Now is unique time to sell aircraft to hungry US buyers
If you are based in Europe, Africa or Asia and are planning on selling your aircraft you should not read this. Instead, call a broker and put it on the market.
There are 91 days left until the end of 2022 and you do not want to waste them.
Year-end is always important for US buyers but this year it is even more so. From January 1st 2023 US owners will no longer get 100% bonus depreciation. Many US buyers are keen to beat this deadline.
Brokers say demand is still outstripping supply for many types. The number of aircraft for sale is slowly rising, but demand is still strong. AMSTAT says that there are 1,036 business jets for sale, up from a low of 782 in March. This is still less than what was a record low of 1,058 back in November 2021.
The three months will go quickly.
“It can definitely be done in 90 days. There is still time,” says Aoife O’Sullivan, founder and partner, The Air Law Firm in London. “We are seeing exports from Europe to the US close in a manner of weeks rather than months. Finding an FAA Designated Airworthiness Representative [DAR] can be hard, but perhaps the biggest risk is when supply chain problems delay fixing any issues identified during the pre-purchase inspection [PPI]. We have seen aircraft flying to the US for PPIs to make the closing process as efficient as possible and get access to more readily available DARs.”
Sellers from Europe and Asia have another motivation – the strong dollar. Aircraft trade in dollars, so anyone selling aircraft and converting into weaker currencies is getting a big pay-out. The British Pound and Japanese Yen have fallen 20% in the past 12 months. The Euro is close to 15% down, the Chinese Yuan and Indian Rupee are around 10%. Even the Swiss franc is down 6%.
To put it more simply, if a UK owner sold a jet for $10m 12 months ago, they would get £7.4m. Today that $10m is worth £9.15m.
Oliver Stone, MD, Colibri Aircraft in London, has had two British sellers contact him this week after a sudden fall in the pound last week. “Both of them were already looking at selling before the latest currency movements as their needs changed and the strength of the dollar is encouraging them to act sooner not later,” he says.“Obviously, it only works if your flying needs have changed and ownership doesn’t fit for you now, and you are not planning on buying another aircraft for a few years.”
Stone is telling owners to act fast. He says: “There still is time to close before the end of the year, but you need your aircraft listed by early October. In theory deals can go smoothly and close in weeks, but that does not always happen in aviation.” He says most sellers are not prepared to fly aircraft to the US before a deal is closed but there are still pre-purchase inspection slots available around Europe.
O’Sullivan says there can be advantages with the looming deadline. “We have never seen a market like this. But it does mean that advisers are being a lot more flexible and focused on getting deals closed rather than wasting time arguing insignificant points.”
If you have read this far, you may feel that demand for aircraft or the dollar can only get stronger. You may be right. It looks likely that one pound could soon be worth one dollar. However, unlike some investments, the value of jets usually goes down. In the rare times when they rise, you don’t want to miss it.
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