Powerpoint - Northern California Business Aviation Association

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 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

• • • •

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 – – – – – – –

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 – – – –

Spec Warranty Bill of Sale Technical Acceptance Receipt Delivery Receipt

5

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 – – – – –

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”

•

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…”

•

Nothing could possibly need “repairing”, this aircraft is perfect!

•

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 – – – –

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