An equipment financing expert, Kacin will be pivotal in developing relationships and supporting clients across the Northeast and Midwest, according to the company. He will report to Mike Christie, who became head of Sales for the Americas in March.

Commenting on his new role Kacin said: “I’m looking forward to the opportunity to help both corporate and UHNWI [Ultra High Net Worth Individual] clients benefit from the innovative and customised financing solutions Global Jet Capital offers for the business aviation market.”

Before joining Global Jet Capital, Kacin served in sales leadership and management roles for Webster Capital Finance, Terex Financial Services, Citibank, and Wachovia.

Alongside the appointment, the company is reorganising its North American sales territories.

Hannah Davis, formerly vice president of Sales for the Eastern US, will now lead the newly-formed Southeastern US region. John Arlinghaus, formerly associate sales director of the central US region, will now oversee the Western US region and Latin America.

Christie welcomed Kacin to the team: “Tom’s passion for aviation and strong equipment finance background will help us continue to provide bespoke solutions to our clients,” he said. “The territory realignment will provide better coverage of key markets allowing our team to be closer to our key partners.”

Meanwhile, in May Vivek Kaushal, CEO, Global Jet Capital said: “The business jet market has never been in a better place.” 

Global Jet Capital territory re-organisation – at a glance

• Tom Kacin, vice president, Sales for the Northeastern and Midwest US region
• Hannah Davis leads the newly-formed Southeastern US region
• John Arlinghaus oversees the Western US region and Latin America.

The post Global Jet Capital appoints Tom Kacin vp Sales, Northeastern and Midwest US appeared first on Corporate Jet Investor.

The finance company is predicting transactions of new and pre-owned aircraft to rise 5.7% in number of deals and 10.7% in dollar value. This reflects increased deliveries of large cabin aircraft – including Gulfstream G700s.

Global Jet Capital says that transactions fell by 14.8% in 2023. But there were still more than 3,000 deals which is in line with pre-COVID levels.

It expects manufacturers to increase new aircraft deliveries to 777 in 2024, up 9.4% from 710 in 2023. Global Jet Capital expects them to keep rising until 862 deliveries in 2027 and then drop to 831.

“It is a confluence of things that happened post-pandemic,” says Kaushal. “You had this long period of supply overhang that went away because of the production slowdowns that happened and they you have replacement upgrades and new growth driven by wealth creation that just never stopped.”

 As a risk specialist, Kaushal accepts that an external shock could change the market. “We are all students of the market and you can look back to those historical periods where these things happened – and things can change quickly,” he says. “But you just have to realize that the industry is in a very different place today. It just has an installed base that is head and shoulders above what it was back in the 1980s where it was still a very nascent industry. It was still an industry that was kind of just coming into its own.”

Global Jet Capital expects North America to continue to be the largest market for both new and pre-owned business jets, making up 76.3% of the total market. Large fleet orders from NetJets and Flexjet are one reason for this. It also expects 77.3% of all pre-owned aircraft to be North American.

Their forecasts expects that Europe will be the second largest deal market with 9% of transactions. Latin America is next – although it will have a larger 9.8% share of pre-owned deals.

It uses a top-down linear regression model to create its forecast. In 2023 it forecast that the new aircraft market would be worth $18.5bn and that the pre-owned market would be worth $17.9bn. Supply chain difficulties meant that new aircraft were worth $16bn. Global Jet Capital says that pre-owned deals only accounted for $16.3bn.

“The tone in the market is very positive. When you look at this market, you feel like it’s just people doing what they do. People are planning ahead, placing orders. Demand for good high quality aircraft is still very much there. People want to get into those planes,” says Kaushal. “Yes, there’s been inventory built up but you would expect that coming off of the post Covid days, but the market’s stabilized. We are just not seeing anything that would suggest a serious sea state change here.”

You can download the report here.

The post Global Jet Capital: “The business jet market has never been in a better place” appeared first on Corporate Jet Investor.

The offering consisted of a three-tranche structure, catering to investors with varying risk appetites.

The $459.9m Class A tranche, with a A/A rating, signifying a low-default investment. The $73m Class B tranche, with a BBB+/BBB rating, offering a bit more risk for a potentially higher return.

Rounding out the structure is the $42m Class C tranche, which carries the BB/BB rating, translating to the highest risk/reward proposition for yield-hungry investors.

“We are very pleased with the results of our latest successful issuance,” said Vivek Kaushal, CEO, Global Jet Capital. “It underscores the robustness of the BJETS securitisation program and the strong performance of the company’s previous ABS transactions. We continue to broaden our investor base, demonstrating the increasing appeal of the business aviation sector and our company.”

This is Global Jet Capital’s seventh ABS offering, bringing total assets securitised to approximately $5.1bn and bonds issued to approximately $4.2bn. The transaction successfully attracted 38 investors, with seven being fresh faces to the BJETS programme.

Citigroup served as the lead structuring agent and bookrunner, supported by Deutsche Bank Securities, Morgan Stanley, BofA Securities, and KKR Capital Markets acting as joint structuring agents and bookrunners.

Citizens Capital Markets also joined the party as a co-manager. Notably, Global Jet Capital will retain servicing rights on the securitised assets.

Under the hood of BJETS 2024-1 lies the securitisation of cash flows generated from a diversified pool of business jet loans and leases.

This offering encompasses 31 such leases and loans extended to corporations and prominent figures across 18 distinct industries. The underlying assets themselves showcase a variety of 21 different aircraft models, with a focus on mid-cabin to large-cabin business jets.

The post Global Jet Capital raises $575m with BJETS 2024-1 issuance appeared first on Corporate Jet Investor.

SPACs or “blank cheque companies” as they are often called, emerged as a promising vehicle for private companies to go public in 2020. The appeal of SPACs lay in their speed and efficiency, allowing companies to go public more quickly and with less regulatory scrutiny than a traditional IPO.

However, investor sentiment in the private aviation space for SPACs has changed over the last two years. Mostly due to the mediocre performance of companies that took the SPAC route for listing. Share performance of WheelsUp and various advanced air mobility companies have put a big question mark on whether SPACs are the right way to go about raising new funds for aviation companies looking to expand their operations.

These questions have prompted some business aviation companies to shelve their plans to pursue the SPAC route for listing.

But despite these concerns, Volato went ahead with its Proof Acquisition Corp. (PACI) SPAC merger and began trading on the New York Stock Exchange under the ticker symbol SOAR. In addition to the merger, PACI also closed an additional $12m in private investments and $14m in Series A Preferred Equity financing.

This brings the total amount of new capital raised by SOAR, operating one of the world’s largest HondaJet fleets, to over $60m – together with the conversion of Volato’s convertible debt. Following the merger, SOAR stock went up 88%. A lot of the merger’s success had to do with Volato’s approach to private aviation and their asset-light business model.

The company boasts of a strong revenue base diversified across its offerings. In 2022, it reported revenue of $96m – mostly from its fractional ownership ($45m) and aircraft management ($35m) business. The remaining $16m came from the company’s jet card programs.

Volato’s business model is simple. Bring the benefits of whole aircraft ownership to the fractional customer, while filling residual fleet capacity with in-house software solutions.

“I think what’s most unique about us is that … our fleet focus is entirely on light jets, with the HondaJet. And we’re also unique in that our fractional program allows for unlimited use and revenue share, which is a departure from the typical fractional ownership,” said Matt Liotta, CEO, Volato while speaking at the Corporate Jet Investor Conference in Miami. But why HondaJet? “I specifically went on a journey to find what I thought would be the best, most efficient, jet for four passengers or fewer. That’s what we saw as a market opportunity. We had a limited number of airplanes to look at, and we thought the HondaJet made the most sense for that.”

Consumers are also looking for flexible solutions. With private flight costs skyrocketing during the last two years, selling less costly seats on efficient jets hits the bullseye for users. And high interest rates have become a major consideration for consumers looking to invest.

“One of our unique aspects is that we’re an asset-light company, so we don’t own any planes. So, interest rates aren’t affecting us, in that sense. I think it affects our customers and, their considerations when making, investments in any space, including, this one. So, it’s certainly a consideration for our customers,” says Matt.

Volato’s fractional ownership and revenue sharing puts it in a perfect spot to earn higher market share in the current high interest rate environment.

The company currently has 25 aircraft in fleet with 27 on order (including 11 HondaJets and four Gulfstream G280s scheduled for delivery in 2024.) Volato says its solutions address major pain points in private aviation. High operational costs and restrictive jet plans for consumers are matched with Volato’s flexible fractional ownership model and incentives for customers.

With an asset-light business model and ample liquidity from the recent merger, Volato’s management is focused on targeting the consumer segments which need two-to-four seats and fly for two-to-three hours. Volato’s management says they does not want to become the Uber of private jets. They have a clearly defined market, and they are focused to tap into it while keeping costs in check and efficiency at maximum.

“I think really matters like how much you’re flying; how much you’re contributing to market share and what your growth rate is. And so, for us, we’re a very high growth company that is looking to be a dominant player in the light jet space,” Matt added.

“We’re growing very fast. October 2023 was our best month ever. Since I was here last year, we’ve more than doubled our utilization of owners of deposit card customers of charter. So just everything is up for us.

“We think, as far as we can tell from the data that we’re taking market share.”

The post Volato’s focus on efficiency sets it apart appeared first on Corporate Jet Investor.

Yingling Aviation’s chairman and CEO, Lynn Nichols and president, Andrew Nichols are to remain active leaders and investors in the newly-acquired Wichita, Kansas-based FBO and MRO.

AEI has made numerous investments in business aviation companies over recent years, such as Alpine Air, Global Jet Capital, Landmark Aviation, Solairus Aviation and StandardAero. Jon Nemo, senior partner, AEI said this investment signifies the start of the company’s plan to strengthen its services to business aviation.

“We have known Yingling Aviation and its owners for several years and are excited to be partnering with them to continue to build this leading platform serving the needs of business aircraft owners and operators,” said Nemo.

Located at Wichita’s Dwight D. Eisenhower National Airport, Yingling’s MRO services include airframe, engine, avionics upgrades, paint, interior, propeller sales and service and parts sales. Founded in 1945, the firm currently operates a 300,000sqft facility with more than 180 employees.

“Yingling Aviation is a very well-recognised brand within the business aviation market and the Wichita community,” said Lynn Nichols, chairman and CEO, Yingling Aviation.  “Our partnership with AEI represents another key milestone in our growth story and we look forward to having a partner with their knowledge and operating experience in our market.”

Akerman & Co served as legal advisors to AEI on the acquisition, with Arn Mullins Unruh Kuhn & Wilson and Klenda Austerman serving as legal advisors to Yingling Aviation.

The post AE Industrial Partners acquires Yingling Aviation appeared first on Corporate Jet Investor.

First, Jetcraft’s 5-year Pre-owned Business Jet Market Forecast. Despite what the broker describes as an inevitable market correction in 2023, it remains confident about market prospects – notwithstanding rising interest rates and fears of recession. The reason for Jahid Fazal-Karim, owner and chairman of the board, Jetcraft is clear. “The driving factor is the corporate buyer – who roared back to life in 2022 following the pandemic hiatus. This, combined with a continued flow of new entrants to the market as well as OEM backlogs, took total pre-owned transaction values beyond our expectations,” he wrote in the report’s summary. “And those buyers are flying more than ever.”

Jetcraft research reveals the share of buyers coming from the corporate sector reached 60% last year. This demonstrates the value corporations and the UHNW individuals running them place on jet ownership, he wrote. “The more valuable their time, the more their need for business jets.” It’s a trend that shows no sign of slowing down. Aircraft use among corporate and individual buyers has doubled since 2020. The return of the corporate buyer, growing maturity of markets outside North America and continued investment in larger jets from the OEMs, flying has evened out across all aircraft sizes to an average for Jetcraft buyers of 200 hours per year.

Over the forecast period, the number of pre-owned transactions is predicted to grow steadily again and exceed previous highs by 2027. (That represents an average Compound Annual Growth Rate (CAGR) increase of 4.7% per year. Inflationary times may even help to prompt private jet purchases, according to Chad Anderson, CEO Jetcraft: “When inflation is high, the market is more favourable to cash-rich corporations opting to buy outright.”

Global Jet Capital also sees significant market growth up to 2027. It’s report – New and Pre-owned Business Jet Transaction Forecast – predicts new deliveries this year to rise by 6.3% (up 12.2% in dollar terms) compared with last year. But offset by a 2.6% fall in the number of pre-owned deals, the report predicts a 1% increase in the value of aircraft transactions.

As the market settles from the highs of last year, steady growth is expected to re-emerge over the five-year forecast period. “We forecast total transactions will increase at an average annual rate of 2.9%, while dollar volume will increase at an annualised rate of 3.1%,” according to the Global Jet Capital forecast. “Between 2023 and 2027, we forecast new aircraft will represent 51.5% of the total value of the market, about on par with the last five years.”

Heavy and very light jets are predicted to show the strongest growth, with heavies leading the way. Heavy jet deliveries are forecast to increase at a CAGR of 5.9% between 2022 and 2027, as their range and passenger capacity finds favour with buyers and flyers. It’s a trend that will be fuelled by the introduction of new heavy jets during the forecast period. At the other end of the ramp, very light jets (VLJs) are also expected to demonstrate rapid growth, expanding at an annual rate of 5.6%. “The low price of VLJs makes them appealing to many buyers, especially first-time owners,” according to the report. “Although light and medium jets will grow more slowly than heavy jets and VLJs.”

Fazal-Karim, from Jetcraft, sums up the (qualified) reasons to be cheerful: “A forecast isn’t ever a certainty, but with demand having reached unprecedented levels last year, we can continue to be confident about the health of our industry.”

Meanwhile, Jetcraft’s forecast is available here and Global Jet Capital predictions can be read here. Both make encouraging reading – particularly after a long day touring the EBACE halls and Static display (now the protestors have gone). What better way to relax than with two positive reads to lift the spirits – if not soothe the weary feet? Beverage of choice optional.

Above: The Global Jet Capital report predicts heavy and very light jets will show the strongest growth.

Top: Jahid Fazal-Karim, owner and chairman of the board, Jetcraft:  “The driving factor is the corporate buyer.”

The post CJI EBACE DAY 3 – Good reports about business aviation appeared first on Corporate Jet Investor.

It is expecting 2023 new deliveries to increase by 6.3% (up 12.2% in dollar terms) compared with 2022, but the number of pre-owned deals to fall by 2.6%. Combined, this works out as a 1% increase in the value of aircraft transactions.

“Anybody who’s is plugged into the marketplace understands that last year was a bit of a peak for pre-owned transactions and we’re obviously cooling off of those highs, but OEMs are starting to steadily increase deliveries,” says Vivek Kaushal, CEO, Global Jet Capital. “I don’t want to use the words ramping up because OEMs are being very measured and it’s very much supported by all the trends that we’re seeing.”

Over the next five years, new deliveries are forecast to grow at a compound annual growth rate (CAGR) of 4.6% and dollar volume should grow at a CAGR of 6.4%.

Pre-owned transactions are expected to continue declining in 2023 as they did in 2022. Unit volume is forecast to decline 4.8% while dollar volume is forecast to decline 8.5%. Continued market demand, however, should lead to more pre-owned deliveries over the next five years. Pre-owned transactions are expected to increase at a CAGR of 2.5%, with dollar volume remaining stable over that time.

Global Jet Capital expects North America to continue to be the dominant business jet market for the next five years – making up 77% of the total market. “Demand in Europe is very strong – we are seeing a lot of activity from our Zurich office,” says Kaushal. “I was in Asia last month and there is definitely pent up-demand and you can see the market coming back.”

He says that high profile bank failures have not yet hit aircraft finance. “Availability of credit is still OK for somebody who wants to finance an aircraft,” says Kaushal. “But as cash continues to drain out of the banking system, as rates continue to stay elevated, you’re going to see some tightening in market conditions. That’s only to be expected.”

Kaushal has not seen a sudden fall in demand. “We are seeing that customers still have intent to acquire. They are still going ahead with fleet planning upgrades – where a client of ours that’s been in a G550 for the last 10 years would like to move up into a G650,” says Kaushal. “They’re in the market looking for something. At the same time, the urgency to act is less. People see a market in which there are choices and where there will continue to be choices. They are OK waiting a little bit for prices to find a new level. But nothing that we’re seeing tells us anything other than a very natural pullback from a cyclical peak.”

See full market forecast here.

The post Global Jet Capital sees dip in 2023 deals, but bullish for next five years appeared first on Corporate Jet Investor.

Flight activity and pre-owned transactions were at all-time highs and inventories reached all-time lows. We also saw a record number of first-time users at all entry points: charter, fractional ownership, and whole ownership. While more difficult to track, there exists strong evidence that this period also saw all-time highs in the dollars invested in the business aviation industry. From FBOs, to MROs, operators, and others we have seen a broad array of private investment enter this space.

When we look back at this period a decade from now, perhaps the most important record is the one we did not set — aircraft production. Against a backdrop of unprecedented demand, supply chain issues and OEM order book discipline resulted in aircraft production below the increased demand. That “underproduction” has, in our view, positioned the industry well for an uncertain economic future. We are all aware of the economic clouds on the horizon, and the likelihood of turbulence ahead. As always, that disruption will push some people out of charter back to the airlines, out of a half-share onto a jet card, and out of whole ownership into one of the many shared service platforms available. But with rational production rates we do not expect to see inventories swell nor widespread aircraft devaluation as we saw following the Great Recession in 2008-09.

Over the past two years more and more people, corporations, and investors were exposed to the undeniable value proposition behind business aviation — immediate and unscheduled access to travel, security, safety (including health safety) and, most of all, productivity. That exposure led to a widespread expansion of our industry, and while we may be coming down from some all-time highs, all evidence suggests we will be landing on a new, higher, and solid plateau.

It reflects our projection of future activity in the business jet market in both the new and pre-owned market segments across different geographic markets around the world. The business jet market shrank in 2022 as OEMs continued to deal with supply chain constraints and the pre-owned market normalised from a historically strong 2021. Despite some headwinds in 2023, the business jet market remains resilient, and we forecast steady growth over the next five years.

 Total new and pre-owned business jet transaction unit volume is forecast to decrease 2.6% in 2023 as preowned transactions continue to normalise from the all-time high volume seen in 2021. However, the increase in new deliveries and growing demand for larger jets should result in a 1% increase in transaction dollar volume.

• Following a strong 2021, major aircraft manufacturers continued to report strong order intake in 2022. At the same time, supply chain constraints continued to limit production. The combination resulted in increased backlogs. Most manufacturers plan to increase production over the next few years as a result. New deliveries are expected to increase 6.3% in 2023, while new delivery dollar volume should increase 12.2%. Over the next five years, new deliveries are forecast to grow at a compound annual growth rate (CAGR) of 4.6% and dollar volume should grow at a CAGR of 6.4 percent.

• Pre-owned transactions are expected to continue declining in 2023 as they did in 2022. Unit volume is forecast to decline 4.8% while dollar volume is forecast to decline 8.5%. Continued market demand, however, should lead to more pre-owned deliveries over the next five years. Pre-owned transactions are expected to increase at a CAGR of 2.5%, with dollar volume remaining stable over that time.

• North America is forecast to continue to be the largest market for both new and pre-owned business jets, making up 77% of the total market. Europe is also an important market and Latin America will remain a significant market for pre-owned aircraft. 

Business jet demand, measured in dollar volume, is forecast to grow at an annualised rate of 3.1% over the next five years. After years of continuing demand from both new and established users, the business jet market is on a solid footing. Business jets are primarily business tools and demand is closely aligned with overall economic growth. Oxford Economics forecasts global GDP will grow at a year-over-year rate of 1.8% in 2023. Following years of strong growth as the world recovered from COVID, the global economy is now dealing with a variety of risks including the Ukraine War and other geopolitical frictions, persistent inflation, supply chain disruptions, and economic uncertainty in many regions. These factors have resulted in lower-than-expected growth over the next few years. They also create downside risks to any forecast, including the forecasts used to build Global Jet Capital’s model.

Despite slower economic growth, the business jet market remains in a strong position. Following early phases of the COVID-19 pandemic, the business jet market experienced an influx

of new users who purchased new and pre-owned aircraft. These new entrants also utilised charter and fractional operated aircraft, driving up fleet purchases. While many users have returned to commercial airlines as the world reopened, others continue to rely on business aviation and flight operations remain well above pre-COVID levels.

Demand also resulted in high backlogs at major business jet manufacturers. While orders slowed in late 2022 from highs earlier in the year, OEMs report that demand remains strong. Many OEMs expect to overcome supply chain constraints in 2023, enabling them to increase production compared to 2022. As more new models come on stream in 2023 and 2024, steady growth will continue in 2025 and after. Pre-owned transactions are forecast to continue a return to a rate more in line with historical trends in 2023. This will be driven by continued low inventory, higher prices, and economic uncertainty. By 2024, however, pre-owned transactions are expected to begin to rise again as new users enter the market and established users upgrade their aircraft.

Following strong growth in 2021, the total number of business jet transactions declined in 2022

Supply chain constraints prevented manufacturers from increasing production, holding back new deliveries. Pre-owned transactions also declined as low inventory, higher prices, and economic uncertainty kept some buyers on the sidelines. Despite a 14.6% year-over-year decline in pre-owned transactions, 2022 was second only to a strong 2021 in unit volume. In addition, rising aircraft values drove pre-owned transaction dollar volume up 17.4%, making 2022 the largest pre-owned market in terms of dollar volume in over 30 years of data that Global Jet Capital maintains.

In 2023, the new and pre-owned markets are expected to diverge. New deliveries are forecast to increase 6.3% compared to 2022 as manufacturers are expected to overcome supply chain obstacles. On the other hand, pre-owned transactions are expected to continue to decline, dropping 4.8% compared to 2022 as the market continues to return to transaction volume

aligning with historic trends. Over the five-year forecast period, a pattern of steady growth is expected to reemerge. We forecast total transactions will increase at an average annual rate of 2.9%, while dollar volume will increase at an annualised rate of 3.1%. Between 2023 and 2027, we forecast new aircraft will represent 51.5% of the total value of the market, about on par with the last five years.

New deliveries remained steady in 2022 as manufacturers dealt with supply chain issues that prevented them from increasing production as planned

At the same time, new delivery dollar volume increased 5.8% as the market shifted to larger jets. Even as production increases failed to materialise, orders were high in 2022, especially in the first half of the year, driving up backlogs. Factors such as new users entering the market and low pre-owned inventory drove demand. Going forward, demand will be driven by new aircraft models planned to be introduced over the next few years, a return to economic stability, and typical replacement and trade-up patterns.

New deliveries are forecast to increase 6.3% in 2023 compared to 2022 as manufacturers overcome supply chain obstacles and increase production to meet demand. New delivery dollar volume is expected to increase at an even stronger rate of 12.2% with new heavy jet introductions expected this year. As the product mix changes over time, unit volume and dollar volume may increase at different rates during the forecast period. Still, the pattern should be a steady increase to meet demand from customers. Over the next five years, new deliveries should increase at a 4.6% average annual rate, while dollar volume is expected to increase 6.4% over the same period. Between 2023 and 2027, new deliveries are forecast to total 4,054 units, valued at $100.5bn. 

We expect deliveries of all size classes to increase during the forecast period, demonstrating a general increase in demand for business aviation 

There are a wide range of business jet types that appeal to users with different missions and budgets, and that dynamic will continue over the next five years. 

Still, heavy jets should increase at a faster rate than other categories. Heavy jet deliveries are forecast to increase at a CAGR of 5.9% between 2022 and 2027. The range and passenger capacity of these aircraft make them increasingly popular. Rebounding international travel will only enhance the appeal of these longer range aircraft. The introduction of new heavy jets during the forecast period will further increase the appeal of this category. Very light jets (VLJs) are another category that should demonstrate rapid growth, expanding at an annual rate of 5.6%. The low price of VLJs makes them appealing to many buyers, especially first-time owners. Although light and medium jets will grow more slowly than heavy jets and VLJs, we forecast that deliveries in these categories will increase as well (at a 3.5% CAGR and 3.3% CAGR respectively).

Following a very strong 2021, the number of preowned business jet transactions declined in 2022

In 2022, buyers dealt with low inventory, rising prices, and economic uncertainty, resulting in a slower market. It should be noted that despite a 14.6% year-over-year decline, 2022 transactions were the second highest on record, next only to 2021. In addition, rising aircraft values drove pre-owned dollar volume up 17.4% year-over-year.

Declines in the pre-owned market are expected to continue into 2023. Despite increases in inventory throughout 2022, aircraft listed for sale remain near historic lows, reducing buyers’ options. Buyers also continue to face relatively high prices and economic uncertainty. An increase in new deliveries should also meet some demand in the marketplace, further reducing pressure in the preowned market. Unit volume is expected to decrease 4.8% year-over-year in 2023. Dollar volume is forecast to decrease at a faster rate of 8.5% as values normalise.

Over the long term, we expect the pre-owned market to resume the rising trend that it has experienced over the past two decades, driven by continued demand and a growing user base. Over the next five years, we forecast there will be 14,581 pre-owned transactions valued at $94.6bn. During that time, transactions are expected to grow at an annualised rate of 2.5%. Dollar volume should remain level with 2022 over that time, even as unit volume increases due to normalising aircraft values.

Heavy jets have grown in popularity in the preowned market, driven by their long rag and high passenger capacity – the same factors that are driving an increase in the new market

That trend is forecast to continue over the next five years, with heavy jets increasing from 24.3% of the pre-owned market in 2022 to 28.1% by 2027. During that time, we expect heavy jets will grow at an annualised rate of 5.5% compared to 2.5% for the wider pre-owned market.

We expect that VLJs will be another strong performer over the next five years, increasing from 21.7% of the pre-owned market in 2022 to 22.4% by 2027 — their small size and low price make them attractive to entry level jet buyers. Transactions involving medium jets are also expected to increase over the next five years, rising at a CAGR of 1.8%. Since that rate will be slower than the overall market, medium jets will shrink as a percentage of the pre-owned market. Light jet demand is also projected to decline over the next five years. These jets are the most popular segment on the pre-owned market so even with declines, we expect they will continue to be the most popular by 2027.

North America is forecast down to account for 76.9% of the global business jet market over the next five years, making it the largest region for business jets in the world

North America has the largest installed base of business jets, strong market maturity, and supporting infrastructure that will drive continued strength in the market. 

The North American market is also driven by wide acceptance of pre-owned business jets. Over 79% of all pre-owned transactions are forecast to take place in North America between 2023 and 2027, with transactions involving pre-owned aircraft accounting for 80.4% of all  transactions in North America. 

While North America should remain the largest market over the next five years, other regions of the world are expected to continue to drive sales of business jets as well. Europe is projected to be the second largest market between 2023 and 2027, with 9.6% of transactions. Latin America is forecast to be an important market for pre-owned jets, accounting for 8.8% of all pre-owned transactions. The remaining transactions are expected to be split between the Middle East and Africa region (MEA) and the Asia Pacific region (APAC).

Global Jet Capital utilises a top-down linear regression model, using economic variables as inputs to forecast the business jet market

Model outputs are balanced against Global Jet Capital’s in-depth market knowledge and insights to arrive at a detailed five-year forecast covering both new and pre-owned business jet transactions. 

Economic data and forecasts come from Oxford Economics and are based on its analysis of current and expected future market conditions. Forecasts are based on analysis of relevant data at the time they are made. In a dynamic market, data may change rapidly, and unforeseen events may lead to differences between forecasts and actual future events. Global Jet Capital does not guarantee the accuracy or likelihood of these forecasts and these projections should not be construed as advice for any business decisions.

As with any forecast, there are many risks that may result in different outcomes than expected. Upside risks include a reduction in geopolitical conflicts around the world, the ability of central banks to resolve inflation and conduct an economic “soft landing”, and higher-than-expected demand from new users. Downside risks include a worsening of the geopolitical environment, persistent inflation, economic recession, continued low supply due to low pre-owned inventory and 

OEM supply chain difficulties, as well as more new users returning to commercial airlines than expected.

In 2022, Global Jet Capital forecast that the new market would be worth $18bn, and that the pre-owned market would be worth $14.8bn. By the end of the year, the new market was actually worth $16.5bn (8.4% lower than the forecast), and the pre-owned market totalled $19.6bn in transaction value (32% higher than the forecast). New transactions ended the year lower than forecast due to supply chain disruptions that prevented manufacturers from delivering enough aircraft to meet demand. In the pre-owned market, actual transaction unit volume was only 2.1 percent lower than Global Jet Capital’s forecast. The mismatch for dollar volume was due to higher-than-expected prices due to low supply.

Total business jet transactions declined in 2022 vs. 2021

New deliveries were held back by supply chain issues that affected OEMs, while pre-owned transactions declined due to low inventory, higher prices, and economic uncertainty. Despite the decline in the pre-owned market, the total number of transactions in 2022 was second only to 2021, demonstrating the strength of the market in 2021. In addition, rising values drove the market dollar volume up 11.8 percent, even as overall unit volume declined 12 percent. 

The new market was lower than forecast in 2022 as manufacturers continued to struggle with supply chain constraints that delayed some deliveries. The pre-owned market was slightly lower than forecast in terms of unit volume but higher than forecast in terms of dollar volume due to continued strength in aircraft values.

In 2023, the new and pre-owned markets are expected to diverge. New deliveries will increase as manufacturers overcome supply chain obstacles and increase production to meet demand. On the other hand, declines in the pre-owned market are expected to continue into 2023. Despite increases in inventory throughout 2022, aircraft listed for sale remain near historic lows, reducing buyers’ options. Buyers also continue to face relatively high prices and economic uncertainty. Following a dip in 2023, we forecast both markets will grow steadily into 2027.

Between 2023 and 2027, North America should remain the dominant geographic market for business jets, with a strong lead in new deliveries and pre-owned transactions. Europe is also expected to be an important market for business jets, while Latin America is expected to remain a strong market for pre-owned jets.

The post Global Jet Capital: New and pre-owned business jet transaction forecast appeared first on Corporate Jet Investor.

Vivek Kaushal, CEO, Global Jet Capital told Corporate Jet Investor: “KBRA’s ratings actions reflect the result of years of hard work by the Global Jet Capital team and our strong customer base. It’s great to see the strong performance of our portfolio being recognised by the rating agencies.”

All tranches of notes issued in the Business Jet Securities (BJETS) 2020-1 and BJETS 2021-1 transactions were upgraded by one rating notch due to having received “timely interest and scheduled principal payments since the closing of such transactions”.

KBRA considered key performance metrics such as changes in delinquent or defaulted contracts, cumulative net loss utilisation and debt service coverage and loan-to-value ratios.

“We are extremely pleased with the recognition from KBRA and continue to focus on delivering strong value for both our clients and our investors,” added Kaushal.

The company has issued a total of $3.6bn of asset-backed security (ABS) notes through its BJETS securitisation programme. The collateral for the notes are business aircraft loans and leases. In February, the firm hit its $3.5bn financing milestone.

The post Global Jet Capital gets ratings upgraded appeared first on Corporate Jet Investor.

The financing specialist said in its fourth quarter (Q4) Market Brief that a possible recession in 2023 could still challenge the market, despite its “unique value proposition”.

“While many economists forecast the global economy to experience a recession in 2023, Q4 2022 data indicates that the contraction may be less severe than originally expected,” predicts the report.

Flight operations dipped slightly in Q4 2022, from 945,218 in Q3 to 905,513 in Q4, but remained 19% above pre-Covid levels, which the report said shows “the broadening of the business aviation user base has endured”.

Pre-owned transaction levels were down in Q4 year-on-year (YoY) from 3,243 to 2,709 units, but their value increased YoY from $16.7bn in Q4 2021 to $19.1bn in Q4 2022. Both the amount of pre-owned aircraft delivered and their value were up from Q4 2020, which saw 2,536 units delivered worth $11.8bn.

“The pace of transactions in 2021 was not sustainable, given the substantial decline in pre-owned inventory and continued supply chain disruptions affecting new aircraft production,” the report said. “The strength of the market in 2022 compared to previous years, however, demonstrated the continued demand for business jets among fleet operators and individual users.”

New aircraft deliveries remained relatively steady since last year, dipping slightly from 721 units at a value of $15.6bn in Q4 2021 to 655 units worth $15bn in Q4 2022.

OEM backlogs across Bombardier, Gulfstream and Cessna increased from $32.2bn in Q4 2021 to $40.3bn in Q4 last year, almost doubling Q4 2020’s backlog of £24bn. The book-to-bill ratio remained above 1-to-1 in the quarter.

Total aircraft listings during 2022 were 23.7% higher (2,279) than in 2021 (1,843). Industry observers said that some aircraft owners may have been motivated to sell their aircraft to take advantage of the pricing environment, according to the report.

In addition, many aircraft sales in 2021 involved unlisted aircraft, while sellers last year returned to public listings. Global Jet Capital said listings may increase this year when new deliveries begin to pick up, with owners marketing their current aircraft after taking delivery of a new one. Around 5% of the business jet fleet was available for sale in Q4, up from 2% in the first quarter of the year.

The report concluded: “Looking toward 2023, the overall macroeconomic environment remains the biggest concern, with many economists expecting a recession. While the business jet market has seen a substantial expansion of its user base and has been resilient to economic volatility, this resilience may be tested in 2023.”

Earlier this month, Global Jet Capital announced that it reached a business jet financing milestone of $3.5bn.

Global Jet Capital Q4 Market Brief – at a glance

The post Global Jet Capital: Private jet market ‘will be tested’ this year appeared first on Corporate Jet Investor.