Spring Fever – purchase and finance a new airplane!

It’s Flying Season!

Spring has arrived and across the country, people are gearing up (or at least daydreaming about it while they’re digging ou134399-stock-photo-green-dark-freedom-spring-flying-umbrellat!) to jump back into their airplanes.  Whether to  get out and see those clients you haven’t met with all winter, take the family to your favorite spring break destination, or just enjoy seeing the earth come alive from above, each of us start getting the itch after a long, cold season, to take flight.

AirFleet has seen some positive signs of the economy warming despite record low temps across the country this year.  With tax incentives extended to 2013 and the ability to still buy an airplane at a great price coupled with our low, fixed financing rates – this first quarter has been the busiest we’ve seen since 2008!  We have high hopes that the momentum will continue and increase as buyers with Spring Fever begin making purchase decisions.

Please contact AirFleet Capital to get an aircraft loan quote on that airplane you’ve been eyeing.  With flying weather and all the holiday bills paid off, it’s a great time!  You can call to discuss options with a financing specialist at 800.390.4324 or you may request a quote online.  If you are considering a purchase anytime this year, it is always good to get pre-approved for a dollar amount while you shop.  Approval is free and it allows us to be ready to close quickly once you find “the one.”

Get out there and enjoy – safe travels!!

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The 4th Quarter Countdown

We can’t believe it is already that time of year, the 4th quarter is upon us.  With optimism that this past year seems to have stabilized, we are looking forward to an uptick the last months of the year as business buyers who have turned the corner satisfy a tax appetite (see BLOG: Tax Incentives), and those of us who feel more personally comfortable decide to get back into purchasing for fun!

For those interested in financing their year-end purchase, it’s best to get the process started early.  With approval expiration at90 days, we are inside the window for all purchases in 2012.  Even if you have not picked out an exact aircraft, there is no application fee so now is a great time to get approved for a loan amount – shop with the funds in your back pocket, and feel confident to close on a hot aircraft deal you come across quickly.

It is also the busiest time of year for dealers, escrow companies, the FAA, banks and finance companies.  Due to the volume of transactions, sometimes response and action is slightly delayed the closer you get to December 31st.  That being said, we are happy to work with someone who decides to purchase a plane starting mid-December, but to avoid stress and the risk that the purchase could get pushed into the new year, it’s always best to have the details worked out before then.

For a quote, or to get started on the application process, please contact us at (800) 390-4324.  We look forward to hearing from all you early birds soon!

Gearing up for AOPA Summit 2012

AOPA Summit 2012 starts tomorrow in Palm Springs, CA and we are excited!  With an uptick in activity the past month and the show returning to one of its prime locations, we are optimistic that it will be one of the best shows of the year.  As with each year, the show will host hundreds of exhibitors, educational seminars, display aircraft of all types and the latest and greatest in aviation.  Something unique about Palm Springs is that the exhibit hall and aircraft are all together in one location – the “Parade of Planes” today taxis dozens of aircraft the mile from KPSP down the city streets to the Convention Center! 

Take a break from the desert sun and see AirFleet Capital in Booth 416 to discuss any financing questions you may have.  With the ability to fix historically low rates for up to 20 years, it is a great time to think about upgrading to a new aircraft.  If you don’t have any financing needs at this time, you can still swing over and enter for a chance to win the Stratus: 
Portable In-Flight Weather for
ForeFlight!

The show starts 10AM Thursday (10/11) through 4PM Saturday (10/13).  We look forward to seeing you at the show!

Activity picks up!

As we gear up full swing for flying season all over the country now (reality check for our AZ offiice, “wait, it’s not beautiful flying weather all year everywhere?”) we are encouraged by the number of inquiries we have received the past few months regarding aircraft purchases.  Over last year, our leads are up 11% in 2012.  Many of those that we are talking with are getting back into the game after feeling like they’ve been “sitting on the sidelines for too long”.  As things stabilize, those that have weathered the storm are showing signs of increased consumer confidence.  It is certainly still a wait-and-see type mentality for many, but just the noticeable increase in interest has given us cause for anticipation. 

Last week, we attended regional Aircraft Expo shows in both Texas and Arizona.  As opposed to the preceding few years where the crowds had thinned at these events, attendance seemed to be up significantly this year!  We spoke to many more potential buyers and all the other exhibitors seemed to share our sentiment.  If you are one of those buyers who is ready to dive back into aircraft ownership, or looking to refinance at our historically low rates, please give us a call to discuss Aircraft Financing programs to fit your needs!

Aircraft Financing – Interest Rate Update

Interest rates remain very attractive for aircraft buyers.  That, coupled with great values, makes for a uniquely buyer-friendly market that hasn’t been seen in recent history and may not be duplicated for years to come.  It’s a wonderful time to purchase!

In the past 90 days, we have seen relatively level underlying rates; a slow, softening in rates through December and January was met with a slight uptick in February.  However, rates remain lower today than they were in early 2011, and have been hovering at this low-point for about 7 months, as illustrated with the chart below (Source:  Treasury.gov – using the 3-year Treasury rate in this example from January 2011 through February 2012).

While the FED has committed to keeping rates low through the next 12-18 months, we are likely to see increased pressures on the underlying rate market if fuel prices or inflation tick-up more aggressively.  The general sense is that we might start to see some increases as we move further into 2012, but the increases are expected to be minimal at most, likely keeping rates at or below averages seen over the past 24 months.

AirFleet offers a selection of fixed and variable rates to match a client’s particular rate-risk desire.  Please call us at (800) 390-4324 to get a specific quote for a fixed-or variable-rate product.

Whats up (or down!) with the rates?

Despite the recent fear of looming rate increases due to all of the money that was injected into our market last year, it appears that inflation is remaining a non-issue for the time being. For the first time since March 2009, prices fell in April and analysts say inflation has pretty much disappeared. Because of this, the FED is more motivated to keep interest rates low to continue to spur economic activity.

What does this mean in terms of aircraft financing? For qualified buyers looking at purchasing large assets, including aircraft, this is great news. It is the perfect time to lock in low, fixed rates on new long-term debt. Despite the slowdown over the past 18 months, these low rate projections should help ease buyers’ fears and provide some motivation to buy now.

Though it was initially projected this period of low rates would be short-lived, it appears that rates will remain low for at least the next 12 -18 months. As consumer confidence returns, these extended low rate conditions should bode well for a ripe buying environment!

Sun ‘N Fun Update

Mid-way through the Sun ‘N Fun fly-in and things have been heating up in Lakeland, Florida.  Although no official attendance statistics have been posted, the crowds have been steady and Lakeland Linder Regional Airport is buzzing with aviation enthusiasts enjoying near-perfect weather!

Per usual, there are hundreds of exhibitors with renewed zeal in 2010 to kick the airshow year off with a bang.  Along with the usual daily activities, forums, workshops, and demonstrations, SNF also premiered their new Exhibit Hall E this year and the Thunderbirds have been preparing for their daily airshows, guaranteeing more excitement and bigger crowds.

At the AirFleet Capital booth, many customers have been inquiring about aircraft financing programs and engaging us in conversation, wondering what’s happening in the lending market.  Quoting aircraft from an older Cessna 172 to a new business jet and everything in between, most customers we are talking with have a positive outlook on the upcoming year and are getting closer to making purchase decisions after maintaining a wait-and-see approach the past 18 months.  In polling other exhibitors and with confirmation of aircraft sales on the show grounds, everyone also seems to be sensing this same attitude shift among attendees – a refreshing change from the uncertainty at last year’s show!

Stop by and see us if you will be at the show – we are located in Hangar C Booth 53 and would be happy to discuss how our low financing rates can help you purchase that aircraft you’ve had tagged in your favorites the past year – Happy Spring Flying!

Aircraft Financing Market Update

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After the high levels of activity at EAA’s AirVenture Oshkosh in July, activity has continued to strengthen in the marketplace.  AirFleet participated at Flying’s Parade of Planes in Lawrenceville, Georgia (www.paradeofplanes.com) on August 12-15, and a continuation of high quality activity seemed to follow.

One of the top online sources of aircraft listed for sale, http://www.Controller.com reflects a slight but continuing decrease in available aircraft (inventory), now down 6% from the high-point in mid-April 2009.   UBS Bank confirms this as reported in their August Business Jet Monthly, that used aircraft inventories have finally started to dip lower.  While it’s a very small dip – we’re looking for any evidence that the trend is reversing.

Working in our favor;  the 3rd Quarter tax incentive which expires on September 30th.  The 3rd Quarter is often an excellent time for an aircraft purchase, as a buyer can write-off 20% of the purchase with only 3 months’ expense remaining in the calendar year (for closings on September 30).  But in addition to this base tax incentive, the stimulus program is offering another 50% bonus in depreciation in the first year.  This is a real incentive to new aircraft buyers, and should stimulate strong qualified activity through the end of the 3rd Quarter.

The aircraft lending market, while having seen some changes in the past year, remains strong in support of qualified buyers.  To catch you up, a couple of the changes in the aircraft lending market are outlined below:

1.  You may need to search harder to find an aircraft lender.  Through August 2009, 14 nationwide aircraft lenders have either ceased supporting aircraft financing or have restricted capacity.  However, Google is your friend – a quick Google search will display those still active (and the sponsored searches show who’s spending advertising dollars in support of the aircraft lending market).

2.  Down-payments have for the most part increased.  In most cases, the minimum down-payment has increased from 10% to 15% for private-use aircraft, and commercial use (i.e. leaseback or charter aircraft) terms start with 20% down.  10% down terms may still be available for small loans, but may also have additional stipulations such that the bank is only underwriting the highest credits with these terms.  However, if an underwriter perceives risk with the credit package, one of the best ways to overcome any deficiencies is to increase the down-payment.  If a company had poor financial performance in 2008, but has strong credit and net worth and can verify 2008 was a blip, it may need to consider a higher down-payment for their aircraft purchase (i.e. 30-35%).

3.  Underwriting time.  In recent years, it was common to expect a decision in less than a day on loans up to $1MM.  However, with the extra attention to detail in today’s market, underwriting is taking 1-2 business days – still much faster than financing a home.  For larger loans, the rule of thumb of 3-5 business days applies up to about $2MM, after which it may take 7-10 business days for larger ticket financing.

4.  Underwriting documentation.  In today’s environment, aircraft loans require full documentation (i.e. tax returns, bank statements).  Most aircraft loans are cash-flow driven, so traditionally the finance companies have requested 2-3 years Federal Tax returns and/ or Audited Financial Statements.  However, in 2009 “Cash is King”.  You should be prepared to provide verification (i.e. bank statements) of any cash or marketable securities (i.e. public stocks) that you list on your Personal Financial Statement.  While standards for cash flow analysis have not changed in 2009, banks are looking much more closely at personal and corporate liquidity.

5.  Rates remain exceptional.  Rates often vary depending on the size of the loan, down-payment, type of aircraft, and intended utilization of the aircraft, but an individual or company buying a new aircraft in September 2009 may expect an interest rate between 6.3% and 7% (with exceptions for higher or lower rates).

Recalculating (Today’s Financing Market)

Do you have one of those GPS’s that sit on the dashboard of your car – the ones that have been so popular for the last few years? You know – the GPS units that tell you how to get to the Grocery store that you’ve been otherwise driving to for the past 12 years without any navigational aid. It’s particularly frustrating when you take that left turn for the shortcut that bypasses the traffic light – and the GPS starts chirping “recalculating”. Recalculatingrecalculatingrecalculating she constantly chirps, until you either show her there’s a better way, get back on course, or throw the GPS out the window. Either way, you know the best way to get there regardless of her chirping.

Therein lies the state of aircraft financing today. The rate market and bank appetites are constantly recalculating, and we can either rely on our own business experience and the reality of our individual situations to see the way forward, or listen to the “chirping” we’re constantly hearing that is eroding our confidence. To clear up current rumors, below are 4 tips for keeping your sanity today:

1. We have money!!! There’s plenty of money available to write aircraft loans. Yes, there is a shortage of funds available for financing in some segments of the market, and a few aircraft finance sources have scaled-back or shut-down this year. But the fact remains that there is a strong network of finance institutions (including ours of course!) that have capital ready and available to lend today.

2. Rate Turbulence: Interest rates are very fluid right now. Clients can lock an interest rate today for up to 30 days – so if the rate increases, the client is protected for up to 30 days after approval. What happens if the rates drop dramatically after the client takes delivery of their airplane? No problem – refinance at the new lower rates, in most cases without a pre-pay fee.

3. Stay Smart: Financing is a good financial decision especially in today’s market. Aircraft financing is more popular right now given the losses investment portfolios are sustaining. Those losses aren’t realized until a client cashes-out of the stocks, so ride it out and finance your aircraft purchase.

4. Don’t Panic! Financing is available for most of the market’s demands. Historically, aircraft purchasers are higher net-worth and A-credit buyers. Financing for this historical buyer remains readily available today. The interest rates are still exceptionally low compared to historical averages, and business buyers find 2009 to be an incredible tax environment. So remain cool, don’t listen to the chirping, and trust your instincts to get you into the left seat.