Buying a Jet

From its start in 2007, Nextant Aerospace has been the first and only company to capitalize on remanufacturing aircraft for the business jet market. For example, consider the Nextant 400XTi — a completely rebuilt Beechjet 400A/XP with a Williams FJ44-3AP engine and an integrated avionic suite from Rockwell Collins.

What Nextant did for the light jet market they are now about to do again for the turboprop market. The new Nextant G90XT was first introduced in late 2013 and reportedly will soon be available for purchase.

As with the company’s previous models, the G90XT will be completely refurbished and features a few surprises, including:

• single-lever power control to reduce pilot workload and increase safety
• integrated Garmin G1000 flight deck with fuel indicator
• ultra low-maintenance GE H75 engines for reliable performance
• completely digital pressurization

One of the most unique features of this model is the ergonomically designed cockpit and customizable cabin configurations. Purchasers can select a three- to five-seat executive configuration with “chairman’s workstations,” a mixed passenger-cargo option, and even a special mission/air ambulance configuration. The lavatory is also larger than most and includes a vanity sink. Baggage is stored at the rear of the aircraft.

Nextant’s test-flight program was reported as a success and a model was featured at EAA Airventure in Oshkosh, Wisconsin this summer. Some of the responses from test flights include a noticeable difference in power during takeoff and a general impression that cockpit noise levels are markedly reduced. The change in propeller position relative to the fuselage appears to be a successful combination for a quiet and comfortable flight for both pilots and passengers.

Once certified, Nextant will begin delivery of production aircraft immediately. The G90XT will sell for $2.6 million, which is approximately $1.2 million less than a new Beechcraft King Air C90GTx.

Nextant CEO Sean McGeough noted in recent interviews that the company listened carefully to what King Air operators had to say about what would make their experience better. He believes they are about to deliver a product that will include those improvements and have a significant impact on the business aviation market segment.

If you’re looking at an upgrade to a G90XT, L & L International can help you get the most out of the sale of your current aircraft.

Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 305-754-3313, or visit us online.

Acquiring a private jet, preowned or new, for your personal or business use is a big commitment. Whether to buy or lease can be a complex decision in its own right. Although each option has benefits, it’s important to choose the right plan for you and your business.

One of the best options is purchasing with cash. It’s immediate: You don’t have to wait for financing, there aren’t any financial contingencies, and businesses won’t have debt to disclose.

However, cash isn’t a possibility for many individuals and businesses. And even if the cash is available, you may not want to invest that much all at once. Typically, you’ll need to decide between leasing and financing an aircraft.

Advantages of leasing and buying

For those who dislike surprises, there are many advantages in leasing a jet:

• A lower up-front cash requirement than traditional financing
• Fixed monthly payments and predictable maintenance costs
• Flexibility, especially when you need to switch to a different aircraft (larger, smaller, newer)
• No residual value risk

Purchasing a jet through financing has its own set of benefits:

• As the owner, you can recoup the residual value.
• Businesses can often benefit from claiming depreciation as a tax deduction.
• You build equity as you pay.
• If your aircraft will see heavy use, buying makes more financial sense than a leasing plan that may cost more for frequent fliers.
• Joint ownership opportunities can be an option.

For buyers, preowned jets are a great option because they come in at a price point that is a much lower than new. At the same time, a private plane will not lose value quickly, so a preowned jet can be a great investment.

When you purchase a jet, rather than leasing it, you are investing in your own asset rather than just handing over money to someone else. All these factors mean that a preowned jet purchase is a great financial and business decision that is far more accessible than you may think.

Guidance for making the right choice

All that said, this decision is best made with the guidance of an experienced professional advisor. With a general understanding of your needs and financial goals, a professional can help you weigh factors such as expected use and selecting the ideal make and model. When you have an experienced partner, you can have confidence in your decision about whether to lease or buy your private aircraft.

Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at +1.305.754.3313, or visit us online.

2014 continued to be a buyer’s market for pre-owned business jets. Even so, according to data from JetNet, used business-jet inventories in December 2014 dropped to 11% — their lowest point since 2007 and a 1.5% decline year over year, as reported by AINonline.

The year-over-year retail transactions for used business jets surged by over 8% in December, hitting a new record of 2,569 pre-owned jets. However, the average asking price for pre-owned business jets continued to slide by over 10%.

While the number of in-operation business jets has continued to grow over the past several years, up until last year, pre-owned aircraft inventories had remained fairly stable, declining by less than one percentage point per year between 2011 and 2013, as reported by JETNET. The significant drop in pre-owned inventories bodes health for the market overall.

Pre-owned Gulfstream models a good buy

In the wake of Gulfstream’s delivery of its G650 to a waiting list of wealthy buyers, quite a few G550s are now for sale. CNBC reports that more than 30 used Gulfstream G550s are currently for sale, up from 11 a year ago. A 2006 G550 can be purchased for less than $30 million, around 60% of its original retail value. With the increase in G550 inventories, prices could fall even lower, possibly enabling individuals or business that previously couldn’t afford a private jet to do so.

Sales of older airplanes have typically been cash only, with models priced far below market value. For example, Gulfstream’s GIV models, originally priced at $36 million in 1998, now sell for $3 to $4 million. Financing for these older models has been almost nonexistent. However, recently some financial institutions have started offering aircraft loans, including financing for older aircraft, reports Business Jet Traveler.

If you are a jet owner and considering upgrading your current business jet to a newer model, now appears to be a favorable time to sell — before a flood of pre-owned jets hits the market and drives down values.

When most people think of business aviation, they imagine a large private aircraft used by a well-known conglomerate, filled with business people in suits making deals. But here’s a surprising fact: Smaller businesses, not the Fortune 500 giants, operate the majority of business aircraft. Specifically, a large majority (85%) of companies who own and operate business aircraft are small and midsized businesses (SMBs); the largest corporations operate only 3% of the U.S. business aircraft fleet.

Bizav is big among SMBs

Why is bizav so popular among SMBs? Many of the smaller U.S. businesses operate in markets across the country where commercial airlines have reduced or even eliminated services, leaving the private jet market to pick up the slack.

Owners of SMBs also realize that they get the same competitive advantage that larger companies do by investing in a business jet. A business aircraft allows them to compete efficiently and fosters productivity among their employees. Business owners with a business aircraft can quickly travel to more places — often visiting two or three places in a single day. And their aircraft are equipped with the latest communications technologies, enabling owners and executives to stay connected with their associates on the ground. Studies consistently prove that companies that operate business aircraft are more competitive, more productive, and earn greater profits than those that don’t.

A smart investment

Sure, the initial cost of an aircraft can be daunting for smaller businesses, but comparison studies show that when the costs of commercial airfare are combined with overnight expenses for food and hotels and car rentals, they typically exceed a private aircraft’s costs. Add to those overhead costs and the loss of time for traveling executives who are disconnected from the rest of the company while in the air — especially if their destination is not close to a major airline hub — and the benefits of a private jet really begin to shine.

In the fall of 2010, a study by NEXA Advisors and the NBAA found that the investment in a private aircraft was a smart one for many U.S. SMBs. Companies using business aircraft produced better financial results, posted greater top-line growth, and achieved better customer access, improving customer retention and securing new sources of revenue.

Private jets offer the same benefits to all businesses, regardless of their size. If your company leadership and sales employees travel frequently, take a few minutes to add up all their travel costs. You may find that a pre-owned private jet, combined with today’s lower fuel costs, could save your small or mid-sized business a significant amount of money.

Contact L & L International if you need assistance in purchasing or selling a private jet. 
You can reach our sales specialists today at sales@L-Lint.com, call us any time at +1.305.754.3313, or visit us online.

Whether you’re buying a car, a house, a company, or an aircraft, due diligence is a key part of the process. When you’re buying a pre-owned aircraft, this appraisal involves establishing the aircraft’s condition and history to ascertain its fair market value. Here are the specific tasks involved in due diligence as part of a pre-owned aircraft purchase.

Aircraft assessment. This step can identify potentially costly maintenance needs as well as possible safety issues. In fact, the aircraft assessment step, also called a pre-purchase inspection, is so important that it is often performed twice: first, as an initial in-person inspection and then again as a more rigorous undertaking later in the buying process.

The pre-purchase inspection includes a thorough, onsite physical assessment of the aircraft. The buyer pays for the pre-purchase inspection and receives a report from the inspector; the seller, in turn, gets a report detailing any issues that need to be corrected.

For the inspection, the buyer should choose a certified, trustworthy maintenance provider who is highly knowledgeable about the aircraft make and model you’re looking to buy. The provider should have experience in completing “tip to tail” inspections that include internal and external engine parts, avionics, and other aircraft areas and systems.

Records review. Another important task is a thorough review of records from the aircraft’s engine maintenance service plan (MSP) and other maintenance records. This paperwork should include verification of total time in service, that regular servicing and inspections have been performed, and that maintenance records are complete.

Establishing a clear title. This step ensures that you are buying an aircraft free of mortgages, liens, leases, or other obligations. To establish whether the aircraft’s title is clear, check the title filed in the FAA Civil Aviation Registry or in a foreign registry and, if necessary, take the required actions to clear the title. (Title insurance can protect aircraft owners from title problems stemming from liens and other liabilities incurred by previous owners.)

Tax review. The buyer should ensure that tax records for the aircraft are up to date and taxes are paid in full.

If you’re working with a reputable pre-owned jet broker like L & L International, you can rest assured that the broker’s representative will perform the necessary due diligence tasks. Even so, it helps to understand what’s involved in the due diligence process, so that you can ask the right questions to acquire all the information you need about the aircraft’s condition and history and whether its title is clear.

An escrow company plays an important role in an aircraft purchase transaction. When a prospective buyer puts down a non-refundable deposit toward the aircraft’s purchase, the escrow company serves as a trusted, neutral third-party to securely hold the aircraft papers and deposit. Whether you’re buying or selling an aircraft, knowing how an escrow company works will help you to be better informed about the sale process.

Escrow basics
Using an escrow agent can help avoid conflicts of interest in an aircraft sales transaction. That’s why it is of the utmost importance that an escrow company has no ties to the buyer, seller, or broker involved in a transaction.

Once a buyer and seller have agreed on the terms of the aircraft sale, the buyer submits a letter of intent (LOI) to the seller. Once the seller accepts the LOI, the buyer then submits deposit funds for escrow. The buyer and seller should jointly agree on the steps in the escrow process to avoid surprises at closing. When the transaction is near completion, the buyer and seller meet with the escrow company to release ownership documents to the buyer and funds to the seller.

The escrow company typically charges a fee to hold the deposit and aircraft documents and also files documents with the FAA to transfer the title. Most escrow services are FDIC insured, but you should verify this with the escrow service you’re considering.

A full-service escrow company such as Insured Aircraft Title Service (IATS) can assist with document and deposit-holding services, title and registry search, and title clearing as well as filing the necessary documents with the FAA.

Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at +1.305.754.3313, or visit us online.

Whether you’re selling or buying, you want to make sure a preowned aircraft is valued accurately so that it’s priced fairly. But how can you determine the right value?

The first step in establishing an aircraft’s value is often to consult an aircraft bluebook, which offers standard prices for many aircraft makes and models. You can turn to subscription-based resources, such as Aircraft Bluebook Price Digest, VREF Aircraft Value Reference (free to AOPA members), and the Airliner Price Guide. These databases list current prices for many types of business and general aviation aircraft. Another option is the AvBuyer’s Aircraft Price Guide, a free resource that gives an average price range for various categories and models of aircraft.

Bluebooks give you a baseline but can’t provide an accurate valuation of a specific aircraft; each plane’s true value depends on many factors. An accurate aircraft valuation takes into account considerations such as these:

• Engine hours, specifically time between overhaul (TBO).
• Exterior and interior condition, including paint, presence of corrosion, state, cleanliness, and fit of interior items (e.g., seats, lighting, storage compartments).
• Avionics and other installed equipment.
• Accident and damage history.
• Aircraft history, particularly the owner’s compliance with FAA Airworthiness Directives.
• Maintenance history.

Get an expert opinion

Once you have a base value, you’ll need to consider specific factors that affect a plane’s worth. Unless you are highly knowledgeable about aircraft valuation, your wisest choice is to have the aircraft appraised first, then consult with a reputable, established broker who has extensive experience buying and selling the type of aircraft in question. A broker can provide a realistic valuation based on market data and in-depth experience with the aircraft. A reliable aircraft appraiser is certified by the National Aircraft Appraisers Association (NAAA) and analyzes various factors to determine an aircraft’s current market value (aka an opinion of value). As experts at both buying and selling aircraft, L & L International can guide you through the valuation process and assess your aircraft’s worth.

It’s not unusual for aircraft owners to overvalue aircraft they want to sell — or for inexperienced buyers to have unrealistic price expectations. By understanding the factors involved in valuation and using the services of a professional who’s knowledgeable about aircraft valuation, you’ll improve your chances of getting the best deal for your aircraft.

Recent market developments are currently converging to make the conditions for buying older jets favorable. Here are some of the facts that are leading experts to that conclusion:

• Inventory of young pre-owned jets, i.e., those manufactured after 2000, is down 1.3% from the same time last year (JP Morgan).
• Only 8.1% of the nearly 11,000 jets manufactured since 2000 are available for sale (Business Jet Traveler).
• Inventory of older jets, i.e., those manufactured before 2000, is relatively high (Business Jet Traveler).
• Average asking prices for business jets in all categories are down 7% from the same time last year (AIN Online).
• The price difference between newer and older jets is significant — a Gulfstream G450 is around $36 million, while a 1996 Gulfstream G-IVSP is roughly $6.5 million (Corporate Jet Investor).

But despite the massive price differential and the years in between the two models, the difference between the jets isn’t as extreme as it sounds: “If you were to park a 1996-delivered G-IVSP alongside a recently delivered G450, many wouldn’t be able to tell the difference between the two,” says IBA’s senior aviation analyst Jonathan McDonald.

In addition to price-related motivators for buying older jets, newer aircraft models are in much more limited supply. When buyers are evaluating the pre-owned jet market, they look at the percentage of the worldwide fleet that’s currently for sale and they investigate availability on a global scale.

While popular newer-than-2000 aircraft models like the Falcon 2000EXy and Challenger are sold at a rate of about one a month, pre-2000 models are currently selling at one per quarter. The continued short supply of late-model jets should spur new aircraft sales, but in a recovering economy are more likely to cause pre-owned jet buyers to take a closer look at older jets that they might not otherwise consider.

This is good news for sellers who are looking to unload an older aircraft and perhaps purchase a newer pre-owned one. Buyers should carefully research the aircraft’s maintenance records and operational history in order to be fully informed about the aircraft’s true condition before making a purchase.