Business jet and helicopter finance report 2011

It is getting easier to find business jet finance but still tough for aircraft charter operators.

Key to tables

Green = Finance is readily available and market is competitive
Orange = Finance available from several lenders
Red = More challenging, although financing may still be obtainable

Outlook
+ market is improving and likely to continue
– finance availability may decrease
* Foreign aircraft registration may be required for some jurisdictions

Summary

There are clear signs that the availability and pricing of finance is continuing to improve. The core-US market is becoming increasingly competitive. However, some participants estimate that cash may still account for 70 per cent of all transactions. Although this is partly because buyers are holding large amounts of cash. If economies strengthen it is expected that there may be significant refinancing opportunities.

At the moment there is a clear split between older aircraft and newer models. It is still difficult – but not impossible – to find financing for aircraft over 10-years-old. However, there are some new entrants in this market including funds.

Data provider AMSTAT says that 13.9 per cent of the worldwide fleet of business jets is for sale, compared to 14.2 per cent just one quarter ago. This is the lowest amount of aircraft on the market since September 2008 and closer to the 20-year average of 12.6 per cent. Dealers say that inventory finance is returning.

There is also the possibility that we may see the private bank market split in the near future.

Although it will not come fully come into effect until 31 December 2019, large institutions with private banks – which dominate the international market – are already starting to implement Basel III policies. Basel III will continue to push banks towards stronger credits and may mean that whilst good credits can get very good deals, weaker credits will need to pay more.  One financially strong US borrower – with several private bank relationships managed to achieve financing at Libor plus 115 basis points.

Led by Milestone, there are a number of new lenders targeting helicopter finance – particularly off-shore and larger utility helicopters. The first German helicopter retail fund is due to be sold in September.