Liquidity

'Maxing out the client’s return on investment on all fronts whilst keeping great liquidity of his assets'

Maxing out the client’s return on investment on all fronts whilst keeping great liquidity of his assets

In most instances it is difficult to assess the liquidity of any aircraft. When it comes to helicopters this is even more problematic. With 100 different turbine powered models on the market produced by some nine manufacturers, each model fits a limited number of mission profiles. One has to thoroughly understand each and every model transactional dynamics throughout the year and beyond.

We had a situation where an operator wanted to upgrade from alight single turbine to a light twin turbine powered helicopter. He was thinking to invest in a Eurocopter AS355N model because of the helicopter’s ability to meet the JAR OPS3 Class I single engine performance.

After a thorough market review, we noticed that the previous three years of AS355N trading stock/fleet was very poor. We also realized that the helicopters for sale took an average of just under two years to sell.

If the client wanted to dispose of his helicopter quickly, or for example upgrade to a better machine, he risked being stranded with that specific model. We recommended he invested in the much more capable Eurocopter EC135P2i model as these were sought after and thus offered great liquidity and limited price depreciation over a three year ownership cycle..

Although the purchase price was double that of the AS355N, we demonstrated that the following combining factors were actually returning a substantial amount of money whilst limiting the risks of liquidity over a three year ownership lifecycle:

1)    Putting the right financing into place with a fair interest rate below 6% on a lease purchase

2)    Fixing the right balloon payment for the three year financing period

3)    Putting the engine through the Pratt & Whitney ESP plan to mitigate the risks of unscheduled removals whilst ensuring the client did not suffer cash flow issues and at the same time adding value when reselling the helicopter with the OEM engine maintenance contract fully paid

4)    Securing a strong reselling price and allowing for a profit to be made at any given time of the lifecycle should the helicopter needed to be sold

5)    Flying a more capable machine, taking better contracts and in the end increasing the company profit substantially!