Philip Rushton of Aviatrade says Private Jets Act as Leading Economic Indicator

Pre-Owned Jets as Financial Market Indicators
 
Anyone involved in the acquisition or sale of private jets over the past few years will have noticed the sometimes sudden influx of available aircraft, or the sudden dearth of certain aircraft. This ebb and flow will oftentimes correlate to both macro and micro economic movements around the world.
 
The Lead Factor
 
On the macro side, take for example the Asian money-meltdown in 1998, suddenly there were a number of Asian-owned aircraft for sale. Gulfstreams and other large cabin aircraft such as Challengers seemed to swamp the listings with no forewarning. However, a number of these forced sales were known to some (Aviatrade included) for quite some time prior to their official listing with a “for sale” sign. In fact, two of these owners came to Aviatrade and requested anonymous (but speedy) sales of their aircraft. This was a prime example of the tsunami-effect in the private jet marketplace - those owners that heeded the warning, suffered the least damage.
 
On the micro side of the ’ebb’ news headlines concerning some of the fatally-wounded in the recent sub-prime mortgage debacle were “old news” to anyone who, for example, was aware of the sale of Countrywide Financial’s fleet of Gulfstream jets. These distressed Gulfstream jet sales were common knowledge amongst some in the industry a long time before a perma-tanned Angelo Mozilo hit the headlines. This suggests that a sharp observer could have legally profited before the ensuing Countrywide share-price collapse (imagine that a legit insider-information tip, sans hedge fund meddling).
 
Another fairly recent example on the micro side of business collapses preceded by panicked jet sales was Worldcom. Aviatrade was well aware of Worldcom’s furtive attempts to unload Bernie’s ’air force’. It actually had conversations with Scott Sullivan, (Worldcom’s former CFO), concerning a couple of Worldcom’s jets. This was quite some months before Mr. Ebbers was indicted.
 
The Lag Factor....
 
On the ’flow’ aspect of private jet sales, the disappearance of a large number of late-model, low-time aircraft from the marketplace usually indicates that a recovery is under way (and has been for some time). By the time some buyers wake up to this phenomenon, they are behind the drag curve and end up paying too much for their new ’mounts’.
 
Investors could take advantage by knowing who is buying jets. Aviatrade is quite often ’informed’ as to who is ordering, which aircraft and from which OEM.
 
Note that the ’players’ in these markets are almost always the decision makers on a corner-office level when we hear of someone ordering a new 550/G650 and it’s not simply a pre-ordained fleet upgrade - scratch a little deeper and you’ll find positive company news that will inevitably move a stock.
 
It’s also pretty obvious (despite the “I knew nothing” knee-jerk defense) that corporate and other business mischief more often than not starts at the top. Therefore, any decisions to ’offload’ the private jet in a hurry should be looked at with a jaundiced eye. 
 

Contact Information

Philip Rushton

President

Aviatrade, Inc

(1) (908) 696-1174

philiprushton@aviatrade.aero