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Key Items to Note

04-20-2011

Free Webinar Scheduled for 4/26/2011.  Risk & Collateral Management in Aircraft Financing.

REGISTER TODAY!

other information

Call 800-895-1382 for more information or to see how Plane Data, Inc. can help you.

Recent news and events

Once again JetNet and the NAAA report a fairly stable market for the month of March.  For the most part, numbers (asking prices aside) changed less than 1% across the board but that is not too surprising this time of year.  The real focus for March and April has been training.  This includes training for clients along with professional recurrency training as an appraiser.  When hiring any aircraft appraiser, it is always important to understand what professional ratings they hold (as an appraiser, not a pilot) and what recurrent training they undergo and how it relates to the subject aircraft. 

There is another free webinar that many banking clients may find helpful entitled - Managing Risk and Collateral in Aircraft Financing.  There is only one session scheduled for 9:30 AM EDT on 4/26/11.  A good number of individuals have already registered.  Banking examiners from several states have also been invited to attend so that they will have a better idea what documents they should be requesting when aircraft financing is involved.  If you need assistance registering, please let me know.

The free webinar held last month- Make Money Financing Aircraft While Managing the Risk and Collateral - was well attended and out of the those who attended, I was surprised to see more than one financing company or "loan broker".  In fact, several discussions are presently underway with different financing companies.  I have always believed that any aircraft financing company would find it helpful to have a creditable "package" when presenting opportunities to banks.  For various reasons, the appraisal process has been avoided or overlooked by aircraft finance companies in the past but it appears that this attitude may be changing. 

Recently, I've had the pleasure of speaking with one financing company in particular - Avfundsource (www.avfundsource.com).  Tony Kaiser, the President, has a good understanding of the process used by Plane Data, Inc. to evaluate and document aircraft and believes it is a good fit for his company and his company's objectives.  One area he is focusing on is helicopter financing.  Helicopters are quite different compared to fixed wing aircraft and for whatever reason many banks/bankers simply avoid them even though they carry no more and no less risk than any other aircraft they presently finance.  The real key when financing helicopters or any other aircraft is to utilize a trained professional to document and evaluate the asset itself and this effort cannot be accomplished in a creditable manner while sitting behind a desk.  Field work and research are critical.  In the case of helicopters, the NAAA provides special training for appraising helicopters to address their unique attributes.  Using an experienced professional in the evaluation and documentation of the collateral (along with a sound collateral management program) helps to de-risk any deal significantly.  If your bank would like to explore helicopter financing in greater depth, contact Avfundsource for additional details.  Tony will be happy to help you and answer any questions you may have.

New service offering

As part of our commitment to help banking clients in the Risk Management associated with their collateral (the aircraft).  A new service is being offered to eliminate the guesswork out of the collateral/risk management process for one flat fee.  It is referred to as the "Autopilot" Program and here is how it works and who will benefit the most.

Most banking clients hate surprises and the Autopilot Program tends to eliminate them.  For one negotiated fee, Plane Data, Inc. provides all appraisal reports, all collateral inspections - including travel and all title work.  Those banking clients that will benefit the most are the ones who have a portfolio of aircraft they have financed or who finance aircraft on a regular basis.  Banking clients know how much they have to pay each period and aircraft are placed on a schedule for routine collateral inspections or Certified Appraisal Reports.  Once the program and schedule are established, the program is on "Autopilot" in that inspections and reports are provided regularly and automatically.  New deals are simply requested.  Title work and Apprisal Reports are completed as soon as possible.  There are no additional quotes or invoices to address and more importantly, NO SURPRISES.

Pricing for the Autopilot Program is established on each bank's unique requirements but the Program removes the peaks and valleys out of "per project" pricing and allows banks to be more competitive while continuing to manage their risk and their collateral.

For more details, click HERE.

A Question for the Appraiser

Q:  What is Liquidation Value and how is it derived?

A:  The typical aircraft appraisal report provides an opinion of "Market Value" which is sufficient for most banking situations.  However there are other values a bank may want to consider.  One of them is "Liquidation Value".  The inclusion of Liquidation Value is not a routine part of the appraisal process and this requirement needs to be clearly stated when requesting services from any professional appraiser.  The Engagement Form used by Plane Data, Inc. asks for the "Purpose of the Report" and in most instances the response is "financing" but another purpose could be "repossession" or "liquidation" of the asset and in those instances, Market Value alone would be insufficient to solve or address that type of problem.

In brief, "Market Value" is an opinion of value and presumes that a knowledgeable and willing buyer and seller are involved and neither has any pressure to conclude the deal. 

Liquidation Value is an opinion of value that presumes the seller is under pressure to sell within a specific timeframe (identified by the client) which is typically much less than the normal selling window for the subject aircraft.  Liquidation Value is NOT Wholesale Value.

It would be easy to say that there is a "standard formula" to obtain Liquidation Value but there isn't - and this is why you need to hire a professional to obtain it.  There are simply too many variables involved such as the current number of aircraft on the market, how this aircraft compares to others currently for sale, how many days these aircraft are currently on the market and are there any special attributes about the subject aircraft that would increase or decrease a prospect's interest?  The timeframe to liquidate the asset is also a critical piece of information.  If a 30 day window is the timeframe identified by the client, and the normal time to sell this particular make/model is measured in years then a short timeframe will place more downward pressure on the liquidation value - especially if the market for that make/model is exceptionally slow.

When engaging a professional appraiser for any assignment, the appraiser may ask many questions but the objective is to understand the scope of work, the problem to be solved  and the purpose of the report itself.  Exceptional situations (such as repossessions) need to be clearly identified to the appraiser so that the report can properly solve the bank's problem at hand and provide a creditable, believable result.

Key Items to Note

04-20-2011

Free Webinar Scheduled for 4/26/2011.  Risk & Collateral Management in Aircraft Financing.

REGISTER TODAY!

other information

Call 800-895-1382 for more information or to see how Plane Data, Inc. can help you.