Hawker Beechcraft sees aviation financing becoming increasingly available to business aircraft buyers

During a recent corporate
jet finance conference, Hawker Beechcraft Corporation (HBC) announced that it
has seen the overall cost of aircraft financing decrease throughout the past 24
months compared to prices seen during the economic downturn, with buyers seeing
greater access to aviation financing. The company says these trends have been
aided by a number of factors including the global economic recovery, an
increase in knowledge and sophistication of the key players in aircraft
asset-based financing, growing competition among local institutions expanding
into the global marketplace, and the increasingly active role of manufacturers
in helping potential clients find financing.

“Over the past 12-24 months,
we have seen a gradual, yet consistent thaw in the aviation finance sector as a
number of lenders have gained an increasing appetite for this business,” said
Kirsten Bartok, HBC vice president, Global Aircraft Financing. “A number of
large commercial banks are looking to offer aviation finance in a growing
number of countries outside of Western Europe and North
America, and some smaller indigenous banks are looking to enter or
grow their footprint in this market within their own countries, and in some
cases beyond this.” 

One of the reasons for this
growing interest is that HBC, along with other aircraft manufacturers, is
playing a more proactive role in helping financial institutions develop a
better understanding of the aircraft industry by providing information on
future product developments and life cycle plans, for example. These efforts
have helped in reducing the asset-associated risk in transactions and created
an environment that allows for lending to a wider customer base.

In addition, HBC is doing
more to assist potential customers with gathering the relevant material needed
to secure financing and making recommendations on potential banks for loans or
leases. Financing costs are reduced when customers position themselves in the
most transparent way and structure their purchase correctly in terms of
registration and operation.

As private banks increase their
knowledge and understanding of the aviation industry, HBC has seen them take a
more proactive role in not only assisting their clients with their aircraft
purchase, but also in educating them on the range of aviation products.
Further, HBC has seen an increased role on the part of export credit agencies
(ECA) in the business aviation sector, especially in emerging market countries
where financing is often harder to secure. ECA financing has historically been
very supportive of commercial aircraft purchases and their success in this
sector is fueling their involvement in business aircraft purchases as well.

Greater involvement on the
part of aircraft manufacturers in providing more industry data and playing a
larger role in introducing customers to financial institutions has also led to
further interest in post-transaction financing (also known as cash-out or
re-financing transactions). Through assisting in building relationships between
customers and banks at an early stage, customers are becoming better positioned
to purchase an aircraft at a highly competitive price with a temporary line of
credit or cash, and then work with the bank to procure more long term financing
after the sale.

“Over the past year, the
aviation finance sector has grown and become more sophisticated,” Kirsten Bartok
said. “We expect the availability of financing to continue increasing as well.”