Financing Logjam Hits Used Market
A financial Catch-22 is at the root of the market logjam stalling new business jet sales, according to analyst Brian Foley. Manufacturers keep saying they won’t start selling healthy numbers of new aircraft until the glut of used planes is cleared. And while there are plenty of customers anxious to snap up the many bargains on the used market, those low prices are at least partly responsible for their not selling. Foley says that while banks are starting to lend again, they are being a lot more careful and don’t like lending for items that are undervalued. “Residual values have plummeted, so today’s loans are based more on the borrower’s balance sheet and less on the [repossessed] asset value of the aircraft, although that continues to play some role,” Foley said.
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