Ha! I'm almost certain many of them received million(s) of dollars in PPP. If they have 100 or more employees they most likely received $1m+ in PPP. Could be many multiples of that.

Chip,

I am sure you are close with your customers but I really doubt you know exactly where the money comes from. Pretty naive to think you would know for sure.

I do business with the affluent and many of them I have seen things that contradict what I was told. We work on and in peoples houses. I see a lot more of my clients than you of yours. LOL

I would never think I know exactly where my clients get their money.

Mike

Look them up and see, you might be surprised who got what.

https://www.federalpay.org/paycheck-protection-program

Also there was TRILLIONS thrown around for covid, PPP was "only" 800 billion. If you don't think the government throwing around 4.6 trillion dollars has anything to do with the inflated aircraft prices....


https://www.usaspending.gov/disaster/covid-19

The vast majority of my clients received between $5 million and $15 million in PPP funds. A few others were in the $1-5 million or over $15 million camp. I can only think of one that was under $1 million and they got $800k. And yes, I see their financials so I am not guessing.

I think it is VERY likely PPP funds helped buy a lot of aircraft, boats, vacation homes etc.

I don't think any of our clients received $5 - $15M in PPP funds!

I could certainly be wrong.

I am certainly not naïve, and I'm sure some of our clients benefitted from PPP. But, that is very different from someone using PPP funds to buy an airplane.

I agree with Tarver, most of our clients are hard working SMALL business people, I can only think of a few that have over 100 employees and only one of those bought an airplane post-covid. He sold 25% of his company to a PE firm, so I doubt PPP was the cash cow there.

Again, small sample and most of our clients are in the $2M - $20M price range, did some big companies screw PPP and buy a jet... probably. But, we weren't involved.

https://www.flyingmag.com/preowned-busi ... roup-says/

Chip and et. al. what corners of the markets do you see softening (I mean rebalancing)?

Do you agree with the comments in the article?

How is the MRO situation? Looking at the Beech piston forums, A&P shortages and rising A&P shop rates, may relegate older aircraft with deferred or intensive maintenance uneconomical, without commensurate price declines?

Hey Leif,

We are definitely seeing less enthusiasm over all, I agree with what Mobley said, the "feeding frenzy" is over, but much like a pond full of Piranha, there's not much left to eat!

Specifically we are seeing softening in the large cabin jets, especially Challenger 604 /605 and we're seeing the same to a lesser extent in the mid-size jets, especially the Hawkers.

Rebalancing is a good word, it's not that the market as a whole is dropping, in fact prices continue to rise on many late model, desirable aircraft. However, some airplanes went up more than they should have and they seem to be coming back in line.

It's hard to gauge right now, most of the brokers say it is slow, but sales are always slow during tax time... on the buys side, which is usually ahead of the sales side, we are seeing our normal level of prospective new clients, we have a Mustang and CJ2+ in prebuy, on the hunt for another 2+, a Challenger 300 and we were just hired over the weekend to acquire a CJ4, add to that the two King Air B200's we've been looking for and the Denali we have on order... it's a full load!

I think the long and short is that as long as the airline experience is less than ideal, charter companies will be overwhelmed, buying more airplanes, making private ownership attractive, with those owners buying to escape charter, resulting in higher demand than supply, and our current critically low inventory levels are here to stay.

Hey Leif,

We are definitely seeing less enthusiasm over all, I agree with what Mobley said, the "feeding frenzy" is over, but much like a pond full of Piranha, there's not much left to eat!

Specifically we are seeing softening in the large cabin jets, especially Challenger 604 /605 and we're seeing the same to a lesser extent in the mid-size jets, especially the Hawkers.

Rebalancing is also a good word, it's not that the market as a whole is dropping, in fact prices continue to rise on many lade model, desirable aircraft. However, some airplanes went up more than they should have and they seem to be coming back in line.

It's hard to gauge right now, most of the brokers say it is slow, but sales are always slow during tax time... on the buys side, which is usually ahead of the sales side, we are seeing our normal level of prospective new clients, we have a Mustang and CJ2+ in prebuy, on the hunt for another 2+, a Challenger 300 and we were just hired over the weekend to acquire a CJ4, add to that the two King Air B200's we've been looking for and the Denali we have on order... it's a full load!

INFLATION INFLATION INFLATION! Real prices have gone up 25-50% in the last few years so I don't think it's unreasonable for hard assets to maintain the appreciation they have seen in the last 2 years. A new 172 is $600K, a new Baron is $1.8 million, etc. Relatively speaking, used airplanes are still a HUGE value compared to a new one.

I don't think we are going to experience a dramatic price collapse anytime soon.

Plus, there is still tons and tons of cash floating around.

Saying "People bought that plane with PPP funds" isn't implying anything nefarious. The PPP funds were distributed essentially without respect to need ... in order to get cash out into the economy quickly.

People whose businesses were still doing well ... still got a buncha money.

Just to add some food for thought, OTOH my day job is a portfolio manager and Bombardier is a top pick amongst a number of analysts because of their order book and some pretty impressive long haul and fast biz jets

https://nypost.com/2023/04/20/surge-in- ... demic-fad/

Yes, the recipients did nothing wrong as long as they were honest on their applications. That makes it no less infuriating when you see small businesses crushed by lock downs desperately in need of assistance and getting crumbs, while larger businesses that are booming due to the lockdown are collecting $10 million in free taxpayer money to make their most profitable year ever another $10 million (in untaxed profits) more profitable.

There were at least 4,840 identified companies that received more than $5 million. There was supposed to be a cap of $10 million but as you know, many businesses have multiple legal entities, joint ventures etc. which allowed some to get more than $10 million in aggregate (depending on your perspective obviously).

I think a lot of this money bought airplanes, summer homes, toy cars, etc. How could it not have?

I agree with your position that the PPP money fueled the explosion in aircraft purchases. My company got $5.5 million in free money on PPP based on having 400 employees. I immediately said its time to step up to a jet and started looking. I signed a contract on a deal in late October 2020 at a very favorable price.

The government handed out PPP money to any company with employees starting April 2020 and thru that summer based on the amount of their employees, regardless of whether their company was doing well or not. I believe the companies that received the PPP money held their cash and did not act to buy aircraft until the government started sending out letters in November 2020 to these companies saying that they did not have to pay back their PPP money. When this cash was released onto the market that's when the prices for all luxury items started to take off, including for aircraft.

Are aircraft inventory levels still critically low or did this thread solve the problem yet