“LACK OF LOANS?” YOU ARE THE PROBLEM!

 

    Another preposterous statement?

 

 

ow about that for an attention grabbing statement!!! After reading the 1st paragraph on the SmartBrief site, I just couldn’t read any further – here’s what the summary said that caused my one eye to roll:

“While the Federal Reserve and lawmakers say banks need to lend more, the problem is that consumers and businesses aren't seeking to borrow. The sluggish economy has prompted companies and consumers to eliminate debt and increase savings. Overall, loans and leases at commercial banks are 3% lower than the high of $7.32 trillion in October 2008” … ELFA SmartBrief July 30, 2012

Being a basketball fan, one of the enjoyable video clips I still love is Allen Iverson from 10 years ago when he was taken to task about not practicing at game speed … for those who remember, his classic line was “Practice … you mean practice … are we talking about practice?” That image kept running through my mind as I super-imposed

“Borrowing … you mean borrowing … are we talking about businesses not wanting to borrow? … you gotta be kiddin’ … businesses don’t want to borrow????

Now, I readily admit I didn’t read the rest of the article – reader’s block I dare say – and I don’t intend to. But when I look at our helicopter industry, how preposterous a statement! Perhaps the statement is correct for those few helicopter entities who are cash flush and elect not to use financial resources such as loans and/or leases in the business strategy … or perhaps the statement is correct (and this one I do believe) because helicopter companies have been so frustrated and alienated by the financial institutions’ inability or lack of desire to dig deeper to find out more about our business … how it operates … the equipment and its value retention if properly maintained … just to name a few.

To me – in talking to a handful of folks in our industry – many of our helicopter operators have simply grown tired of attempting to work with the banking community and either being summarily dismissed right at the start (and by the way, I believe a quick “no” is better than a prolonged “maybe”) … or experiencing the intense interrogation suitable for a captured warrior during the crusades (obviously an overstatement and my own preposterous statement!).

Now, does the article stimulate both the financial institutions and the potential borrower to attempt again to come to a “mutual reconciliation of judgments” (an oft used line from professor Durham) where the bank is willing to take the time and considerable effort to understand their customer and their needs … and in turn, the customer is willing to re-invest the time to educate the lender without having the risk of being dismissed like a bell signaling the end of 3^rd period? Perhaps that is the real message here.

If ever, now is the time for both sides – the lender and the customer - to come together … to work together … and develop a rapport which will lead to more outstandings for the bank as well as satisfied customers who will truly become “customers for life”.

Let Me Know What You Are Thinking!

an Avstar Media Affiliate

Mis-Perception ~ Helicopters & Corporate Jets Are The Same

At Heli-Expo 2012 in Dallas, I got on my soapbox at the HAI Finance & Leasing Inter-Active Seminar with the question “Ya’ know why I think helicopters are having such a tough time getting financing or leasing in today’s environment?’

“It’s Corporate Jets!” Now … what is my reasoning for that preposterous statement? It really covers a lot of ground … so, my first series of blogs will deal with this silly proposition.

ost financial institutions – unless they have a specific helicopter niche – tend to lump all corporate/business aviation products into one big bucket. And you really can’t blame ‘em. From their perspective, with the literally 100’s of collateral items financial intuitions deal with day-to-day, they truly can’t keep their finger on the pulse for all of them … so, right or wrong, corporate jets and helicopters are typically lumped together.

And they are dead wrong. But before we tackle that, let’s talk about why being grouped with corporate jets is a real disadvantage.

Perception is Reality

With all the bad news in the media about corporate jets, the financial institutions get scared about helicopters! Remember, most financial institutions tend to lump us together!!!

Here’s where I think the bad news started - “Big 3 Auto CEO’s Flew Private Jets to Ask for Taxpayer Money”, CNN 11-19-2008. An absolutely devastating – and unfair - event for corporate aviation. Rather than private jets being seen as business tools that allowed these senior executives all to appear at the same time with minimal interruption of their day-to-day business accountabilities, the perception was all about business perks, premadonnas, and arrogance.

Just imagine how different this event may have played out if the CEO’s would have orchestrated a 3-day-million-car-caravan from Detroit to Washington made up of automotive employees, vendors, suppliers, and car dealerships … totally different media coverage that would have built momentum from city-to-city. So, the CEO’s misjudged the media and as a result, corporate aviation got hammered!

Here’s just a few of the “continuing bad news” headlines over the last few months:

“Manufacturers of corporate jets are starting to despair of ever seeing the European market recovering with some worried about growth in the U.S., industry”, 5-14-2012, Geneva (Dow Jones)

“Hawker Beechcraft filed for bankruptcy protection Thursday in the latest blow to Wichita's beleaguered aircraft industry”, 5-3-2012, Wichita (AP)

“Makers of business jets hope for better weather beyond the current turbulence”, 4-14-2012, (The Economist)

“Falcon Business Jet Maker Says Market “Uncertain”’, 3-22-2012, MonitorDaily

Perception … perception … perception … a dangerous proposition if helicopters continue to be lumped in with corporate jets.

Corporate Jets and Helicopters are so, so different

It’s really an unfair comparison … corporate jets fly much further … fly much higher … and at incredible speeds when compared to our helicopters.

But here’s the real difference. Helicopters are truly the “SUV of Aviation” … they’re multi-functional, essential use, revenue generating assets vs. the corporate jets whose primary mission is executive transportation. I’ve yet to see a Gulfstream doing air ambulance scene work … landing at an offshore rig … fighting fires … lifting and positioning heavy objects … capturing a criminal … just to name a few. And when’s the last time you saw a Gulfstream hover, fly sideways, or even back-up?

Helicopters since their inception have been working, revenue generating assets. Looking at GAMA’s latest statistics, over ¾ of the 11,500 jets in the U.S. are dedicated to personal, executive travel versus only 25% of the 10,000 helicopters. True working machines.

And when you go one step further, helicopters overall fly MORE flight hours than jets; and on a flight hour comparison, under 10% of helicopter flight hours are for personal, executive transportation.

So, to wrap it up … helicopters are unique flying machines … the similarities between corporate jets and helicopters pretty much ends with both being objects that can fly through the air. Their usage is dramatically different … one primarily for executive transportation vs. a multi-mission revenue generating asset.

And helicopters traditionally hold our value better than the jets. Next time, we’ll chat about why helicopters – properly maintained – are one of the finest value retention assets.

Let Me Know What You Are Thinking!

an Avstar Media affiliate