US buyers snap up second-hand jets as euro nosedives
Europe's slow growth and sinking currency have meant boom times for Kevin McCutcheon, an American who buys used private jets to resell in the US.
He's bought six aircraft in Europe and is negotiating for a seventh, a Cessna Citation in Germany, in less than two years. He's finding plenty of bargain shoppers back home. Small and mid-sized US companies and wealthy individuals are buying up Europe's second-hand jets as that region's economic woes spur owners to put their Falcons, CJ3's and Excels on the market.
"The US has a stronger economy and a strengthening dollar, said Mr McCutcheon, who founded Flight Solutions, which was created from an aviation company he started with country music star Reba McEntire in 1991. "That all provides for more opportunity for guys like me."
In the last two years, the number of foreign jets sold in the US jumped 45pc to 371 from the previous two years, according to JetNet, a New York-based research firm.
The trend is accelerating this year with the dollar's gains, which began last summer. Of 48 European used jets sold between December and February, almost half, or 21, were bought by US buyers.
In the same period a year earlier, only 15pc went to the US, according to Michael Chase, a private-aviation consultant. Retail prices range from a couple of million dollars to as much as $65m (€60m).
Buyers are also benefiting from a glut of jets created by the 2008 financial crisis. In the boom years, the market for new jets was so hot that sometimes people ordered them with the intention to flip at a profit.
"That stopped overnight with Lehman Brothers and people were stuck with their airplane," said Dannys Famin, managing director of Paris-based Unijet, which manages jet aircraft for companies and individuals.
The inventory is now being worked off with the return of US buyers.
When Mr Famin put a used Cessna private jet up for sale in Paris last year, he got no European bidders.
Instead, he quickly found US buyers and sold the 9-passenger Citation CJ3 jet for 10pc more than anticipated, he said. The jet retails new for about $8m (€7.5m).
"I got a better price and the selling period was shorter," Mr Famin said.
Thanks to the strong dollar, American buyers pay about 25pc less for a used jet in Europe than one in the US, Mr McCutcheon said. That is offset in part by extra travel for inspections and negotiations as well as higher costs to meet US regulations and to transport the foreign planes, he said.
The jump in US sales comes amid a general strengthening of the used-jet market, which amounted to about $11.7bn (€10.9bn) last year.
Secondhand-jet transactions worldwide increased 8pc in 2014 over the previous year and the average number of days aircraft were on the market fell by 42 to 350, Mr Chase said.