GRAHAM WARWICK / WASHINGTON DC
Manufacturer also improves resale package in bid to reduce inventory of used aircraft
Bombardier is looking for a partner to take over remarketing of used aircraft traded in against new business jets. The move is part of plans to dispose of the business aircraft portfolio of financing arm Bombardier Capital.
Like other manufacturers, Bombardier has seen its pre-owned inventory grow, and aircraft values drop, with the downturn in business aviation. The company had 67 used business jets in inventory at the end of its third quarter, says chief executive Robert Brown.
Used aircraft prices have fallen 50% over the last three years, says Rick Engels of broker Vance & Engels. "Prices needed to come down more to stimulate demand, and it has finally happened. But it is not pretty for manufacturers committed to taking aircraft in trade," he says.
Brown hopes to have a third-party facility in place by year-end to take aircraft traded in against new deliveries and remarket them, keeping them off Bombardier's books. About one-third of future deliveries involve trade-ins, he says.
The company has several initiatives under way to reduce its inventory, including finding buyers for Bombardier Capital's portfolio, which includes a substantial number of the used jets on its books. Brown expects the inventory to "burn down" in the fourth quarter.
The company has also stepped up efforts to place aircraft in Europe and Latin America. Mexico has a large and ageing fleet that needs re-equipping to meet new noise and airspace requirements. Mike Zabcar, vice-president, pre-owned aircraft sales, says 25% of current sales are to Europe and Latin America.
Bombardier has also improved its resale package, providing six-month warranties on used aircraft, along with pilot and mechanic training, free charter hours and a free 300h inspection at one of the company's service centres. "These are a nominal cost to Bombardier, but a major saving to the customer," says Zabcar.
The company has launched a charter partner programme to lease pre-owned aircraft to charter operators. "A lot of pre-owned sales are to first-time buyers, who do a lot of chartering, and the majority of leased aircraft end up being sold to users of charter," Zabcar says.
The company is having to place a substantial number of aircraft coming out of its Flexjet fractional-ownership programme at the five-year mark. "We started taking aircraft a year ago and have moved over 25 to date," says Zabcar. Flexjet aircraft appeal despite their high hours because they are well equipped and maintained, he says.
Source: Flight International