Why commercial aircraft financiers should look at business jets and helicopters

Commercial aircraft are great assets to finance. However, your aircraft financing skills are transferable to other markets including business jets and larger utility helicopters (we are not talking about small owner pilot ones). Lots of your competitors are looking at these markets and it may be time for you to research them. These markets are also a priority for US Ex-Im. Beyond the asset diversification that comes from financing business jets and helicopters, there are lots of other reasons why you should look at these assets. Here are just a few of the benefits of financing business jets and helicopters:

Business jet finance

Business jet finance

• Third party operators and engine maintenance programmes reduce your asset risk;

• Although jet values are more volatile than commercial aircraft ones, business jets depreciate less than commercial jets;

• There is a large, liquid secondary market for pre-owned aircraft;

• The industry has shifted from being a US market to an international one creating opportunities for experienced global lenders and advisers;

• Large business jets like a G650 or Global 8000 cost over $60 million – these are not small transactions;

• There are opportunities to work with other divisions of your bank such as private banking and gain fee income and access to their balance sheet;

• Non-scheduled airlines – like VistaJet or XOJET – have strong business models and place multiple aircraft orders.

Helicopter finance

Helicopter finance and leasing

• Utility helicopters have long useful lives. There are 40 year old helicopters in service today;

• Helicopters hold value extremely well. Many will be worth 75% of the original cost after 10 years and often 50% after 25 years. Most heavy helicopters built in the 1970 are still flying and are worth more their original list price;

• Strong credits – most commercial helicopters are on long term lease deals with strong end users like Petrobras, BP or government entities. Aircraft on these contracts usually stay in place even if the operator ceases;

• Helicopter leasing is a relatively new market with room for new entrants. Milestone Aviation Group (launched
by the founder of NetJets) and Lease Corporation International are leading the way;

• The oil industry drives the helicopter market. This makes it a good hedge with commercial aviation.

Alasdair Whyte

Alasdair launched Corporate Jet Investor and Helicopter Investor in 2010. He has more than 15 year's experience as a financial journalist and has specialised in aviation for much of this time. As well as editing the website, Alasdair helps to organise our international conferences and events. He also regularly chairs them as well as other industry gatherings.

You may also like...