““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
An increase in sales activity in the first quarter has spilled into the second, and the uptick appears to be more than a temporary rise. While it's no secret that prices have been decimated compared with those of a year ago, the declines are resulting in values that for some are simply too hard to resist.
While some buyers are beginning to take advantage of the new pricing levels, others are waiting for even better deals- but this latter group might be setting themselves up for disappointment. In a possible sign of a market bottom, we are beginning to see deals that have been over-negotiated.
A few buyers have pushed the envelope on some near-deals only to lose them to a higher bidder. Often in these scenarios someone else takes advantage of the over-negotiator's hard work by swooping in and buying the airplane for slightly more. Once it gets priced right, multiple buyers start appearing, even in a distressed market such as this.
What can be said about the market in general now that couldn't have been said over the last several months is that most model types have established a predictable trading range and one that is stabilizing. While inventory is at an all-time high, the rate of growth is slowing. In fact, we've begun to see some aircraft being removed from the market. This may be an indication that owners are hesitant about selling at current levels.
There also is a question of whether some airplanes are legitimately for sale. In light of recent negative publicity, companies may be going through the motions of placing aircraft on the market to appease critics of corporate aviation. The fact that a jet is ostensibly for sale doesn't necessarily mean that it can be bought.
Another sign of inventory and pricing stabilization is a reported tightening of manufacturers' supply of "white tails"-airplanes that are ready for delivery but whose intended buyers have seen business needs change and have had second thoughts.
This year seems to be unfolding in a manner that many predicted. No V-shaped recovery was anticipated and none will likely occur. Some industry observers expected, however, that 2009 would yield some exceptional values, and it has. Now, with nearly half the year already in the rearview mirror, many of the best buys may be there, too.