The Mesinger Blog

Originally published as a blog for AINsight for Aviation International News on 12/1/23

There are so many signs that it’s that time of year. Fireplace chimneys smoking, commercials on television playing Christmas music, and department stores setting up the Santa area for kids to whisper in Santa’s ear what they hope to have under the tree on Christmas morning. From my vantage point, I can almost see the new year by the drop off of calls from people who are trying to capture a year-end transaction. Sure, I am still getting some, even as recently as last Friday looking for an opportunity. But most people are thinking about next year rather than this year.

This has been a very good year on many fronts. The transactions have been less frenzied and the balance in our market seems to be returning. Inventory levels are increasing, signaling the balance is here to stay (for a while). Days on the market are lengthening. This gives the buyers more choice and success in negotiating for better pricing rather than just having a yes or no answer from a seller. Don’t misunderstand, prices are not dropping off a cliff. They are gently floating down a bit. This gives sellers the ability to not feel they are in a fire sale and buyers a bit of confidence they are not in a bidding war. Both sides are winning.

As I look out over the horizon into next year, I see what mirrors the start of 2023. A bit of a slow start to the transactions in the first quarter. This momentary slowdown will afford those buyers who can wait opportunities that may be a bit better than the 4^th quarter of 2023. Buyers will have time to scour the market and find the best opportunities. The seller may feel a bit panicked, but this feeling should not last since the market should pick up steam as the second quarter begins.

Remember, 2024 is an election year. This always takes a few buyers to the fence to await the outcome. I have always felt that those prospects that say they must wait until the election is over to decide if they would buy or not are always looking for a fence to sit on to delay the buying decision. After all, regardless of who wins, our country tends to move along and promote the need for business aviation. One must still get out ahead of their competition and in front of their clients.

I think we can expect continued strong book-to-build ratios from the manufacturers. As an industry, we have a terrific line-up of products being delivered. I would expect the supply chain problems to continue to ease. Already in many segments, I see this matriculation moving in our favor. I anticipate pre-buy slot opportunities being freed up with more regularity. Paint and upgrade slots should also be more readily available. All in all, doing business in the business aviation space is shifting in the direction of the consumer.

2024 will bring another productive year of trade shows and gathering venues. NBAA, CJI, and others are lining up with full slates of domestic and global events. Now that the pandemic is in the rearview mirror, crowds are less scary and attendance at all events is on the rise.

Doing business in aviation has always provided for those of us who make our living in this industry and 2024 should be no different. Thank you all for being such great readers of my articles and aviation supporters. Happy Holidays and Happy New Year to you all!

Originally published as a blog for AINsight for Aviation International News on 11/3/23

When our daughters or sons bring home a new significant other, we look them up and down and then start a line of questioning: “So, tell us about yourself?” On and on with the hope of learning if your child has found the right partner. Is this newfound relationship going to be a solid partner? The pedigree or foundation is fundamental to anything one wants to become associated with. It could be a house, a building, or a business. Will it be a good fit? Will it add value to your portfolio? Is it resaleable? Can it enhance your asset base?

Now let’s talk about how the last few years might have taken the eye off the pedigree ball and what this might become as a differentiating factor going forward for our fleet of aircraft. When prospects hire us to acquire an aircraft, we set up very rigid criteria for the search. It always starts with pedigree. Who owns it? Has the owner provided for the best maintenance and operational excellence? How many owners has the plane had and do they all represent high quality people and operations? Next of course, we dig deeper into the maintenance and the history. Has there been any damage and to what severity? A further hard look at repairs and any non-standard reoccurring inspections because of the repairs. Where in the world was the plane operated? On and on with questions that help us differentiate the good ones from the mediocre ones, and even the must stay away from ones.

I know you all must be saying I am preaching to the choir by now. Why drive so deep into areas you must all know? Well, here comes the twist! Starting with the pandemic and the surge of first-time buyers who seemed all bent on capturing 100% bonus depreciation, our available inventory was worn totally thin. In fact, often there would only be one or none of a specific category of plane on the market. Feeding frenzies ensued. Bidding wars and price escalations were the norm. But here is one more thing that became the norm. A shift away from the basic hard questions that should have been asked and whose answers should have been a guide. Foundation, history, operational history, and repair history. Buyers were so desperate to get a plane bought even if it did not quite meet the mission or check all the boxes. The priority for many shifted to just buying a plane. I began to hear questions like, “Are third world countries so bad to buy from?” “Was that damage really that bad?” “Is an engine program really that important?” “So what if it was not a recognizable past owner?”

Many critical questions were overlooked and the idea of the plane being able to close and provide the buyer with the depreciation seemed all that mattered. So, what happens next to these planes? One day they will come back on the market and those planes that were purchased that could not check all the boxes concerning pedigree and history will start to stand out less positively than those whose boxes were checked with the right answers. Values may begin to separate, and the cream will rise to the top. Those buyers who ignored the right questions and the right answers may find that there was a cost to that path. Those that asked all the right questions and respected the answers even if it meant not buying at that moment, but waiting for the boxes to be checked, will be rewarded with the added value that comes with patience as well as all the right due diligence.

Originally published as a blog for AINsight for Aviation International News on 10/6/23

Aside from getting our best celebration wardrobes pressed and shined, how are you getting ready for this wonderful event? At our company, we are making a list and checking it twice. Picking up the phones and making the key calls to industry players and thought leaders to be sure we have time carved out to meet and reacquaint ourselves with friends and business associates.

There are so many opportunities to shape not just the rest of our year, but in fact, years to come. There are challenges to find solutions to, as well as business opportunities to shape and nurture. I know I personally have so many questions to ask those I meet up with and hope to be asked important questions by those that come up to me and my team at the event.

While reviewing my recent webinar topics and articles, I have looked at those topics that might be at the top of the minds of the attendees as well as readers. Using these topics, we are building the thought leader list of people we want to talk to in Vegas. It would be a shame to come home from this event without answers and solutions to the most troubling scenarios we are all talking about.

Pilot recruitment and retention are critical to clients who are either first-time buyers or transition clients who cannot be without these vital team members but are hampered by the time to get in the air based on long lead times for training slots. Of course, contract pilots can help on a short-term basis however, they are not long-term solutions. I hope to be eye to eye with the major training facilities as well as contract pilot providers to seek out solutions to speed up the Inservice timeline with respect to training.

Another relevant topic on everybody’s mind is the longer than usual time to schedule and begin prebuys at inspection facilities. How are the MRO’s and facilities working behind the scenes to shorten this? Can we get creative about tying up slots when we first put planes on the market rather than waiting to get a deal to begin to find a slot? This solution will take a concerted effort of all involved, the sellers, buyers, MRO’s, and technical personnel.

Here’s another one that catches the attention of us all, obsolescence of avionic vis-a-vis the entire category of the aging aircraft. This year we will be talking to as many providers as we can to best understand the reality of repair opportunities as well as the shelf supplies of these problematic systems, monitors, and cabin management switching to name a few.

These are just a few thoughts to get your own set of questions built and your own important list of meetings to set. There is no shortage of areas of concern to address. There are also real celebrations to be had at the event. Hugs, hellos, and catching up. Smiles and pats on the back. I am sure we will also use this time to remember people we have lost this past year. Even those remembrances can be joyous. Our company is going en masse and will spread out to say as many hellos as possible. We hope to come home enlightened and educated. Look forward to seeing you all there.

Originally published as a blog for AINsight for Aviation International News on 9/1/23

Like most of you, I spend my day on the phone speaking with prospects, buyers, sellers, lenders, and aviation attorneys. Everyone I speak with has a pet peeve to mention or a troublesome event that happened recently. I will say though, that in these conversations, the overall attitude towards the industry and more specifically the market is far better in 2023 than in the proceeding couple of years. Everyone agrees that it is a far less frenzied space and more inviting for all to join in.

So, with all the joy, what is bothering people? Clearly, the idea of finding a timely pre-buy location to keep a transaction moving forward tops the list for many. It is so difficult to put a buyer and seller together, joined in a contract, and then wait up to a month or more to begin an inspection. The delay brings up another concern. During this protracted time, is it okay for the seller to continue to fly their plane? Typically, the idea of a seller not flying once under contract was not a burden to the seller as the time between finishing a contract and going to pre-buy may have only been a week.

Another problem we experience and hear about from others is the vulnerability of transactions getting completed in a timeline that the hard-fought contract was stipulating. Not only is the start time of the pre-buy a constant source of irritation to all sides, but once begun, the completion of the pre-buy always seems to take longer and bring about problematic issues for all sides. Supply chain issues, labor issues, and regulatory issues cause delays that keep all sides guessing. Uncertainty is always difficult.

Pilot training slots are another hot topic of conversation. Longer than usual delays in slot openings makes time into service stretch to the limits of patience. As we approach the fourth quarter of this year, it is incumbent upon all of us to gather up our list of what bothers us and work to mitigate the issues.

We have been successful with our clients in securing slots for pre-buys out into the future along the timeline of our listing and acquisition agreements. This not only gives us a positive message to distinguish our listings and acquisition projects from the pack, but also the ability to get about the project with fewer delays. From a regulatory and tax standpoint, it seems that every area of both has more due diligence and paperwork to accomplish the desired well-planned outcome.

So, as I listen to what bothers you in each conversation, it strikes me that in almost every problem, there is a solution if one acts proactively rather than reactively. This means that each of us, regardless of the segment that we cover, should take some time to dust off our process checklists and update them according to today’s environment. Our clients may feel overwhelmed by the added steps, but I assure you they will lose that feeling as soon as a successful sale or acquisition is completed.

Originally published as a blog for AINsight for Aviation International News on 8/4/23

Sometimes change can be overwhelming. Sky falling events. History can remind us of a few of those events, including the 2001 dot-com bubble burst, the 2008 Global Recession, and the 2015 unspoken recession due to the oil price collapse and other global economic factors. This one will go down as the 2023 industry balance shift. Of all the preceding events and others I did not list, this one could be the most desirable and sought after phenomenon. This 2023 balance shift should bring harmony, reality, normalization, and growth to us all.

Starting in March of 2020, we all got caught off guard by the pandemic. Ultimately, our business grew with the unprecedented surge of first-time buyers entering the fray. Huge numbers of entrants brought demand that stretched us as an industry in all segments. Hangar space was frenzied, pilot training slots had lead times never seen before, and maintenance pre-buy and modernization slots were all but gone. And let’s not forget the actual inventory of aircraft to select from and try to buy. Prices skyrocketed. Supply chain issues caused us all to wring our hands and shake our collective heads. What a mess. Charter demand went through the roof, and the idea of providers delivering a good service offering was next to impossible. So, with this rebalancing of 2023, there will be some bystanders who will not survive, consolidation of some providers, and adjustments from operators and customers. But we are a resilient, strong industry that was built to withstand many adversities even when they occur all at once.

However, there are such positive events taking place that our industry will not only survive but thrive. Let’s name a few. More owners are proactively looking at fleet shifts and transitions, which is allowing new inventory to come to market. More inventory allows for more choices for buyers. More choice will allow for easing in prices, and the easing will allow for more prospects to feel safer about entering the world of aircraft ownership. Do not get me wrong; I am not considering this price easing to disrupt the value calculation of aircraft, simply ease the frenzy. This easing will also allow sellers to be more cognizant of the expectation of the buyer, and therefore play a nicer sandbox game. Also, the natural phenomenon of greater inventory numbers is longer days on the market. This should not scare sellers, just create a more natural process. This more natural process levels the playing field and puts the balance back in our steps.

So welcome to a time of change that is finally created by all the right events. No catastrophic occurrences that stop dead in the tracks the industry and players that have for so many years come to welcome and enjoy the act of buying, selling, operating, and reselling the equipment that flies us safely and efficiently around the world. Enjoy!

Originally published as a blog for AINsight for Aviation International News on 7/7/23

Not a bad time to take stock of our year, as well as look ahead to what is in store. At our company we have enjoyed a good 2^nd quarter. The first quarter was a bit slow rolling, as was also reported by many of our fellow sales professionals, but the second quarter picked up steam nicely. Planes went under LOI’s and contracts, pre-buys started up, and the act of buying and selling felt great again.

We are not acting in a frenzied way and patience is becoming the virtue we almost collectively forgot about. 2023 has brought much needed inventory to the table, which gives us all more choice and more opportunity to find the right plane to buy, and not just the only plane to buy. Along with more inventory, also comes another almost forgotten virtue, sellers having to play in a well-groomed sandbox. For the last two years the market clearly felt and acted like a sellers’ market. This gave no room to act responsibly as a buyer without the risk of losing the plane that was often the only one available. We were dealing with unsustainable prices being paid, lack of due diligence being allowed, and frankly even balanced contracts being more difficult to attain.

Welcome back to the normalization of our transactional business.

This all sounds too good to be true. So, is there any downside to our world today, and for the rest of the two quarters to go? Of course there are. As I always say, if this business were easy, everyone would be doing it, or at least doing it more successfully. Let’s talk about the headwinds. To jog your memory, 2020 was one of the best years for our company transactionally, as it was for most. In fact, all that success came in just two and a half quarters. Remember the first many months of 2020 when the pandemic was first sweeping the world, ours, like most industries, just stood still. This did not last thankfully, and by June of 2020 it seemed like we were all rolling at top speed. Prices had not yet begun to rocket up, and buyers, mostly first-timers, were standing in line to pick the best and still pay reasonable prices. Could 2023 be a repeat of that success for all involved? It could be, except for one huge difference. Available slots for pre-buys. Finally, by the end of 2022, we once again were getting back the right to do the due diligence that everyone knew we needed. Only one problem. The maintenance facilities, both OEM owned as well as independents, are so backlogged that they may be the deterring factor to repeating the success of 2020. No matter how many sales we can make, if we cannot find shop space and available labor on a timely basis to perform a pre-buy, the world we know slides to an abrupt halt. We are now waiting up to 2 months or longer to find a slot anywhere, much less the shop or top 3 shops you would like to go to.

This is a supply chain, labor, shop space, and high demand problem. Multi-faceted in the reasoning as well as the solution. I have been talking as often as I can to the shops, and hoping collaboratively, we could work on solutions. If we cannot find them, we may be destined to a mediocre year rather than a record-breaking year.

In either case it will be a year of more balance and less frenzy. It will be a year that should make us all glad to be a part of this thriving industry.

Originally published as a blog for AINsight for Aviation International News on 6/2/23

As we came out of 2022 many of us took a deep breath and said hopefully the frenzy will be over and a dose of normalcy and balance will return. As we wrapped up the 1^st quarter of 2023, and settled solidly into the 2^nd, most of us would admit a slower start to the year, and our collective eyes are peering optimistically toward the rest of the year. If you remember, 2020 for many, was reported to be one of our best transactional years albeit one that was accomplished in just 6-9 months since the pandemic accounted for 3-6 months of recalibrating our sights to what this pandemic was going to mean for us.

We just participated in the Spring IADA meeting and heard the same optimism from all attendees. This could be a 2020 kind of year. Everyone expects a surge of good, balanced activity that will see us operating in an environment of higher supply for our clients to choose from. Prices have tempered down a bit and transactional processes are back to a place where due diligence is the key word in transactions. All that sounds great, doesn’t it? As the title suggests, are we a Bastian of Hope?

Hold on! We must all be very careful not to create a panacea yet. We have a very serious problem facing us all. Finally, we have sellers who are allowing us to get back to the right way to accomplish transactions by allowing pre-buys. So, what is the problem? After finally winning back these rights for due diligence, now pick up the phone and call to get a slot for the prebuy. Sure, you can find one, but maybe 2-3 months from now, or possibly even longer. This roadblock will totally impede our ability to get a plane transacted. There is no way we will allow a client to buy a plane without this critical step. We are even calling facilities in Europe to try to find nearer-term slots.

I am not one to just find problems and dump them on your doorstep. I am proud of how I always look for a solution for every problem, but this problem is out of my control. However, it may not be out of our collective control. We must work in tandem with the facilities and their upper management who can accomplish these critical inspections to see how we might be able to thread the critically needed needle. Is the problem labor or shop space? If it is true that transactions are incrementally down year-over-year then why now is this issue raising its head? We need support to overcome this damaging issue. The word Sorry is not enough.

We on the transactional side can only see the problem, we need to help be a part of the solution. Should the shops allow holding a slot starting earlier that would allow for a more liberal cancelation policy. Sure, this may mean more work for the shops to manage a move-up strategy for canceled slots, but we need help.

Here we are finally finding some sunlight and the dark clouds of pre-buys are gathering above us. I might suggest the shops create a method for us to have an internal round table or town hall. Sure, I understand that might be too difficult for us to put competing entities together so possibly it can be one OEM or independent facility at a time. I assure you we are not looking to put anyone on the defensive, but we are in trouble and need like never before to discuss this phenomenon and solve it somehow.