Alireza says the market is slowing down
Before he became an aircraft broker, Alireza Ittihadieh, the founder and CEO of aircraft dealer Freestream Aircraft, was a foreign exchange trader. He would make quick decisions on which way the market was going and back this by shouting at calling a salesperson to book the trade.
He goes through the same process when deciding when to inventory an aircraft.
“The year 2024 is going to be a slow year for transactions. Brokerage will carry on and this makes life harder for dealers looking for inventory,” he says.
Although Freestream brokers aircraft, Ittihadieh (pictured above) is personally focused on inventory deals. “I don’t want to waste my time with buyers who think they know more than you,” he says. “But there will always be opportunities for inventory, there always are. It always has a role to play. You just have to be confident about the aircraft and not look to hold for too long in a falling market.”
Ittihadieh is working on buying a large cabin aircraft for 10% less than last year (he does not want to disclose the model yet). But he is not seeing a big fall in values. “It is not the same market as after 2008. There are still aircraft that are in very strong demand,” says Ittihadieh. “I have three buyers for a G500 at the moment, there are good opportunities with Globals, G650s and you can’t find a Latitude. Values and demand are very dependent on aircraft type – there are some very strong markets.”
Other dealers seem to agree with Ittihadieh. The recent International Aircraft Dealers Association (IADA) member survey shows that its dealers expect to keep finding deals. (Freestream is not an IADA member.)
Just 42% of IADA dealers expect large jet inventory opportunities to be the same in the next six months, with 37% feeling there will be fewer deals. For light jets they are more optimistic, 52% of dealers expect to close a similar number of deals. This is slightly down on the same quarter in 2023.
One big difference between now and after the Global Financial Crisis is that OEMs still have significant backlogs. Bombardier last week announced a backlog of $14.7bn. This essentially means the company has an orderbook averaging between 18 and 24 months. Gulfstream ($20.1bn) and Textron ($7.4bn) are in a similar situation.
Ittihadieh, however, says there is some room for negotiation with manufacturers. “OEMs have strong backlogs but there are still opportunities to get aircraft faster,” he says. “We have managed to get slots less than 12 months out for certain customers.”
One other big difference between now and the hard market post-2008 is that the US is still dominating. Ittihadieh thinks this will continue in 2024 and is not bullish about most other markets.
“Internationally it is going to be a tough market. Business aviation in China is disintegrating. Russia is a foregone conclusion for the next generation. The Middle East is encouraging and there is activity in southeast Asia but we need America to keep ticking along to drive the whole market.”
The former trader believes that the dollar is going to strengthen and that US interest rates will fall soon as the country needs to stimulate real estate. “We are going to see rates fall a lot faster than they went up,” he says. “Politicians do not want to see defaults in election years.”
Ittihadieh confirms that he is not predicting a crash in 2024, but he is certain there will be a slowdown. As always, he is not worried about his predictions being wrong.
He adds: “I am the Donald Trump of the aviation industry. I call it like it is.”
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