““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 ”
Preowned: August-September 2007
Bigger isn't always better, which is one reason many attendees like the European Business Aviation Convention and Exhibition (EBACE), which takes place in Switzerland each May. They see it as a scaled-down version of the National Business Aviation Association (NBAA) convention that is held annually in the U.S. And they laud the Geneva Convention (as many refer to it) for its more intimate setting and because-despite much lower attendance than the U.S. show-many exhibitors believe it attracts more serious buyers.
In Geneva this year, the sun-soaked static display of approximately 50 aircraft included relatively few used jets. For the most part, they were large aircraft that have been in high demand, like the Boeing Business Jet. The market for that model has been on fire lately, with prices rising quickly from around $45 million to about $55 million. Now, one BBJ that was displayed at Geneva reportedly is under contract for more than $60 million-prompting the owner of the only one remaining for sale to chart new territory with an asking price above $65 million. Referring to the current escalation of prices and what buyers are willing to pay, one of my counterparts at the show asserted, "Crazy doesn't exist anymore."
While talk of ruble-laden Russians buying up everything with wings is pervasive right now, the reality may be somewhat less exciting-at least it was at EBACE. In fact, a few weeks after the show, all of the used aircraft displayed there were still being marketed actively. As noted above, one BBJ is under contract, but its U.S. buyer surfaced prior to the show. From that standpoint, EBACE may be much like the U.S. convention, where relationships are often initiated and then cultivated, allowing for a sale to follow later on.
It was a bit surprising to see so many familiar faces in Geneva, which brings to mind the only complaint I heard about the event: "There are too many American accents this year. I hope this doesn't turn out to be like NBAA." Interestingly, that comment came from a foreigner at the show-an American!