eleven Challengers. Today, the Challenger markets are still sitting virtually quiet as other markets around them start to move. This particular aircraft has approximately 6,000 hours total time. The engines have 200 hours each since overhaul. It is highly equipped and it has had many avionic upgrades over the years. It has a 12 passenger interior in good condition. And, the records and pedigree couldn’t be stronger. Yet, we have struggled to find a buyer even though it stands out as one of the best aircraft and best values in the 601-3A market (call today to learn more if you might be interested in the aircraft).
About a month ago we started working with a buyer. He seemed well qualified and he built the right team of partners around him to help facilitate the sale. We agreed on a sale price and sale terms and had a signed LOI and deposit in escrow. Unfortunately, today he terminated our sale because the bank that initially approved him has decided they are unwilling to loan on the aircraft. Actually, he said that he contacted many banks and none of them will finance the sale through a traditional aircraft loan; even with his willingness to put down 20% or more. The objection was not about the merits of the aircraft or even its competitive value in the market, but instead the age of the asset. The aircraft is a 1989 model and none of the lenders he talked to want to loan on an aircraft that is twenty years old.
As I sit here thinking about losing this potential sale I am reminded that as great as it is to see buyers come back into the market, we are not out of the woods yet. Many make and model markets are experiencing great activity, however, that activity is predominantly in the newer aircraft. We still have challenges ahead of us. Hopefully the buyers, lenders and our industry won’t lose sight of the fact that for aircraft that are well maintained, age alone won’t make them obsolete. Even aircraft that are twenty years old or older can provide safe reliable lift for owners, operators and buyers for years to come. There is a lot of value in some of these aircraft. This particular Challenger 601-3A would have sold quickly in 2007 for $11,000,000 or more. Today, we are only asking $4,850,000. I have spoken before about looking at all of the layers of the onion to understand the full story about an offering. Age is only an outside layer. I hope that buyers (and their lenders) don’t miss the sweet inside due to the age alone.