Northern California
Business Aviation Association
Welcome!
Agenda
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Lunch, Sponsored by Bloomer deVere
NCBAA Memberships
FAA Presentation
Bloomer deVere Presentation
Upcoming Events
Room Introductions
NCBAA Membership Reminder
Regular
Member
Individual
$60.00
Associate
Member
Individual
$60.00
Exempt
Member
Individual
(free)
• 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.
• 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
• 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)
http://norcalbaa.org/Membership_Sign-up.html
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
Charlie Johnson
April 2012
Today’s Luncheon Sponsor
Mark Bloomer, President
Craig Bowers, Sales Director
NCBAA Luncheon
NEW AND PRE-OWNED MARKET UPDATE
Is a Recovery on the Horizon?
Mark Bloomer, President
Bloomer deVere Group Avia, Inc.
Tuesday, April 10, 2012
Used Aircraft Market Values
% of Original Average Equipped Retail
99.69%
Source: Aircraft Bluebook Marketline Vol. 24, No. 3. September 2011
111.84%
109.53%
67.37%
2
Market Forecast by Class of Aircraft
7%
CAGR
15%
CAGR
21%
CAGR
20%
CAGR
Aircraft
Value $bn
Source: Rolls Royce (CAGR: Compound Annual Growth Rate)
Last 10-years
7,512
157
Next 10-years
10,588
284
Change
41%
81%
3
Market Forecast by Class of Aircraft
7%
CAGR
20%
CAGR
21%
CAGR
15%
CAGR
Source: Rolls Royce (CAGR: Compound Annual Growth Rate)
4
US Corporate Profits vs. Business Jet Deliveries
What
is the Probability …
# of aircraft ~ 1995 – 2013E
Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))
5
Global Corporate Profits vs. Business Jet Deliveries
What
is the Probability …
# 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
2000 Gulfstream GV Values
PREVIOUS CYCLE
• Started 4Q/2001
• 9/11
• Enron bankruptcy
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CURRENT CYCLE
Started 3Q/2008
Lehman bankruptcy
Global financial crisis
US elections
Retail Value
Wholesale Value
Source: Aircraft Bluebook
8
“Boom – Bust” Recovery Cycle
ULTRA-LONG RANGE
LARGE CABIN
HIGH SERIAL NUMBER/LOW TIME
SUPER MID-SIZE CABIN
LARGE CABIN
LOW SERIAL NUMBERS / HIGH TIME
MID-SIZE CABIN
9
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
“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
Dow Jones Industrials
Bizjet
Inventory
What is ~the
Probability
…
2008 - 2012
Source: BofA Merrill Lynch Global Research, AMSTAT
12
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
NCBAA Luncheon
PRE-PURCHASE EVALUATION
The Process and Pitfalls
Craig Bowers, Sales Director
Bloomer deVere Group Avia, Inc.
Tuesday, April 10, 2012
Who Cares About the Pre-Buy?
2
I Want to Buy An Airplane!
3
Letter of Intent
Acquisition Decision
Letter of Intent (LOI)
• Executive Summary
– Short document
Visual Inspection
Aircraft Purchase
Agreement
Pre-Purchase
Evaluation
• Contains the “Basic” Terms of the Buyer’s Offer
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Purchase Price
Delivery Conditions
Demo and/or Test Flight Requirements
Deposit
Pre-Purchase Evaluation
Accept/Reject Conditions
Transaction Timeline
4
Aircraft Purchase Agreement
Acquisition Decision
Letter of Intent (LOI)
Visual Inspection
Aircraft Purchase
Agreement
Pre-Purchase
Evaluation
• Control Document
– Replaces Letter of Intent
– Long document
• Complete Transaction Details
– Price, Taxes, Expenses, Warranties & Escrow
– Indemnities, Insurance, Governing Law
– Inspection, Delivery, Acceptance & Closing
• Attachments
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Spec
Warranty Bill of Sale
Technical Acceptance Receipt
Delivery Receipt
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Pre-Purchase Evaluation
Acquisition Decision
Letter of Intent (LOI)
• Workscope and Location
– Mutually Agreed to by Buyer and Seller
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
• Key Documents
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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
Buyer
“Sole Right of Refusal”
Seller
“Delivery Conditions”
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Wants an “out” as late as
possible
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Up-front agreement as
to “acceptable”
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“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!
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Wants absolutely every,
single discrepancy
addressed!
8
Pitfall #3
Discrepancy / 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
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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?
DISCREPANCY
AIRWORTHY
NON-AIRWORTHY
INFO ONLY
Sealant missing in areas on R/H engine between nose inlet cowl
and acoustical lining
AFIS printer will not print from MCDU #1
Intermittent Water Tank level indication on Galley switch panel
Copilot’s windshield has discoloration on outboard and inboard
sides
Right Wing fixed trailing edge lower surface has a single dent
Design eye locator is chipped up
Fuel leak
Left APU Igniter Plug is worn to 0.011” exceeds the 0.09” limit
Right APU Igniter Plug rattles
Left side Thrust Reverser-Outboard PDLA bearing inspection found
the Fwd bolt corroded
Brake accumulator gauge lens is cracking at mounting holes
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, President
Craig 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
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
eBay Scholarship Auction
Doug Rice – NCBAA Advocacy Committee