aviation finance

  • NAFA Administrator posted an article
    NAFA Webinar: How the Priorities of the Aviation Industry Have Changed see more

    NAFA Webinar:  How the Priorities of the Aviation Industry Have Changed

    The Global Pandemic has had a profound effect on the industry and the way we do business.  What long-term effect will the CARES act have?  What about sustainable fuels, pilot shortages, and insurance rates?  Have those been affected, too? 

    Come listen to our distinguished panel of experts discuss the many ways industry priorities have changed in 2020.

    Meet our Moderator and Panelists:

    Gil Wolin, Publisher, Business Aviation Advisor Magazine.

    Ed Bolen, President and CEO, NBAA (National Business Aviation Association) 

    Pete Bunce, President and CEO, GAMA (General Aviation Manufacturers Association)

    Tim Obitts, President & CEO, NATA (National Air Transportation Association)

    Mark Baker, President, AOPA (Aircraft Owners and Pilots Association) 

     

     

    This NAFA webinar originally aired on October 15, 2020.

  • NAFA Administrator posted an article
    NAFA announces Flinn Aviation, LLC joined it's professional network of aviation service providers. see more

    FOR IMMEDIATE RELEASE

    EDGEWATER, Md. – October 13, 2020 – National Aircraft Finance Association (NAFA) is pleased to announced that Flinn Aviation, LLC has recently joined its professional network of aviation service providers. 

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome Flinn Aviation to our growing organization as we head to our 50th anniversary,” said Jim Blessing, president of NAFA.

    Flinn Aviation, LLC manages the sale of corporate jets, turboprops, and helicopters, with over 280 worldwide transactions to date. Headquartered in Austin, TX, the company has a 20-year history of successful aircraft transactions with a great deal of repeat business – attributed to their team’s professionalism, business ethics, and customer satisfaction. 

    The company began operations in 2002, selling corporate jets and turboprops, then expanded into turbine helicopter sales and acquisitions in 2006. Flinn rapidly became an industry leader in both the fixed wing and rotor wing markets, trusted by reputable aircraft owners and operators worldwide.

    With a customer list spanning the globe in every industry segment, Flinn Aviation’s team is well versed in international transactions – accounting for approximately 40% of business. The company offers comprehensive market research, technical knowledge, and aggressive marketing techniques, along with a proven and documented track record.

    Much like NAFA, Flinn Aviation promotes professional, ethical, client-based service. Through their passion and expertise, Flinn and NAFA foster long-standing business relationships throughout the aviation industry. 

    For more information about Flinn Aviation, visit nafa.aero/companies/flinn-aviation-llc.

    About NAFA:  

    The National Aircraft Finance Association (NAFA) is a non-profit corporation dedicated to promoting the general welfare of individuals and organizations providing aircraft financing and loans secured by aircraft; to improving the industry's service to the public; and to providing our members with a forum for education and the sharing of information and knowledge to encourage the financing, leasing and insuring of general aviation aircraft. For more information about NAFA, visit NAFA.aero.

  • NAFA Administrator posted an article
    Flight Staffing in the Time of Coronavirus see more

    NAFA member, PNC Aviation Finance, shares the latest on flight staffing during the coronavirus crisis.

    The coronavirus has changed the global aviation industry, and is resulting in an upheaval in employment that will re-shape the business.

    Highlights:

    • Effect on Pilot Training is Mixed
    • Business Aviation Positioned Well for Recovery
    • Retirements May Rise
    • Pandemic Increases Business Aviation

    At the beginning of this year, all of aviation was facing a severe pilot shortage, with business aviation competing against commercial aviation to recruit a limited pool of qualified candidates. Now, established pilots face furloughs, or even job losses, as airlines adjust their operations for a long recovery period.

    Impact on Pilot Training

    Before the coronavirus crisis, the industry had invested heavily in promoting aviation careers and education. In February, United Airlines had bought a flight school in Phoenix to support its Aviat pilot recruiting program.[1] The airline had plans to train up to 10,000 new pilots over the next decade. The current instability might discourage some student pilots from completing their careers, and persuade others that aviation is too unstable a field of study.

    Regional pilot Mike Czarnecki told FightGlobal,[1] “I worry more about the next generation, because we will come out of this smaller than before.” His own son is currently training as a pilot.

    But the reality both for Czarnecki and his son is that, in time, aviation will recover. Those specialized skills will still be in demand. The question is how long the recovery will take and which jobs will attract the greatest share of existing pilots and new recruits.

    Recovery May Favor Business Aviation

    It is expected that the recovery for airlines returning to 2019 levels of traffic may take anywhere from 3 to 5 years. During that time, job security and growth prospects in commercial aviation will be in doubt.

    While business aviation has suffered through many of the same disruptions of service as airlines, it may be better poised to recover more quickly as more high net worth individuals opt to acquire aircraft or to fly private charter in future.

    For those pilots who welcome more flexible work schedules, a career working as a pilot in business aviation could be attractive.

    Alerion Aviation, an aviation services company that offers aircraft management, charter, maintenance and FBO services to owners and operators of private jet aircraft, saw an initial retraction in business resulting from the coronavirus pandemic, but has kept its flight staff on the payroll in expectation of a rapid return to service once people can start traveling again.

    “If we furlough our pilots and they went off to do other things, then they might not be available,” says Bob Seidel, CEO of Alerion, and a pilot himself. “Recruiting, hiring and training would take months that would add to the injury that we already suffered from the loss of business.”

    Seidel, who has been active in raising awareness of the pilot shortage, and supporting recruiting of new pilots for the industry through his work with the State University of New York (SUNY), believes that there are still good prospects for future pilots in the long term.

    Effects of Retirement

    For one thing, this latest downturn may persuade more senior pilots to retire. Those who are at the senior level are not going to go through another furlough cycle, he tells us. There may be wave of retirements and early retirements taken because of this latest shock. If pilots aren't flying airplanes by June, then United is going to be accepting retirements. That makes room for people to come up, and we've seen a tremendous interest in aviation careers. SUNY's flight school was struggling to find students and is now full to capacity.

    Aviation journalist Victoria Bryan decided to take her passion for the skies further by pursuing a career as a pilot. Nearly two years ago, she left Germany for New Zealand to study at a local flight school there.

    The crisis has put her dream on hold, but she remains hopeful of completing her training. One positive result from the current crisis, as she points out in an article she wrote about her current flight school experience,[2] is that there may finally be enough retired and furloughed pilots available to adequately staff flight schools.

    “Our school lost instructors to airlines hungry for flight crew and we endured delays to our training. The 18-month timeframe to get qualified was out the window,” Bryan writes.[2] “Ironically, flight schools are now in a better position than in the past few years.

    “With no airlines seeking crew, there are now enough qualified pilots to work as flight instructors to train their cadets. So once lockdown restrictions are lifted in New Zealand, my training should progress faster than previously anticipated.”

    It will be important to keep those students committed to their career as pilots to avoid coming out of the coronavirus recovery with a greater pilot shortage than before the pandemic.

    And that won't be easy, considering the costs of study for cadets, and the slow jobs recovery which will see experienced pilots more likely to get hired before recent graduates.

    Some of those experienced pilots will want to shift from airlines to business aviation, and graduates may welcome opportunities in business aviation too. While airlines offer more regular work-schedules than charter operations, the financial vulnerabilities of the airline industry have been on full display. Airlines may no longer be in a position to offer the same tempting work packages that saw them lure pilots away from business aviation before the pandemic.

    “We lost five people to the airlines last year and three of them have contacted us wanting to come back,” Alerion's Seidel tell us. “And there is a possibility that recovery may be faster for business aviation, as those who have the resources to fly private now choose to do so.”

    Private Flight Considered Essential

    Seidel has seen some signs of a change in the wind that favors private aviation, with some people who might previously have thought private flight a luxury now considering it essential. There may be a greater willingness to abandon commercial air travel in order to avoid crowds at airports and crowded cabins, and to have greater control over travel companions.

    “Last year, at this time, we were working on one acquisition deal. This year, we are working on six. I don't think the industry is up 600%, but our little corner of the business is so active that it tells me something,” Seidel says.

    “Whatever the shape of recovery, pilots will be needed. The key, at least for now, is to be flexible to get through the crisis. People are going to have to remain agile,” he tells us. “They're going to have to be pragmatic, but the opportunity is still there.”

    Let's Talk

    PNC has been a steady source of flexible financing for more than 160 years. Our solutions are uniquely designed to meet the needs of sophisticated corporate aircraft owners - from high net-worth individuals to Fortune 500 companies. Contact Us »

    This article was originally published by PNC Equipment Finance on May 27, 2020.

     

  • NAFA Administrator posted an article
    How is the Coronavirus Affecting Used Aircraft Prices? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses how the coronavirus pandemic has affected pricing of used aircraft. 

    As of this writing, the coronavirus pandemic has not resulted in any measurable decline in used aircraft prices. That's not to say it won't over time, but in the near term, prices are holding steady.

    Why aren’t we seeing values lower? Despite being blindsided by the consequences surrounding the coronavirus pandemic, the aviation market was already in a unique situation because inventory was pretty thin. Traditionally, when supply is constrained, market pricing will stay roughly the same. That holds true now, despite any drop-in demand that we may be witnessing.

    Another reason prices have remained steady is because fewer owners are listing planes right now. There is so much uncertainty surrounding the ability to close deals (financing, the logistics of inspections and aircraft delivery) that folks are more comfortable sitting on the sidelines than taking the risk of losing out on a deal.

    While the coronavirus pandemic might spur some people to sell, as of yet, there’s been no noticeable uptick in these situations. AOPA Aviation Finance, (“AAF”) is working on a deal right now with a pilot-owner who’s trying to close on a TBM turboprop single. He's buying from an 80-year-old gentleman, but such transactions are rarer than they are regular.

    The bottom line is if you're thinking this might be a good time to pick up something cheap, our answer is, it’s always worth looking, but the markets are efficient and the professionals in the industry help to keep it way, so you’ll have to look hard for those gems.

    This article was originally published by AOPA Finance on April 30, 2020.

  • NAFA Administrator posted an article
    How is the Coronavirus Affecting the Closing Process for Aircraft? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses the challenges of aircraft closings during the Coronavirus pandemic.

    Unlike real estate, where the exchanged property does not move, the challenge with closing on an aircraft is that eventually it must be flown to its new home. It’s a rare transaction where buyers purchase an airplane from their home airfield. Therefore, how to legally move the aircraft is one major concern for buyers during the coronavirus pandemic. Another is how to get a pre-buy inspection done.

    First, there is the sticky problem of getting an aircraft inspected. It’s not clear whether maintenance and repair shops are currently open to perform pre-buy inspections, or whether their employees can even report to work. Some states have not deemed aviation techs “essential.” What jobs are deemed “essential,” how, and by whom such job designations will be enforced remains up in the air. Even if aviation techs are, parts suppliers might not be. That means needed parts may not get delivered. In normal times, a closing might take 30 days. In these abnormal times, plan on the process stretching to 45 days or more.

    Beyond that, is it legal for a ferry pilot or the new owner to fly an airplane from the airport where it is hangared to its new home base?  State laws vary on the subject. How complicated it will be to transport the aircraft may depend on factors like the route of flight and the number of states involved. Is the airplane going from California to Maine? Or from Wisconsin to Indiana? One has to ask oneself, “Am I going to have a challenge from this state?” Other questions follow, including, “Which governing body would enforce such a challenge — state or federal?” “Is it within FAA or state jurisdiction?” None of that is easy to navigate.

    If you can imagine the difficulty of flying from one European country to another and having to deal with the balkanized ATC system there, then you have some idea of the current complexity surrounding moving an aircraft across state lines during this pandemic. At AOPA Aviation Finance, (“AAF”), our advice is to call AOPA’s Legal Services to get better clarity on your specific situation.

    That is a great benefit of AOPA, having multiple resources all in one place. This complex situation is the perfect time to tap into them.

    Great advice. Great rates. From helpful and responsive reps you can trust. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263), or click here to request a quote.

    This article was originally published by AOPA Aviation Finance Company on April 30, 2020.

  • Tracey Cheek posted an article
    Keyvan Havacilik A.S. Joins National Aircraft Finance Association see more

    FOR IMMEDIATE RELEASE

    EDGEWATER, Md. – April 22, 2020 – National Aircraft Finance Association (NAFA) is pleased to announce that Keyvan Havacilik A.S. has recently joined its professional network of aviation service providers. 

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome Keyvan Aviation Group to our growing organization as we head to our 50th anniversary,” said Jim Blessing, president of NAFA.

    Keyvan Aviation works with current and prospective aircraft owners when making important decisions. The team’s approach to providing aircraft consultancy services begins with combining a comprehensive analysis of the client’s travel needs, objectives for aircraft features, and ownership arrangements.

    In Keyvan Aviation Group, the focus is on making the ownership experience smooth with the best solutions for transportation needs. Their services include consultancy, pre and delivery audit and valuation reports, financial services support and registry services, flight crew assembly, aircraft maintenance programs, and taking care of major maintenance events or upgrade modifications.

    Much like NAFA, Keyvan Aviation Group is dedicated to providing highly qualified experts. Keyvan and NAFA foster accurate data and accurate methods throughout the aviation industry. 

    For more information about Kayvan Aviation, visit nafa.aero/companies/keyvan-havacilik-as.

    About NAFA:  

    The National Aircraft Finance Association (NAFA) is a non-profit corporation dedicated to promoting the general welfare of individuals and organizations providing aircraft financing and loans secured by aircraft; to improving the industry's service to the public; and to providing our members with a forum for education and the sharing of information and knowledge to encourage the financing, leasing and insuring of general aviation aircraft. For more information about NAFA, visit NAFA.aero.

     

  • Tracey Cheek posted an article
    Five Guidelines for Successful Aircraft Financing and Leasing During the Covid-19 Crisis see more

    NAFA member, David G. Mayer, Partner at Shackelford, Bowen, McKinley & Norton, LLP, shares guidelines for aircraft financing during the Covid-19 crisis.

    With the availability of surprisingly low financing rates, aircraft owners may be able to reduce cash flow demands and/or create an extra cash resource during and after the Covid-19 crisis. Owners and others may be able to do so by aircraft refinancing, borrowing and leasing, cashing out aircraft equity or entering into sale leasebacks. 

    If you have purchased an aircraft for cash and you can wait out the crisis without stress or still prefer to and can purchase an aircraft with cash, read no further – except number 4 below.

    Otherwise, you may find the following five guidelines useful to qualify for and close these transactions during the Covid-19 crisis:

    1. Be thorough; be patient. You can apply for and facilitate a credit review process by providing all lender or lessor (financier) requested information promptly and thoroughly. In this unprecedented environment, financiers still generally assess your financial capability during and beyond the crisis based on typical criteria such as aircraft attributes, cash flow, business prospects, net worth and total debt obligations. However, with current business disruption, you should expect slower credit review and documentation processes.
    2. Ask for payments that match your expected crisis and post-crisis cash flow. You may need or want several months of no payments, interest only or other lower payments during the crisis followed by increasing payments or other amortization changes thereafter. Financiers can customize your financing within policy and regulatory parameters. 
    3. Realize that a durable relationship with your financier is crucial.  Your transparency and high quality of integrity and character will go a long way toward building a strong and lasting relationship with a financier, especially during the current health emergency. The relationship is likely begin with some uncertainty during crisis period but, if all goes well, last for years after the corona virus ends. Stay in touch with and be responsive to your financier – by voice – not just email.
    4. Structure your transaction to align with the FARs. Spare yourself additional anxiety of operating illegal charters or other illegal flight department companies (often LLC holding companies). Your violations may cost you significant sums in attorney’s fees as a result of potential FAA scrutiny or action against you. Use loan or lease credit review time and/or any pause in flight operations during the crisis to structure or restructure your agreements to comply with the Federal Aviation Regulations (FARs). Aligning your aircraft ownership, leasing and operations within the FARs is a frequent task for experienced aviation lawyers.
    5. Search broadly for insurance coverage at credit application. In your financing proposal, specify commercially available liability insurance that you have secured or expect to buy. It is important to add this term so that financiers do not ask for more coverage than you can deliver in an insurance market that is still in turmoil due to, among other difficulties, past underwriting losses and the tragic Kobe Bryant accident.

    This information was provided by David G. Mayer with Shackelford, Bowen, McKinley & Norton, LLP on April 7, 2020.

  • Tracey Cheek posted an article
    AINsight: Negotiating Business Aircraft Financing see more

    NAFA member, David G. Mayer, partner at Shackelford, Bowen, McKinley & Norton, LLP, discusses negotiating business aircraft financing.

    Like large companies, an increasing number of high/ultra-high-net-worth individuals apparently like using other people’s money (OPM) instead of cash to close private aircraft transactions. These transactions include true tax leases, sale leasebacks, financing leases, secured loans, and refinancing of private aircraft by lessors and lenders. These deals also cover a broad range of aircraft by value, cost, cabin size, age, make and model.

    It might just be my passing anecdotal experience that these “customers” seem to be more patient, flexible and engaged with their financiers than before the fourth quarter in resolving deal points that matter to them. Perhaps customers have discovered what I regularly see today: financiers, though controlled by bank regulations and internal credit policies, will work diligently and productively with their customers to develop structures and terms acceptable to their customers and the financier.

    For lessors and lenders, this apparent surge in financing activity is good news. Yet, they widely acknowledge that “cash is king” in how high/ultra-high net worth individuals typically purchase new and preowned aircraft. According to JetNet, cash wins over secured loans to purchase jets, in an estimated 70 percent of U.S. aircraft purchases or a lower percentage of cash purchases depending on other sources of the information.

    Financiers often encounter objections to financing like these: “I have cash available to buy the aircraft with minimal effect on my net worth”; “I really want to avoid the ‘brain damage’ associated with negotiating documentation, responding to onerous credit disclosure requests and abiding by restrictions that financiers will impose on me.”; and “I just prefer, like my buddies, to own the aircraft outright.”

    Some financiers apparently have found the magic sauce to overcome these typical customers’ objections when combined with three particular attributes of financing today that appear to underpin the elevation in financing activity.

    First and foremost, while money is cheap in the current highly competitive financing market, every client pursues the lowest loan or lease rates, though most lease pricing entails more variables and assumptions than loans.

    Some clients even acknowledge what is almost universally true: they can make more money using their cash elsewhere for their businesses or investments. Other clients simply prefer using OPM and holding their cash. With the current volatility in the stock market, coronavirus fears, and concerns about the future economy, OPM may, and maybe should, attract even more interest.

    Second, with the passage of the Tax Cuts and Jobs Act of 2017, clients almost always ask whether the aircraft qualifies for bonus depreciation. Correspondingly, they assume, often incorrectly, that they can use and qualify to take these substantial tax benefits. What is important here are ways in which leasing still might enable customers to enjoy some of these tax benefits.

    How is that possible? Certain lessors can and do use the tax benefits in pricing leases—when setting rents and casualty values—sums lessees must pay the lessor on the occurrence of a total loss of the aircraft. These lessors can, but might not offer to, share the depreciation tax benefits with the lessee, primarily in the form of lower rents and casualty values.

    Importantly, the tax benefits might be available not only when the lessor purchases the aircraft directly from the third-party seller and leases the aircraft to the lessee/customer. These tax benefits might also be available when the lessor purchases the seller’s/lessee’s owned aircraft and leases it back to the seller/lessee. The latter strategy allows the seller/lessee to monetize the value of its aircraft while keeping possession and use of the aircraft subject to the new “sale leaseback” arrangement.

    In true operating or tax lease transactions, customers get a third benefit. Lessors assume the residual value risk arising out of aircraft ownership and leasing.

    Under federal income tax true lease guidelines and other applicable law, an owner/lessor must, among other requirements, retain continuous residual value risk during the lease term of not than 20 percent of the original cost of the aircraft. Residual value refers to the market value of the aircraft at the end of the applicable lease term.

    In reality, the residual value assumed usually far exceeds 20 percent due to the inherent value of aircraft, enabling lessors to assume far higher residual values. The customer is entirely free from residual value “downside” losses in value from, or “upside” gain over, assumed residual value in connection with any subsequent sale, lease or other disposition of the customer’s leased aircraft.

    THE RIGHT TEAM

    Although customers often have relationships with non-aviation professionals, aircraft transactions will almost always progress more easily, efficiently, and at a lower transaction cost with the right aviation team. It is imperative that the transaction team thoroughly understands and adopts a strategy to fully satisfy the customer’s desired participation, attitude towards the financing negotiation and distinguishing between the “must have” an “nice to have” modifications in the documentation.

    As a result, every financing transaction is unique, even when a financier provides basically the same “form” of documents to different customers covering similar aircraft. The right transaction team will understand the big issues, nuances, documents, and characteristics of the financier.

    Some clients want to negotiate/win every point. Others simply want the best loan or lease rates from financiers that will stay out of their businesses, minimize fast-trigger defaults, not reach for non-aircraft related collateral such as securities accounts, and impose the fewest restrictions on flight operations.

    To achieve the best outcome, the transaction team, especially brokers and technical advisors, should ideally participate starting before the hunt for the right aircraft. The customer should engage the other team members before the negotiation of the letter of intent  (LOI) or the financing proposal.

    For buyers, the key is to allow adequate time for tax planning, aviation regulatory structuring, identification of the best financier for the particular situation and risk management planning, especially in current volatile insurance markets.

    Financiers draft the financing documents in their favor even though they expect the provisions to change depending on the relative bargaining, credit, and relationship strength of the customer. True tax lease transactions usually entail more complex and opaque provisions than secured loans, including extensive aircraft maintenance requirements, aircraft return conditions and federal tax indemnification.

    For reasons that differ and do not appear to show a discernable pattern, more high and ultra-high net worth customers seem to be gravitating toward financing private aircraft. Perhaps these potential customers, on closer reflection, have concluded that aircraft financing has significant value and, with the right aircraft transaction team, are easier to close than they anticipated.

    The content provided above is intended for informational use only and does not constitute legal advice. Each person involved in these transactions should consult his or her aviation team advisors.

    David G. Mayer is a partner in the global Aviation Practice Group at Shackelford, Bowen, McKinley & Norton, LLP in Dallas, which handles worldwide private aircraft matters, including regulatory compliance, tax planning, purchases, sales, leasing and financing, risk management, insurance, aircraft operations, hangar leasing, and aircraft renovations. Mayer frequently represents aircraft owners, flight departments, lessees, borrowers, operators, sellers, purchasers, and managers, as well as lessors and lenders. He can be contacted at dmayer@shackelford.law.

    This article was originally published by AINonline on March 13, 2020.

     

  • Tracey Cheek posted an article
    Aircraft Purchases During Stock Market Swings see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses aircraft purchases during stock market swings.

    Q: Given the current volatility of the market, what advice are you giving to members contemplating an aircraft purchase?

    A: In times of volatility, in particular with wild stock market swings, you want to maintain as much cash as possible. Taking a methodical approach of buying into markets that are depressed is arguably more important than having the proverbial crystal ball that helps you get out of the market before a crash. That said, there has probably been no better time to obtain financing, whether it be for your house or airplane, or any other relatively stable asset then now. With interest rates for excellent credits on loans over $2M in the 2.5 to 3.0% range, this is truly an unheard-of period of time. Knowing what options are available is what AOPA Finance does best because of the strength and depth of our membership. Don’t wait to find out what your specific situation looks like, call us and find out how we can help you take advantage of this rare time. 

    This article was originally published by AOPA Aviation Finance Company on March 11, 2020.

  • Tracey Cheek posted an article
    We Florida Financial Joins National Aircraft Finance Association see more

    FOR IMMEDIATE RELEASE

    EDGEWATER, Md. – March 12, 2020 – National Aircraft Finance Association (NAFA) is pleased to announce that We Florida Financial has recently joined its professional network of aviation service providers. 

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome We Florida Financial to our growing organization as we head to our 50th anniversary,” said Jim Blessing, president of NAFA.

    We Florida Financial is a Fort Lauderdale based credit union – combining old-fashioned values with 21st century technology. As a credit union, their focus is on individual attention and support at the most competitive rates.

    The company’s aviation lending program, We fly, offers loans for aircraft purchases, aircraft refinance, aircraft upgrades, and flight training. We fly was created to provide an exceptional and affordable financing solution for clients’ aviation dreams. 

    Much like NAFA, We Florida Financial is dedicated to community, shared purpose and mutual trust. We fly and NAFA are committed to their members, and in turn the growth and success of the aviation industry. 

    For more information about We Florida Financial, visit nafa.aero/companies/we-florida-financial.

    About NAFA:  

    The National Aircraft Finance Association (NAFA) is a non-profit corporation dedicated to promoting the general welfare of individuals and organizations providing aircraft financing and loans secured by aircraft; to improving the industry's service to the public; and to providing our members with a forum for education and the sharing of information and knowledge to encourage the financing, leasing and insuring of general aviation aircraft. For more information about NAFA, visit NAFA.aero.

     

  • Tracey Cheek posted an article
    King & Spalding Joins National Aircraft Finance Association see more

    FOR IMMEDIATE RELEASE

    EDGEWATER, Md. – Feb. 27, 2020 – National Aircraft Finance Association (NAFA) is pleased to announce that King & Spalding has recently joined its professional network of aviation service providers. 

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome King & Spalding to our growing organization as we head to our 50th anniversary,” said Jim Blessing, president of NAFA.

    King & Spalding is an international law firm that represents a broad array of clients, including half of the Fortune Global 100, with more than 1,100 lawyers in 21 offices in the United States, Europe, the Middle East and Asia.

    Celebrating more than 130 years of service, the firm has handled matters in over 160 countries on six continents and is consistently recognized for the results it obtains, uncompromising commitment to quality, and dedication to understanding the business and culture of its clients.

    The firm’s aviation finance lawyers have extensive experience advising clients on various financing structures involving aviation assets in North America, Europe, Asia, Oceania and South America – including operating leases, leveraged leases, capital leases, synthetic leases, syndicated and single-bank credit facilities as well as on purchases and sales of aircraft, engines and portfolios involving aircraft and aircraft-related assets.

    Much like NAFA, King & Spalding is dedicated to demonstrating professional excellence in service to clients. King & Spalding and NAFA are committed to educating and developing others in the field – ensuring long-term growth and success in the aviation industry. 

    For more information about King & Spalding, visit nafa.aero/companies/king-spalding-llp.

    About NAFA:  

    The National Aircraft Finance Association (NAFA) is a non-profit corporation dedicated to promoting the general welfare of individuals and organizations providing aircraft financing and loans secured by aircraft; to improving the industry's service to the public; and to providing our members with a forum for education and the sharing of information and knowledge to encourage the financing, leasing and insuring of general aviation aircraft. For more information about NAFA, visit NAFA.aero.

  • Tracey Cheek posted an article
    Choosing an aircraft from a financier's perspective see more

    NAFA member, Gary Crichlow, with Arc & Co. Aviation Finance, discusses points to consider when choosing an aircraft from a financier's perspective.

    In previous articles as part of our Aviation Insight series, we’ve explored the major benefits of availing yourself of aircraft finance: it preserves your cash flow, allowing you to redeploy capital away from a depreciating asset back into your business, or into investments that earn a return. 

    We’ve also looked at the financier’s motivations to extend finance: they need to demonstrate that they can generate an acceptable risk/return balance on the funds they commit against aircraft, in order to protect and enhance their license to operate. 

    With this in mind, we’ll now look at points to consider when choosing an aircraft from a finance-ability point of view. The more strongly these points inform your choice, the more likely it is that you’ll be in a position to secure the benefits of aviation finance without too many of the hurdles.

    1.     Aircraft suitability – financiers like to work with clients that can demonstrate experience and familiarity with the cost of owning or operating an aircraft. Ideal clients will evidence that they either have, or have solicited, the expertise to select an aircraft with a capability that fits their usage needs. The client will have budgeted realistic fixed and variable costs covering insurance, crew, scheduled and unscheduled maintenance, fuel, handling, etc; and can demonstrate the financial wherewithal to comfortably cover those costs.

    2.    Aircraft age– the overwhelming rule of thumb is that the younger the aircraft, the more readily financeable. There’s absolutely nothing wrong with well-maintained older aircraft, and there is a pool of financiers willing to lend against them for the right client; but generally speaking, younger aircraft in the 0-7 year old range are the easiest to finance competitively. 

    3.    Aircraft value – larger deals are generally more attractive. As with older aircraft, there is always finance available for smaller lends (below $5 million) for the right client, but there is a smaller pool to choose from, especially if other aspects of the deal are not straightforward. 

    4.    Aircraft market position – it’s easier to find finance for “liquid” aircraft: types that have a large customer base, are in well-established production and conform to “standard” in terms of capability, configuration and appearance. Financiers are generally more willing to lend money against an asset that they believe would be relatively easy to remarket if they had to. 

    5.    Aircraft maintenance programmes– practically every financier will require that at the very least, the engines be fully enrolled on an hourly maintenance support programme, offered by the manufacturer or by a reputable third-party such as JSSI.

    6.    Aircraft operator– the financier will generally want to be satisfied that the operator is competent, properly certified, reputable and fully independent of the client. You can generally expect a tripartite agreement will be required between the financier, the operator and the client. The purpose of this agreement is to enable the financier, in the event of a default, to have the operator secure the aircraft.

    7.    Aircraft due diligence– the financier will want to satisfy themselves that the aircraft condition is fully explored. For pre-owned aircraft this generally means an in-depth inspection that looks for things like records entries that are missing or not in English, damage history, corrosion, accidents & incidents, etc – the exact same issues that your technical expert should be alerting to you as a prospective buyer.

    8.     Aircraft regulatory compliance– your technical expert should advise on what is required for your usage in terms of, for example, avionics capability e.g. ADS-B, FANS-1/1A compliance (if you don’t understand that jargon, make sure you have a technical expert who does!). Bear in mind that a financier will generally want to see that it is compliant on a global (or at least a US or European) basis, and this includes looking ahead for scheduled upgrades or expected developments over the term of the financing.  

    What it boils down to is this: when evaluating an aircraft finance opportunity, lenders need to do their homework when it comes to the aircraft, and a key part of that is ensuring that you’ve done your homework too. Your interests, and the financier’s, are aligned: you both want comfort that the aircraft you’ve chosen is as it should be.

    This article was originally published by Arc & Co. Aviation Finance on July 15, 2019.

     

  • Tracey Cheek posted an article
    Sky Allies Capital Joins National Aircraft Finance Association see more
     

    FOR IMMEDIATE RELEASE

    EDGEWATER, Md. – Nov. 13, 2019 – National Aircraft Finance Association (NAFA) is pleased to announce that Sky Allies Capital has recently joined its professional network of aviation lenders. 

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome Sky Allies to our growing organization as we head to our 50th anniversary,” said Jim Blessing, president of NAFA.

    Sky Allies is a group of finance and aviation industry professionals – financing and leasing airplanes, helicopters, flight simulators and other aviation or industrial and technological equipment. The company specializes in credit challenged borrowers and other abnormal deal opportunities. They also offer special hourly simulator leasing programs for flight schools.

    The company is privately held and based in Las Vegas, NV. Sky Allies is a member of the American Association of Commercial Finance Brokers and thereby adhere to a Code of Ethics Program as voted on by their broker members. Their principal has 26 years experience in the aviation industry, is a Citation 525 rated pilot, ATP and an airplane owner.

    Much like NAFA, Sky Allies Capital is focused on the financing of aircraft – putting business plans in the air. Sky Allies and NAFA are committed to the highest level of customer service, fostering long lasting business relationships throughout the aviation industry.

    For more information about Sky Allies Capital, visit nafa.aero/companies/sky-allies-capital.

    About NAFA:  

    The National Aircraft Finance Association (NAFA) is a non-profit corporation dedicated to promoting the general welfare of individuals and organizations providing aircraft financing and loans secured by aircraft; to improving the industry's service to the public; and to providing our members with a forum for education and the sharing of information and knowledge to encourage the financing, leasing and insuring of general aviation aircraft. For more information about NAFA, visit NAFA.aero.

     

  • Tracey Cheek posted an article
    How Can Borrowing More Cost Less? see more

    NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, explains the credit matrix when looking for an aircraft loan.

    An AOPA Finance client recently requested a quote for financing a single-engine aircraft. He was looking to finance $70,000, and was quoted what the interest rate would be based on that figure. However, had the client borrowed $75,000 instead of $70,000, the rate would have been a whole percentage point lower, saving him money. Why is that?

    Many borrowers believe the way to get the best interest rate is through a large down payment and a great credit score. But actually the No. 1 factor in determining the interest rate offered on a loan is the amount of money being lent. Lenders structure each loan around a credit matrix. The matrix is comprised--among other things--of ranges of loan amounts, the loan-to-value (LTV) ratio, an individual's total financial picture, and least of all, that person's credit score.

    Lenders group loans into "buckets," or ranges of loan amounts. For example, in the case of our client, one range included loan amounts from $50,000 to $74,999. Additionally, each range of loans has a default initial interest rate associated with it.

    In this case, the lender's next higher range had an interest rate one full percentage point lower associated with it. This client had said a top priority of his was to get the lowest possible interest rate. Therefore, we knew if our client had the flexibility to increase his loan by $5,000, it would put him in the higher range, where the default lending rate was better.

    Initially, he saw increasing the loan by $5,000 as beneficial only for the lender. We pointed out that this lender also had a loan structure that allowed for additional prepayments without penalty. If our client was willing to hold back $5,000 of his down payment and increase the loan to $75,000, he could, on Day 2 of the loan, take that held back $5,000 and apply it immediately to the principal. That would get him back to $70,000 on the loan while maintaining the lower interest rate of the $75,000 loan, thus saving him money. That’s one example of how borrowing more can cost less.

    Loan-to-value (LTV) is the second-most important element in constructing the credit matrix. LTV is a financial term used by lenders to express the ratio of a loan to the value of the asset purchased. Generally, an LTV of 80%-85% is deemed an acceptable risk. LTV requirements are most frequently influenced by the aircraft and how quickly it is likely to depreciate. In other words, LTV requirements may be applied on a sliding scale. Generally, the more quickly a plane is likely to depreciate, the more money down or lower an acceptable LTV and vice versa. Additionally, by putting even more money down and thus lowering the LTV you can frequently gain better interest rates and terms.

    The last, and least important, component of the credit matrix is one's credit score. Despite what retail financial institutions and credit reporting agencies pushing credit protection products advertise in the media, credit scores for aircraft loans have only a small influence on how lenders determine a loan's interest rate. The difference between a good credit score and a great credit score might be a mere quarter of a percent. It’s a lousy credit score that will hurt the most. A poor credit score may cost the borrower a full percentage point, or the loan itself.

    Ultimately, obtaining the best loan for you is about providing you the best perspective on all aspects of it. AOPA Finance brokers stand ready to share the kind of knowledge, nuance and expertise that can navigate you to the best loan for your situation.

    This article was originally published by AOPA Aviation Finance Company on May 28, 2019.

  • Tracey Cheek posted an article
    Wings Insurance Joins National Aircraft Finance Association see more

    FOR IMMEDIATE RELEASE

    EDGEWATER, Md. – Nov. 11, 2019 – National Aircraft Finance Association (NAFA) is pleased to announce that Wings Insurance has recently joined its professional network of aviation service providers. 

    “NAFA members form a network of aviation finance services who diligently and competently operate with integrity and objectivity throughout the world. We’re excited to welcome Wings to our growing organization as we head to our 50th anniversary,” said Jim Blessing, president of NAFA.

    Wings Insurance is one of the largest aviation risks-only insurance brokers in the country, maintaining five office locations in the USA (Daytona Beach, Cleveland, Minneapolis, Chicago and Denver) and a customer base of over 2500 clients. The company’s aviation insurance reach encompasses every state in the USA along with global insurance placements in most EU, Middle East and Asian locales.

    Wings Insurance began in 1984, specializing in aviation insurance on a regional level. Since inception, the business has experienced a steady rate of growth, and almost 35 years later they offer global insurance solutions through a world-wide network of solution providers with over 100 years of combined aviation insurance experience.

    With their hands-on background in both the aviation and insurance industries, Wings has the resources to help their clients make informed decisions, whether it involves purchasing, financing, tax, legal, transitions or recurrent training. The company aims to provide the best coverages at the lowest price point available and solidify long-term partnerships through responsive customer service, creativity, and integrity. Wings is also one of only three International Aircraft Dealers Association (IADA) endorsed insurance brokerage firms. 

    Much like NAFA, Wings Insurance is dedicated to the highest quality of service to their clients and business associates – delivered with a sense of friendliness and individual pride. Wings and NAFA are committed to fostering industry knowledge and leading-edge technology throughout the aviation industry.

    For more information about Wings Insurance, visit nafa.aero/companies/wings-insurance.

    About NAFA:  

    The National Aircraft Finance Association (NAFA) is a non-profit corporation dedicated to promoting the general welfare of individuals and organizations providing aircraft financing and loans secured by aircraft; to improving the industry's service to the public; and to providing our members with a forum for education and the sharing of information and knowledge to encourage the financing, leasing and insuring of general aviation aircraft. For more information about NAFA, visit NAFA.aero.