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Our Industry Got Smaller Today

I am tragically sad to announce the death of a wonderful friend and co-worker, Dean Welch.  Dean died after an accidental fall last night in Savannah, Ga.  Dean has worked with our company for almost 20 years. He has been a friend for over 30 years.  Anyone who ever had the privilege to sit alongside Dean during a transaction or even across from him came away from the experience feeling good about the manner and method in which he kept everyone engaged and their priorities first and foremost to accomplish the common end goal.  His integrity was overwhelming and his dedication to our company and our family was enormous.  Just writing this to everyone is the most difficult thing I have ever done.  Dean not only leaves my family and of course hundreds of industry friends, but also a loving wife, Tara and three wonderful children Bethany, Kimberly and Doug.

We already miss Dean so much.

Over the next several days as arrangements for Dean are formalized, we will continue to keep you updated.

Ongoing Investments In Your Aircraft

A few years ago I remodeled my house.  I had seen some TV shows about people who would spend a few thousand dollars in preparation for selling and completely changed the look of there homes.  I decided that if there were projects worth doing for someone else, it would be even better if I also enjoyed the investments that my house needed.  The same thing applies to airplanes.

Owners often ask if they should do cosmetic work before selling their airplanes to make them sell faster or for more money.  We regularly tell clients not to bother spending the money on refurbishment or upgrades right at the time of a sale.  At that point, it is best to figure out what their aircraft is worth as it is and price it accordingly because you will never get all of your investment back if you invest right before a sale.

At the same time, most buyers don’t want to buy project aircraft due to the down time and cost associated with them.  And, if the condition of the cosmetics are really poor it makes buyers concerned about what else might have been neglected about the aircraft deterring some buyers from focusing on an airplane at all.  Finally, small problems turn into bigger and more expensive problems if left without being addressed.  Consequently, I recommend regularly maintaining not just the mechanical condition of your aircraft, but the paint and interior too.  That doesn’t mean spending a lot on complete refurbishment projects, but when the paint starts to really fade and peel have it touched up and when necessary painted.  When the carpet is worn out or the side walls stained or frayed, have them replaced.  If you do these projects when needed and not just think about them when it is time to sell you can also benefit through your own use and better experience.  In the long run, these on-going smaller investments will also most likely save money in the long run because you will address smaller issues for less expense than if they were left unchecked to grow into bigger problems later.  When it is time to sell, you will then also benefit from a better sales price and faster sales cycle because worn out cosmetics won’t trigger other concerns about the rest of the mechanical condition of the aircraft or because of a fear of a long downtime and expensive complete refurbishment project.

Bring on 2012!

The last several years have proven to be a long hard road for our industry and it is not over yet.  I do, however, believe that we are on the right path and I am excited for 2012.

In 2011, we saw continued increasing activity in many segments of the market.  It was not consistent in all segments and the super mid-size corporate aircraft probably saw the least activity of all aircraft sizes.  As we faced continued global economic struggles and uncertainty buyers did continue to prevail by making extraordinary buys.  They often pushed for lower prices and got them, but not by dramatic drops of 10% or 20% like many thought they could.  Those big hits, and even bigger ones, were factored into our market earlier in the recession.  Instead, for the most part, the lower prices buyers were negotiating in 2011 were the last 1% or 2% or 3% from the already correctly market adjusted asking prices.

I think that even though the final sales prices were hard for many sellers to swallow, most buyers and sellers completed transactions walking away feeling like they made fair trades within the market conditions.  There were many buyers who missed out because they wanted more than sellers had to give, and there were some sellers who missed opportunities to sell because they weren’t willing to go far enough.  Some of the buyers who thought there should be even bigger price adjustments were misled by the media who reported regularly that prices were still falling.  Unfortunately, they only reported half of the story.  Most of the aircraft sellers who lowered their published asking prices by large percentages had aircraft which been on the market for long periods of time with asking prices which were long outdated.

The good news in 2011 was that there was a lot of activity and a lot of closed transactions.  I think that the same trend will continue through 2012.  At J. Mesinger Corporate Jet Sales, we are excited about the start of this new year and what lies ahead.  It won’t be easy, but nothing good ever really is.  We look forward to working with you this year.  Happy New Year.

NBAA 2011 Wrap-Up

From my perspective, this year’s NBAA Annual Convention was a huge success.  After the last few years of uncertainty and truthfully, some depression about the state of the global economy and our industry, people were enthusiastic and excited to be in Las Vegas and ready to get business done.  Pre-registration numbers exceeded the total registration for all of last year and registration by internationally based business aviation businesses and participants hit a record high.  The convention center halls seemed packed and bustling with activity and the static display appeared to have real buyers ready to talk about buying aircraft.

Our company had a GIV-SP, GV and a Challenger 604 available during the show for private showings at the McCarran Airport and we had several good showings.  We had scheduled meetings with several principles who attended the convention to talk about different sales and acquisition projects including some clients who came to the show from China.  My father and Jeff Lee, Aviation Director for American Express, hosted the Opportunities for Business Aviation in China/Asia panel discussion for the third year in a row.  The first year they had a 100 person room.  The second a 200 person room.  And, this year, they packed the house in a 300 person room for what was definitely one of the hottest and most discussed topics of the convention, the growth of business aviation in Asia.

I’ve been attending NBAA conventions for almost 15 years starting when I was in college thinking of entering our family business.  Every year I am reminded of the magnitude of our industry.  Business aviation is an important part of our U.S. economy providing more than 1,000,000 jobs and one of our most valuable exports, corporate aircraft.  It also supports our ever growing globally connected businesses and allows people and companies to do more than would ever be possible by using commercial airlines alone.  Many of the companies in our industry are small businesses providing individual components or services that collectively help us build these complex aircraft and support their operations.  Additionally, as was evident throughout the week starting with the opening general session and continuing through the NBAA Gala and Corporate Angel Network fundraiser on Tuesday night, the use of business aviation aircraft helps support philanthropic needs and saves lives.  I am proud to be part of such an amazing industry and I look forward to a long bright future for our company and our industry.

Disparity In The Markets & Great Opportunities

August is historically a slow month for corporate aircraft sales.  Buyers and sellers are often vacationing with their families and not focused on aircraft transactions.  The truth is we did not see our normal patterns of activity, or lack thereof this past August.  Large-body, long-range, like-new aircraft markets have seen continued strong demand and low supply.  I have watched a lot of that activity come from the biggest companies around the world who have had pent up demand for aircraft to travel to clients and operations in the farthest corners of the globe.  We have even seen some good activity on some older aircraft models.  Other markets, however, have been slow although there are great values with motivated sellers waiting for activity to pick up.  There is an interesting disparity of sales activity in our markets leaving a lot of great opportunities for five to fifteen year old excellent aircraft (which you can absolutely get financing on) to help companies and individuals fulfill their mission requirements.

Today another broker called to see if we had any activity on a few super mid-size aircraft that we are representing.  He was representing the same aircraft type and both of us lamented that we had had very little activity on these listings over the last few months.  Neither of us could put our finger on a definitive explanation and both of our clients had recently lowered their asking prices and sales expectations.  As our global economy continues to try to find its footing and companies around the world work to grow their business in light of our economic challenges, I have to believe that they will get back to the basics of getting out in front of their clients and in their operations.  To do this effectively many of these companies will need to utilize corporate aircraft and the good news is that there are great aircraft available at the right values to help them do this.  I am excited that Labor Day and summer are behind us (although I will miss the warm weather) which historically means that it is time for most of the world to get back to business.  Call us today to learn what aircraft we are representing that can help you meet your mission.

Fleet Management And Transition Planning

It has been a while, but several clients are starting to not only talk about one off sales and acquisitions, but about long-term fleet management and transition plans.  It is exciting to hear companies thinking in these terms again and these are projects that we are excited to be a part of.  Transition plans are not easy or quick.  They involve long-term commitments and in depth analysis of mission profiles, corporate development plans, budgets, market evaluations and the review of future products and other outside influences.   Over the years we have developed a lot of resources and proprietary tools that we use when developing these kinds of plans for our clients including detailed interactive budgeting models.   We use many of the same resources when working with first time buyers.

This kind of forward long-term thinking about transition plans, and not just transactions, allows for the development of programs that allow companies to strategically plan and budget to effectively meet corporate needs.  From a flight department perspective, this type of planning provides positive exposure at the executive level as aviation growth becomes one of the key vehicles the company uses to facilitate corporate growth.  From the executive level, the commitment to this kind of planning means that a company can better plan for major capital expenditures and most effectively meet their travel needs.  Longer term strategic transition planning also helps facilitate operational planning like commonality of cockpits, training programs, facilities needs and more.  Over the years we have worked with many large companies to develop these kinds of forward thinking strategic plans and then represented our clients in the execution of them.  While much of this kind of planning was put on the back burner over the last few years, it is good news for our whole industry that many large companies are ready to start discussing this kind of planning again.

EBACE: Another Industry Success

The European Business Aviation Convention and Exhibition held its annual event in Geneva, Switzerland May 17th through the 19th. EBACE, jointly hosted each year by the European Business Aviation Association (EBAA), the leading association for business aviation in Europe, and the National Business Aviation Association (NBAA), the leading voice for the business aviation industry in the United States, takes shape as a three-day event and features exhibits, an incredible static display of aircraft, education sessions and maintenance & operations sessions (M&Os). It is all held at the magnificent Geneva Palexpo and Geneva International Airport.

This year I was privileged to have been asked for the second year to participate in one of the educational forums. On May 16th, along with many of my fellow aviation professionals from around the world, we presented at the “EBACE International Aircraft Transactions” conference. Like last year the attendance was great as well as the material presented. I leave each year knowing that international transactions are far more complicated than we are used to in our domestic work. In fact, no two transactions are the same as we blend different countries, different cultures and different time zones into the mix.

So now back at my desk in Boulder I can reflect on my successes at this year’s EBACE. I came away feeling terrific on many levels. I saw old and made new friends with international legal and maintenance professionals. I was able to see and be seen, thereby extending our corporate brand beyond our domestic boarders. I was able to attend several informational sessions, broadening my knowledge base about current International business issues to further support our ability to complete these complex transactions for our clients.

EBAA and NBAA are not just associations whose goal is to put on trade shows, but rather to shape business aviation in their markets for each of us who go to work in this industry every day. Regardless of whether you are operating business aircraft or building and supplying goods or services to this industry, we need associations like these to promote the positive value of business aviation in each and every city, state and municipality within their respective boarders. I urge each of you to learn more about these associations and support them with your membership. Once a member, be involved, stay active and when one of these associations asks for its members to reach out to the local and federal politicians and regulators about relevant issues that impact our operational flexibilities, do it. It is vital!

Visit the NBAA website here
Visit the EBAA website here

Part 7: Showing an Airplane

This article is the 7th in a continuing series
A Career Change: Learning the Aircraft Brokerage Business

It’s been a little while since my last writing about the newness of my job and the challenges and successes of learning a new industry, but lately I have been pulled up off the bench quite a bit; asked to perform in the game and make some plays.  I wasn’t much of an athlete growing up, so often times the bench was my spot.  But in professional settings I have had the fortune to be called up to play in the game with real consequences.  A couple of weeks ago I was told that in a matter of hours I would be on a plane to Los Angeles to show a G550!  It just so happened that everybody else in the company was working on other deals and in different parts of the country, so it was my moment.  I was very familiar with the details of the airplane, I listened to my father and brother tell me what to expect in a showing like this and I packed my bags and got on the plane out to LA.  I knew I was ready and they knew I was ready!  My brother told me he expected 3 people to come look at the plane. As I stood on the ramp in my suit, with the spec and photo packs in my hand, the people I was meeting with pulled right up in their Global Express and all 7 of them came off the plane right towards me.  Not 3.  It felt very cool to be in that moment at that time, performing for the team and succeeding.  The showing went great and I had that notch in my belt telling me I can do this!

It reminds me of one of my first jobs in Hollywood.  I was working on “Something’s Gotta Give” with Jack Nicholson, Diane Keaton and Keanu Reeves, as a PA in the post production department.  I’d been working on the film for months, at the bottom of the ladder, getting lunch, picking up dailies in the morning from the lab and putting about 20,000 miles on my car in a year driving around Los Angeles.  Then one day out of the blue they came in to the office and said, Mesinger, we’re sending you to New York to screen the film at a premiere at a Times Square theater.  They were going to get me two first class tickets, one for me and one for the film (about 6 cans of the actual film from our cutting room.  No other copy exited at this point), a hotel room and a per diem.  I had just lived in New York City while I was in college and had left months before this, so I would be getting to return to my old town and friends on a business trip. A big one!  The same goes for my trip to LA for the G550.  My wife and I had just moved from LA before starting our new life in Colorado and I would be returning to my old home, friends and family on a business trip.  A big one!  Life has a funny way of throwing you opportunities at a moment’s notice.  The trick is to be prepared, focused, confident in your abilities and appreciative of the experience.  The bosses wouldn’t send you if they didn’t believe in you.  The job here at J. Mesinger Corporate Jet Sales is filled with new challenges like this every day and I just focus and learn from each of them.  Stay tuned for a report from my next mission; a trip to Detroit I went on last week to review an airplane we are listing.  It includes late departures, freezing rain, log book reviews and new headshots!

Asking Prices

The idea of an asking price is an interesting conversation in our industry.  Some people use them.  Others say “Make Offer”.  Many people believe that if you just say “Make Offer” a prospective buyer will have to call you to ask about the price and you will have a chance to engage them.  We, however, feel strongly that listing an aircraft for sale with an asking price helps a buyer focus on our clients’ aircraft.  They help buyers know that our sellers understand the market and have a generally accurate expectation of where their aircraft should sell.  I believe that having asking prices helps us elicit more phone calls than not having an asking price.  Of course, this only works when the seller really does have a sales price expectation that is aligned with the actual market conditions.  And, in fast moving markets, up like in 2006 and 2007 or down, like in late 2008 and 2009, it is hard to set an official asking price because you don’t want to overprice the aircraft or sell it short of what the market might bear.

Buyers regularly call us and thank us for including asking prices with our listings.  They appreciate that they don’t have to call, and some are looking online well after business hours, to gain a general understanding of the sellers’ expectations and the market for a given aircraft type.  Real buyers, however, do then call and tell us that they have focused on our aircraft because they understand the value proposition and believe it aligned with the market conditions.  Even if you don’t publicly list an asking price, you still need to have an answer to the question about an asking price when a prospective buyer calls.  There is no definitive answer or guidance, but as a general discussion and idea, I think that stating an asking price helps sell airplanes ahead of the competitive listings.

Two Ways To Tell A Story

When we list an aircraft for sale, we read the aircraft records and go see it to most thoroughly understand it and accurately represent it.  We work hard to identify all details and then tell the best story about it possible.  Every aircraft is unique.  Each has different features and pedigree that we must craft into a story to define the value proposition for a buyer and maximize the sales price for our seller.  I regularly use this blog to tell the narrative about an aircraft listing beyond what the factual aircraft specifications alone can define.  We believe that it is critical to tell this story to help an aircraft stand out from the pack.  And, repeatedly, this strategy proves successful. 

Telling the right story to highlight an aircraft doesn’t stop at our office doors, in our marketing, in a blog post or on a phone call.  It continues at every showing opportunity and in every discussion until we cross the finish line at the closing of the sale.  If an aircraft has a uniquely shaped baggage compartment, but in reality it provides the same cubic feet of storage space as a standard one for the given aircraft type, I would want to make sure that a buyer knows that they aren’t loosing baggage space.  I would craft that message into my story.  Why let a buyer get distracted for concerns that don’t really need to exist.  Or, when showing an airplane, weather permitting, pull it out on the ramp.  Aircraft shine best when in the sun.  In a dark hangar, paint can often look drab and dull.  Or, if you are selling an early serial number of a certain make and model, but it has had modifications and upgrades to make it more comparable to later serial numbers, it is important to point that out to prospective buyers who might otherwise be concerned that they would be buying a “lesser than” aircraft if they buy the early serial number.  

The features and benefits are always different, but if you really understand the asset and think about where a buyer might get distracted or miss a valuable feature, you can build the right story to most effectively craft the value proposition.  This won’t necessarily mean that you will sell an aircraft for more than the market will bear, but it will hopefully help a buyer recognize the value of your offering and help sell an aircraft ahead of the competition.

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