Case Studies
A review of some previous engagements gives a view into our insight.
Client states he wants assistance in purchasing a used King Air C90.
Analysis:
The financials driving the purchase decision were complex. Maximum permissible monthly cash outflow was established after detailed interviews and negotiations with multiple influencers. Market analysis revealed that the C90GTx production line was about to incorporate significant new improvements. Operating Cost analysis quantified the year-to-year differences between the new and pre-owned alternatives. Financing and leasing sources tendered proposals for each alternative.
Solution:
By careful analysis of operating budgets and appealing to unconventional financing sources, the Client was able to purchase and enjoy a NEW King Air C90GTx (including its 10 year operating budget) well within the monthly cash flow established. The Client was ecstatic.
Disenchanted Beechjet owner’s aircraft is managed by a charter operator. Financial results are not satisfactory. Owner’s personal needs are not being served by the Beechjet. Client wants out of this predicament, but uncertain about future direction. Client has some interest in a Hawker 800XP. Client seeks direction.
Analysis:
The Client’s agreement with charter operator was unconventional and not performing in accordance with the Client’s understanding. The Beechjet was depreciating due to accumulation of excess hours and the aircraft incurred maintenance downtime and expense. The Root Cause: Wrong airplane sold on a faulty business plan. The Client’s personal utilization was 100 – 150 hours per year, and frequent trips required an aircraft with 2800+ nautical mile range and the ability to operate from medium length runways in the summer. Capital budget was established at $2 million. The Client’s family was relocating from the East Coast to a western state.
Solution:
First priority was to terminate the agreement with the charter operator, remove the Beechjet from charter service, and liquidate the asset. A Section 1031 Like Kind Exchange structure was created. Although the route structure was not ideal for a Hawker 800XP, we shopped for a $2 million Hawker, but the client just could not get excited. We proposed a change of direction and ultimately consummated the purchase of a Challenger 601-3A/ER below the $2 million capital budget. The Operating Budget was acceptable given the low utilization and the maintenance status of the specific 601-3A/ER we purchased. The Client retained the ability to gain charter income from his Challenger, but elected to fly Part 91 after a year of enjoyable operation for family and business. The Client and his family love their Challenger!
Client is frustrated with his inability to purchase a Hawker 900XP.
Analysis:
For six months, the Client chased various listed and “off market” Hawker 900XPs all over the world from many questionable sources. Most were inferior aircraft. Some were not actually for sale. The Client’s view of pricing did not match reality in a recovering market. Therefore, he was consistently underbidding the market while the market continued to strengthen. Meanwhile, the Client’s transportation requirements were going unfulfilled.
Solution:
Garner Aircraft Group identified an excellent Hawker 900XP owned by a Fortune 100 Company. A very fair transaction was negotiated at a price somewhat below market for an excellent aircraft with a credible Seller. The Pre-Purchase Inspection at a factory service center went very smoothly with the Seller correcting all discrepancies without argument. The initial in-service experience was excellent. The Client was happy to finally be flying in his own Hawker 900XP.
