Northern California Business Aviation Association

Welcome!

Agenda

• Lunch, Sponsored by Bloomer deVere• NCBAA Memberships• FAA Presentation• Bloomer deVere Presentation • Upcoming Events• Room Introductions

NCBAA Membership Reminder•An individual employed by a business aircraft operator or who is directly involved in the operation of business aircraft (examples: corporate flight department personnel, charter operator, owner operator, dispatcher, charter marketing department). This membership includes voting rights.

Regular Member Individual $60.00

•An individual NOT employed by a business aircraft operator or directly involved in the in the operation of a business aircraft however this person is involved in the Air Transport Industry in some capacity. (examples: vendor or service provider, FBO, flight planning service provider, insurance, marketing). This membership does not include voting rights.•All of the above membership dues include a $15.00 contribution for the Scholarship/Mentoring Program

Associate Member Individual

$60.00

•An individual employed by a Government Agencies, or attending an aviation related field of study in an Educational Institution (Students must have valid student ID)/ a person retired from the aviation industry but still wants to be involved and contribute (examples: airport manager, ATC, FAA, student working on an aviation degree or certificate, retired pilot, retired ATC, retired aircraft management or service provider).•This membership does not include voting unless the person is actively involved in NorCalBAA organization or committee of the NorCalBAA)

Exempt Member Individual (free)

http://norcalbaa.org/Membership_Sign-up.html

FAA PresentationThe Wright Brothers Master Pilot Award• The Wright Brothers Master Pilot

Award recognizes pilots who have demonstrated professionalism, skill and aviation expertise by maintaining safe operations for 50 or more years.

Wright Brothers Master Pilot Award

Charlie Johnson

April 2012

Mark Bloomer, President Craig Bowers, Sales Director

Today’s Luncheon Sponsor

NEW AND PRE-OWNED MARKET UPDATEIs a Recovery on the Horizon?

NCBAA Luncheon

Mark Bloomer, PresidentBloomer deVere Group Avia, Inc.Tuesday, April 10, 2012

Used Aircraft Market Values% of Original Average Equipped Retail

Used Aircraft Market Values% of Original Average Equipped Retail

Source: Aircraft Bluebook Marketline Vol. 24, No. 3. September 2011

99.69% 111.84% 109.53%

2

67.37%

Market Forecast by Class of Aircraft

Source: Rolls Royce (CAGR: Compound Annual Growth Rate)

20%CAGR

21%CAGR

15%CAGR

7%CAGR

Last 10-years Next 10-years Change

Aircraft 7,512 10,588 41%

Value $bn 157 284 81%

3

Market Forecast by Class of Aircraft

20%CAGR

21%CAGR

15%CAGR

7%CAGR

Source: Rolls Royce (CAGR: Compound Annual Growth Rate)4

What is the Probability …US Corporate Profits vs. Business Jet Deliveries

# of aircraft ~ 1995 – 2013E

Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))5

What is the Probability …Global Corporate Profits vs. Business Jet Deliveries

# of aircraft ~ 1995 – 2013E

Source: J.P. Morgan Business Jet Monthly (GAMA, BEA, J.P. Morgan estimates (Excludes VLJ aircraft))6

7

“Boom – Bust” Recovery Cycles

PREVIOUS CYCLE• Started 4Q/2001 • 9/11• Enron bankruptcy

CURRENT CYCLE• Started 3Q/2008• Lehman bankruptcy• Global financial crisis• US elections

2000 Gulfstream GV Values

Retail ValueWholesale Value

Source: Aircraft Bluebook8

ULTRA-LONG RANGE

LARGE CABINHIGH SERIAL NUMBER/LOW TIME

SUPER MID-SIZE CABIN

LARGE CABINLOW SERIAL NUMBERS / HIGH TIME

MID-SIZE CABIN

9

“Boom – Bust” Recovery Cycle

2006 G550 vs 2002 GV Historical Retail Values and 12-month Sales

Source: Aircraft Bluebook, AircraftPost and JetNet10

G550 SalesGV Sales

“What Comes Down Quickly……Goes Up Slowly”

• Price increase dynamics ~ next 6-12 months• Overall inventory levels decline to 10% ~ normal• Key market segments decline to 5% indicating a Seller’s

Market• Seller’s hold firm ~ “Just say NO, this is my price!”• Inventory Buyers and Speculators return to the market• Credit restrictions ease

Confidence

Market Forecast

11

What is the Probability …Dow Jones Industrials ~ Bizjet Inventory2008 - 2012

Source: BofA Merrill Lynch Global Research, AMSTAT12

Business Jet Industry Gross OrdersUnits, % of world total, 2001 - 2010

Source: Bombardier analysis based on OEM disclosures, excluding VLJ and large corporate airliners13

PRE-PURCHASE EVALUATIONThe Process and Pitfalls

NCBAA Luncheon

Craig Bowers, Sales DirectorBloomer deVere Group Avia, Inc.Tuesday, April 10, 2012

Pre-Buy Evaluation

Who Cares About the Pre-Buy?

2

Acquisition Decision• Define

Mission

• Target Aircraft

• Buy or Lease

LOI

Visual Inspection• Records and

Logbooks• Interior &

Exterior • Demo Flight

Aircraft Purchase Agreement

Pre-Buy Evaluation

I Want to Buy An Airplane!

3

Letter of Intent

• Executive Summary– Short document

Acquisition Decision

Letter of Intent (LOI)

Visual Inspection

Aircraft Purchase Agreement

Pre-Purchase Evaluation

4

• Contains the “Basic” Terms of the Buyer’s Offer– Purchase Price– Delivery Conditions– Demo and/or Test Flight Requirements– Deposit– Pre-Purchase Evaluation– Accept/Reject Conditions– Transaction Timeline

Aircraft Purchase Agreement

• Control Document– Replaces Letter of Intent– Long document

Acquisition Decision

Letter of Intent (LOI)

Visual Inspection

Aircraft Purchase Agreement

Pre-Purchase Evaluation

5

• Complete Transaction Details– Price, Taxes, Expenses, Warranties & Escrow– Indemnities, Insurance, Governing Law– Inspection, Delivery, Acceptance & Closing

• Attachments– Spec– Warranty Bill of Sale– Technical Acceptance Receipt– Delivery Receipt

Pre-Purchase Evaluation

• Workscope and Location– Mutually Agreed to by Buyer and Seller

Acquisition Decision

Letter of Intent (LOI)

Visual Inspection

Aircraft Purchase Agreement

Pre-Purchase Evaluation

6

• Pre-Purchase Contract– Buyer’s Agreement with Service Center– Cost

• Work Order(s)– Buyer’s is For Pre-Purchase Evaluation– Seller’s is for Discrepancy Repair

• Discrepancy Report– Format– When to Address Discrepancies

Pitfall #1Document Disconnect

• Key Documents– Letter of Intent– Aircraft Purchase Agreement– Pre-Purchase Agreement– Service Center Work Order and Terms & Conditions– Discrepancy Report

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• Purchase Agreement may differ from Letter of Intent

• Service Center has little or no knowledge of Purchase Agreement terms

• Discrepancy Coding– Service Center definition may not necessarily

conform to control document language

Pitfall #2Accept / Reject Conditions

Buyer

“Sole Right of Refusal”

Seller

“Delivery Conditions”

8

• Wants an “out” as late as possible

• Up-front agreement as to “acceptable”

• “Buyer may, at any time prior to acceptance of the Aircraft following the Inspection, and in Buyer’s sole and exclusive discretion, reject the Aircraft…”

• “On the Closing Date, the Seller shall deliver the Aircraft in conformance with the following conditions…”

• Wants absolutely every, single discrepancy addressed!

• Nothing could possibly need “repairing”, this aircraft is perfect!

Pitfall #3Discrepancy / Squawk List

• Manage Expectations– Buyer wants every, single discrepancy repaired– Seller believes their aircraft is the best maintained

aircraft flying – what could possible need repairing?

9

• Clear Definition of a Discrepancy– What is “Airworthy” and “Non-Airworthy”– How does the Service Center code discrepancies?– Large number of Discrepancies are “Info Only”– Additional time and cost to investigate

• Discrepancy Resolution– Accept/Reject Conditions– Correct discrepancies during inspection or wait?– Market conditions will likely influence ultimate

agreement

Airworthy or Non-Airworthy?

DISCREPANCY

Sealant missing in areas on R/H engine between nose inlet cowl and acoustical lining

AFIS printer will not print from MCDU #1

Intermittent Water Tank level indication on Galley switch panel

Copilot’s windshield has discoloration on outboard and inboard sides

Right Wing fixed trailing edge lower surface has a single dent

Design eye locator is chipped up

Fuel leak

Left APU Igniter Plug is worn to 0.011” exceeds the 0.09” limit

Right APU Igniter Plug rattles

Left side Thrust Reverser-Outboard PDLA bearing inspection found the Fwd bolt corroded

Brake accumulator gauge lens is cracking at mounting holes

AIRWORTHY

NON-AIRWORTHY

INFO ONLY

10

The Bottom Line

The reality is….

Can’t force anyone to SELL an aircraft and you can’t you force anyone to BUY one.

Thank You

Mark Bloomer, PresidentCraig Bowers, Sales Director

www.bloomerdevere.com

Next NCBAA Luncheon

May 8th - Hayward Airport Event

Luncheon, static displays, NCBAA Scholarship announcement, and more!

www.norcalbaa.org

May 8th - Hayward Airport Event

Where: ParkAvion Hangar Complex at the Hayward Executive AirportWhen: 11:00AM – 1:00PM, Static display open until 3:00PMLunch: Sit down, in-flight catering style heavy hors d'oeuvres starts at 11:30AM Key note speaker:

"When the FAA comes a knocking" by John Van Geffen, Michael Dworkin & AssociatesStatic Display: Vintage Grumman Albatross, Legacy 650, Hawker 4000, Falcon 2000, Challenger, Piaggio, Eclipse, Pending: Challenger (Solairus), G450 (Gulfstream), G200 (TWC)Sponsors: Ascend Development, Air Culinaire, APP Jet Center, Avantair, Embraer, Dassault, Hawker Beechcraft, CTP Aviation, Mather Aviation, SP Aviation

eBay Scholarship Auction

Doug Rice – NCBAA Advocacy Committee