"V" for Victory
by Jay Mesinger
be great to declare victory over this economic downturn? Who
among us would like to say it is over and return to the days
of old? Many would trample each other to get to the
microphone to make that declaration.
Unfortunately, it is a little early for that comment;
however, it is not too early to recognize some of the
positive changes that are taking place in our market. There
are some good things to start to talk about - such as the
sales that are occurring. These sales are not to be mistaken
for a rush to recovery, as they are the simple beginnings of
would dedicate this article to the “New, New Normal”!
enjoyed what we thought was unending success in 2007 -
thirty buyers for one plane, five year backlogs, and
premiums being paid with values skyrocketing. Then along
came 2008 and everything changed. All of a sudden we looked
around and saw thirty planes with no buyers, falling values,
and eroding backlogs. The illusion of unending success came
to a screeching halt – the “New Normal”. We suffered weak
sales, deals that constantly fell apart before closing.
Every thing that could go wrong did go wrong.
Now, I see
things changing ever-so slowly, but changing nonetheless. I
am starting to see Sellers acknowledging the sweet spot for
asking prices. I am starting to see Buyers having the
confidence to step forward and buy. The number of deals that
get to contract and actually close are increasing. In almost
all categories of aircraft there is a slight up-tick in
activity, though prices are still down. In fact just like
the thought of rising interest rates might slam on the
brakes for our overall economic recovery, any slight firming
of prices among aircraft sellers would also put on the
brakes for our industry recovery as well.
no indicators that give credence to prices rising. Inventory
levels, although stabilizing, are still remaining too high
to draw a new value proposition between supply and demand.
Lenders are still not providing the broad-based support to
the borrower to allow for great numbers of buyers to return
to the market place. There is a lot we as an economy and as
an industry must overcome before transformation takes place.
But it has to start somewhere, and it feels better today
than it did in the preceding 15 months.
time, we as an industry were at a complete loss as to what
the depth of the downturn was, or when we would reach the
bottom and what would be left when we got there. Would all
of the manufacturers be there? Would the optics of our
industry be so tarnished that no one would be on the radar
screen? We may not have all of the answers yet, but there is
more clarity today than in past months.
manufacturers, although still reporting very sluggish sales
of new aircraft, have worked diligently and under the worst,
most painful odds to reduce production and keep whitetails
from cluttering their ramps. I applaud them all for
maintaining their product integrity. Thank you.
As far as
the optics of business aviation being beyond repair…sorry,
to all those that thought that would happen, but our
industry and its owners, operators and beneficiaries are all
too strong, proud and important to the overall economy to
have that happen. The wonderful trade associations that
support all facets of our industry have pulled together with
their individual and collaborative programs and have
succeeded in revitalizing our purpose for all to be proud
of. This battle is not over, however, we are winning and
there is a much longer life ahead. Thank you to all who have
helped breathe life back into our collective livelihoods.
So, as I
think back over the recent past to all of the thoughts and
questions that came up: Are there any real buyers? Could
prices really be this low? Can I just wait this out? I am
proud to say I have much better answers today for everyone.
Yes, there are buyers. Yes, the prices have fallen
substantially, but they are stabilizing at what now may be
considered a bottom. If waiting for this to occur has been
the tipping point for you as a buyer or seller, now is the
time to revisit the market. Having confidence in being at,
or close to bottom allows the transactions that occur at
this level to help us all to step into the market with
renewed optimism and hope for the future.
vocabulary is now changing to the “New, New Normal”. My
excitement is being renewed about the aviation industry, and
I am declaring a market that is responding positively to
change, and this is a “Victory”.
If you have
been afraid to look at the “New, New Normal”, open your eyes
and see the rays of hope. It may take years for prices and
transaction levels to rise to those we saw in 2007. We have
a tough road ahead. Some say the changes we are experiencing
will result in a smaller and less robust industry. I believe
this may be true of our entire economy for the foreseeable
future, but believe me this state is far better than having
no industry at all.
that are occurring are new beginnings that we get to step
into together so that we may all succeed. I think I am going
to like the “New, New Normal”.
Jay Mesinger is the CEO of J. Mesinger Corporate
Jet Sales, Inc. He is on the NBAA Board of Directors
and is Vice Chairman of the AMAC. Additionally, he
served on the Duncan Aviation Customer Advisory
Board for two terms, is a member of MEBAA, EBAA
and is associated with IBAC.