Aircraft Sales in a Down Market

Gantt sees an underlying market that’s stable despite tight credit, dropping values

“A lot of the people are on the sidelines, on the defensive. We’ve seen this same story in the past, in 1990, 2000, 2001.

“That airplane is nothing more than a commodity, when it comes down to it. There’s a supply and a certain amount of demand.”

Regarding aircraft values, Gantt says there’s a downward trend across the resale spectrum. “We’ve always said, if there’s 20 percent of inventory on the market, that’s a sluggish market,” explains Gantt. “Ten percent has always been the goal. Anything less than that is very, very bullish — 10 percent of any given model.”

For aircraft resale companies which inventory, a significant factor in today’s market is the low interest rates, says Gantt. He recalls the high interest rates of the late ’70s and early ’80s which his company weathered but which brought many others down.

Says Gantt, “The 2000-2001 recession was probably the first time when we had a recession when interest rates stayed relatively low and it kept dealers from going under. They could carry a plane for six or nine months at those rates and still get out of it reasonably well. But if you’re carrying 15 percent interest rates or 20 percent, you can’t hold it.
“Our holding times go from three months, which is what we hope to have, to six to nine months; sometimes a year — that’s when it gets dangerous.

“The averages change real quickly. Some of these markets only have 5 percent of the inventory on the market, so if one plane is sold the market changes drastically. If that same market has 15 percent on the market, it drops the prices, obviously.”

No downturn is the same, says Gantt. The 2008 slowdown came along slowly, until the spigot was turned off in September, he explains. “That was a big shock, similar to what happened after 9/11,” he says. “That took three to four months before people were buying again. We had an underlying market that was at least stable, even though it was in recession.”

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