I can not believe that it is already December. It has been several months since my last blog entry and a lot has been happening in our industry. During the summer months it seemed that I had plenty of time to dedicate to blogging, but there was not much going on worth talking about. Once August rolled around, activity picked up exponentially, but I suddenly found myself in a time crunch. That was also the time we decided to develop the quarterly market analysis which went out a few weeks ago and can still be referenced on our website at http://www.jba.aero/marketwatch_qr.asp. All that to say, our marketplace has been active and there is still some time left in the 2010 buying season.
After a rather stagnant summer period, buyers seemed to come out of the woodwork in August & September. I think the seasonal nature of our business lined up with an increased demand for lift and better news out of Wall Street to give us some of that momentum we have been looking for. We received several offers during the third quarter and were able to sell a diverse group of aircraft including a 1976 model King air 200, a 1974 model Falcon 20F-5, a 1994 model CJ, a 2005 model Lear 60SE and a 2001 model G-IVSP. We were also able to complete the acquisition of a 2005 model CJ2 & a 2010 model King Air 350. Many of our other listings generated interest in the marketplace but acceptable offers have not yet materialized.
The NBAA convention in October always seems to act as a catalyst for an increase in activity and this year was no exception. Although most companies seem to be maintaining a conservative approach to the possibility of future fleet changes, there appeared to be a good bit of window shopping taking place at the convention center. I was able to spend some time with some customers comparing and contrasting various aircraft at the static display which was a refreshing change from the mood at NBAA the previous two years.
As I am sure everyone knows by now, growth in our industry is driven primarily by corporate profits. Until the largest U.S. companies start making money, the prospect of selling a lot of aircraft always seems to be sometime in the distant future. Good news came out in the New York Times last week as third quarter numbers were tallied. "American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.... Profits have grown for seven consecutive quarters, at some of the fastest rates in history" CATHERINE RAMPELL, November 23, 2010. I think many companies are still building their cash reserves as a hedge against continued uncertainty by consumers, but this is a great first step toward a solid recovery.
The holiday season can be a very busy time in the turbine aircraft resale industry, or it can be very slow. It is only the Wednesday after the Thanksgiving holiday, but I think I can safely predict that this December should be very active. Several of our customers want us to push hard to move their aircraft by year-end, we have listed several new aircraft and given several recent proposals for additional listings and acquisition projects. Although getting a deal done by year end is looking less likely, it can be done.Last December I received an offer on a listing the second week in December and both parties were motivated enough to close the transaction by year end that we were able to make it happen.
Later this week we will be announcing two new listings - A 2007 Premier 1A with 840 hours for sale and a 2001 model G-IVSP with 2,800 hours that is available for a 12 month lease starting in February. If you would like more information on these aircraft or any of our other listings, please visit our website at www.jba.aero, or call us at 713-850-9300.
Toby J. Smith