““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
A Market Filled with Bargains
The last few years haven't held much in the way of surprises for the used-jet market and I suspect 2012 won't, either.
The slope on which all aircraft prices slid followed different paths for different models. The long-range, large-cabin segment seemed to take the equivalent of double black diamond ski trails to reach its price bottom. Values in this group descended rapidly, but in the process were positioned to board the next lift up. Other market segments seem to still be meandering along the blue circles, an excruciatingly slow and deliberate path to a price basement.
After this withering away of prices for a prolonged period, sellers are starting to see the market as it really is, rather than the way they want to perceive it, and this should lead to more deals. Fewer people these days are saying, "I'm going to wait until the market recovers," and the view that buyers and sellers have equal leverage at the negotiating table has waned. Buyers now enjoy a distinct advantage, and they know it.
The good news for sellers who were holding aircraft at the market peak is that–having paid down their notes for the last three years–they may not have to show up at closing with cash to supplement the buyer's purchase price in order to retire their loans. As such, these sellers can take advantage of the market and enter it as opportunistic buyers–the only type that has been sighted in recent memory.
As for opportunity, no shortage exists. Consider, for example, that more than 15 percent of Falcon 900s and Challenger 604s are now on the market, along with nearly 20 percent of Gulfstream GIVs. You can also choose from more than 10 percent of the Premier 1A and Hawker 800XP fleets. There are many more examples of business jet models that appear to be great values now.
That's not to say that inventory is high for all models. Some–particularly large-cabin, long-range, current-production aircraft–are in great demand, with less than 5 percent of the used fleet for sale. But those are the exceptions in a market where supply is generally high and bargains are easy to find.