RSVP Today: Join Guardian Jet in Texas on August 9

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Business Aviation Professional Development Seminar Series

“Asset Management for Corporate Aviation Flight Departments”

Watch Don's 1-minute seminar preview video

VIDEO: Watch Don’s 1-minute keynote overview

Join keynote speaker Don Dwyer on August 9 at the North Texas Business Aviation Association luncheon in Grapevine, Texas at the Cowboy’s Golf Club.

Don will explain what Asset Management is and why it’s important to view your aircraft assets just like you would the stocks in your financial portfolio.

Learn how you can:

  • Keep your aircraft assets nimble
  • Retain the value in your aircraft
  • Be smart about the capital that you’ve invested in aviation
  • Plus, learn about aircraft valuations, residual values, market conditions and how to take advantage of opportunistic buying.

Who should attend?

Anyone responsible for fleet planning, aviation operations and working within a flight department.

Keynote Speaker:
Don Dwyer, Managing Director, Guardian Jet (Read Don’s bio)


RSVP for North Business Aviation AssociationAugust 9, 2016

11:30 a.m to 1:00 p.m.

Cowboy’s Golf Club, 1600 Fairway Drive, Grapevine, TX 76051










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Temporary Phone Outage

Guardian Jet is experiencing a temporary phone outage as a result of a technical issue from our phone provider. We are still open for business and encourage you to contact our sales team via their cell phones or via email. We apologize for the issue and delay.

The Guardian Jet Team

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A Brief “Q&A” with Guardian Jet’s Newest VP, Russ Piggott

Russ Piggott

Russ T. Piggott

It isn’t often that an aviation-industry company can pull off such a coup as we at Guardian Jet feel we have by hiring our newest Vice President of West Coast Operations, Russ Piggott.

Russ is the consummate aviation careerist, with a love of aviation that goes well beyond the status quo.

This month, we thought we’d sit down with Russ and ask him a few questions to shed some light on what—even at his relatively young age—has already been a stellar career in aviation.


Q: What do you think was the most rewarding aspect of your career in the U.S. Air Force?

A: Well, first I want to say that I have been so fortunate in my life and Air Force career. I grew up around airplanes through my family, and all I wanted to do from a young age was fly in the Air Force.

My dad, mom, sister and brother are all pilots. My dad flew airshows in a Pitts Special, and then later in a Russian-built Sukhoi SU-29. But it was going to airshows and seeing the Air Force demonstration pilots that really fueled my desire to become a fighter pilot.

Those experiences also helped shape my goal to become an airshow demonstration pilot, in order to give back to people and inspire them to fly. So, in 2007 and 2008, I was fortunate to be selected as the F-16 Viper West Demonstration pilot.

I flew at 30 different airshows each year and represented the Air Force with a team of 10 maintenance professionals and six safety pilots. We flew in front of millions of people. On airshow weekends in between flying, we reached out to local schools, met with groups in the community, and communicated with local news and radio media.

My time on the demo team was one of the busiest and exhausting schedules I have ever kept, but it was so incredibly rewarding. I mentally put myself back in the crowd as a young kid on many occasions, and recalled what it was like watching the Air Force jets fly. I had to pinch myself because, here I was, finally doing it. Oh, and talk about rewards: I got to fly upside down in an F-16 at 300 feet!


Q: In your “collection,” of aircraft, you’ve got a fighter jet, a Glasair experimental aircraft and an aerobatic plane, and you’ve flown 30 different types of aircraft. What is your favorite and why?

A: That’s one of the toughest questions to answer, because it really depends on a number of factors.

Flying fighter aircraft is incredibly intense, and the sheer power, performance and capability are awe-inspiring. But it’s a lot of work!

There is no relaxing in a fighter, because you have a mission to accomplish and you have to be perfect. Flying airshows in the F-16, upside-down and at low altitude, in front of millions of people, was one of the greatest experiences I’ve ever had. Flying in an F-15 with three other wingmen at 50,000 feet, Mach 1.6 and targeting enemy aircraft before they even know I’m there is pretty darn powerful!

When my wife, Jennifer, and I go flying together in any light aircraft, she has often commented that as soon as we lift off, she can see my whole demeanor change, as if nothing in the world matters and I’m free.

Whether it’s a Piper Cub or a Sukhoi, it just feels so gratifying to get up in the air. But to answer your question, here are my top five aircraft that I’ve flown outside of my military career:

  1. Lancair Legacy – It’s a 245-knot time machine!
  2. Sukhoi SU-26/SU-29 – The absolute best aerobatic aircraft!
  3. Beech 18 – A timeless beauty that flies great (and you can take your friends).
  4. Bonanza V-35B – It’s the Cadillac of the skies, with that distinct V-tail.
  5. P-51 Mustang – The fighter that helped win the war in Europe.


Q: Now that you’ve joined Guardian Jet, what excites you most about working with the team, and representing the brokerage firm throughout the west coast?

A: When I left the active-duty Air Force in 2009, I had just come off of being the demo pilot, where I was selling the Air Force story around the world.

Along with my passion for aviation, I’ve always had an interest in business, so I wanted to get into the business side of aviation.

I had an amazing opportunity at another consulting firm, where I became well versed in business aviation at a very high level, but, as I started a family, my wife and I realized that we had to get back to California.

After doing so, and being introduced to Guardian Jet, I found that I was drawn to the company because of the fundamentals it’s built upon.

It’s extremely important for me to be part of an organization that has a high degree of integrity, a positive reputation and provides world-class products and services.

As I’ve learned, the Guardian Jet business model is built upon five pillars that are broader and much more inclusive than simply buying and selling airplanes, as most brokers are.

When I discovered that Guardian Jet uses its consulting products and services as a basis to earn the right to buy and sell its clients’ aircraft, I knew it was going to be a perfect fit for me.

Now I get to live where my wife and I want to raise our family, and, at the same time, I’m able to share my passion for business aviation as a member of a very capable company built upon sound fundamentals. It’s a perfect match.

As icing on the cake, I still fly the F-15C Eagle several days per month in the California Air National Guard, so, as I said before, I’m extremely fortunate!


Q: What aviation organizations have you been a part of? And how do you give back to the aviation community?

A: I like to give back to the aviation community by helping people and sharing my passion for the industry and its way of life.

Whether it happens to be a young kid who’s interested in learning to fly or a recent college graduate looking to get into business aviation, I really like taking the time to teach them what it has to offer, and how my life has benefited by being involved in aviation.

Sometimes that means that I’ll just take someone up flying in my Glasair to share the joy of flight with them. “Hey, you want to go flying?”

I’ve helped a lot of my friends buy airplanes or figure out how to get back into flying after a long hiatus, and there’s always a lot of smiling involved.

There’s one common thread that most people in the aviation industry have, and that is some type of deep emotional draw toward airplanes. That’s what makes aviation so special.

Within business aviation, everyone—from buyers of corporate jets to the guys and gals fueling them at an FBO—has some draw toward airplanes, so it’s very unique. It’s an industry that makes it easy for me to share my passion about aviation with others on a personal and professional level.


Q: When you’re not buying and selling aircraft for Guardian Jet, how do you spend your free time?

A: I’m currently in that phase of life where I need to dedicate a lot of time to my family, and I like it that way. We have a four-year-old little girl, and she’s got me completely wrapped around her finger. My wife is due to have a boy in June, so we are very excited about that, and it will obviously take up a lot of my free time!

Between family and my Air National Guard commitments, it’s tough to find much free time. But I’ve loved flying with my daughter in our Glasair since she was five months old. She adores flying with daddy.

I also love the water, and though I don’t get to go very often, I’d say that surfing is one of my most favorite hobbies. I also fly radio-controlled slope gliders, which are a lot of fun.

And, more at ground level, just being outside hiking, mountain biking, or having a picnic with my family is fun. That’s what is so great about California—the weather is terrific and there’s so much to do.


Q: How did you get your call sign?

A: Every fighter pilot has a call sign, and it can often be a long story how he or she got it.

I got my name, “Spicoli,” based on Sean Penn’s character from the 80s movie Fast Times at Ridgemont High.

In a nutshell, when I was a young fighter pilot, I stood out as a “California guy” who liked surfing, was always wearing shorts and flip-flops and said “dude” a lot. I also raced off-road motorcycles, so, at the time, I actually owned a van to transport my bike in.

One late Friday afternoon, while I was finishing what had been a series of eye-gouging squadron meetings, I ordered a few pizzas for the squadron. So anyone who has seen the movie knows that Jeff Spicoli was a surfer from California who drove a van and brought a pizza into class.

So ”Spicoli” just stuck. When I’m not wearing a suit and tie or a flight suit, you can bet that I’m probably in shorts and flip-flops!


Q: Anything else you’d like to add?

A: Well, I would just like to say again what a privilege it has been to live and breathe aviation, and to have had such an exciting career thus far flying some of the world’s finest aircraft.

And now, with this opportunity working for such a “class” organization as Guardian Jet, I truly feel like I’m on top of the world.


Welcome to the team, Russ!

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PRESS RELEASE: UK-based Trevor Lambarth joins Guardian Jet

Trevor Lambarth to Lead Guardian Jet’s European Aircraft Sales and Acquisitions 

Trevor Lambarth joins Guardian Jet as VP of Aircraft Sales Europe

Trevor Lambarth

GUILFORD, Conn. – March 22, 2016 – Guardian Jet (, the Guilford, Connecticut-based aviation brokerage firm, announced today that longtime aviation professional Trevor Lambarth has been named Vice President of Sales, Europe.

Lambarth’s new position follows upon his extensive, 27-year career with Bombardier Aerospace, where he served in several key positions, the last of which was as Vice President of Sales for Europe, the Middle East and Africa. In his new position, Lambarth will be the first European-based executive for Guardian Jet.

“We are very excited to have Trevor Lambarth join the Guardian team,” said Don Dwyer, Managing Partner of Guardian Jet, LLC. “He is the consummate professional with an extraordinary career’s worth of experience.”

Dwyer added that Lambarth is particularly well-suited to Guardian Jet’s consultative approach to business, buying and selling aircraft for its customers by researching and providing them with industry-leading data and information.

“We’ve always bought and sold aircraft around the world, but with Trevor on board, we can significantly enhance our global presence,” Dwyer explained. “More than just wanting to open up Europe, our strategy has been to seek out and find a world-class teammate. The fact that Trevor is based in Europe is a bonus.”

Lambarth brings nearly three decades of global experience in aviation sales, acquisitions and leasing to his new position. Based in the U.K., he holds a degree in Mathematics from the University of Southampton. A former pilot in the Royal Air Force Volunteer Reserve, he later spent six years at British Aerospace, working on both commercial and business aircraft programs. He then joined McAlpine Aviation, a business aircraft operator, where he was responsible for sales of the company’s wide range of aircraft management and maintenance services. He joined Bombardier as sales manager for Short Brothers, the oldest aircraft manufacturer in the world, subsequently moving into the corporation’s business aircraft division. At Bombardier, Lambarth distinguished himself by leading sales for 150 aircraft with a combined value of nearly USD$3 billion.

“I’ve spent the past three decades building long-term customer relationships based on trust, and I look forward to continuing this while expanding Guardian Jet’s presence in Europe,” said Lambarth. “I really feel confident that, in Guardian Jet, I am joining a company fully in tune with my own ethos and values.”

About Guardian Jet

Founded in 2002, Guardian Jet, LLC, offers business aviation brokerage, consulting and oversight services for thousands of clients worldwide. The company distinguishes itself with its focus on integrity and industry expertise, and by consistently providing business value to clients. Guardian Jet’s core mission has always been to earn the right to buy and sell aircraft on behalf of its clientele by providing great consulting advice, market intelligence and flawless execution. For more information, visit


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Want to help buy and sell aircraft?

Are you our next Aircraft Sales Director or Aircraft Technical Specialist?

join our team - buy and sell aircraft guardian jetWe’re Growing!

And and we’re looking for passionate, talented aviation aficionados who can the Guardian Jet team.

Since 2002, our mission has been to earn the right to buy and sell aircraft on behalf of our clients. We do this by delivering unrivaled consulting advice, market intelligence and flawless execution.

Are you our next Aircraft Sales Director or Aircraft Technical Specialist?

If you’re ready to join our first-rate aircraft sales, acquisition and consulting company, please take a moment to review our two open positions. Then email us your resume, cover letter and salary requirements.

Are you in?

Apply today

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Guardian Jet is growing again!

We are seeking a highly qualified Executive Assistant to support multiple Managing Partners in an administrative role to include; calendar, travel, expense reports, trade shows, general office duties, market research, sales presentations, customer service, and responsible for being one of first voices our client’s hear when they call. Positive attitude, a solid work ethic and the ability to work in a fast paced, team oriented environment where priorities change in an instant is a must. We offer a fun and unique office environment that allows each employee to play a large role in the overall success of the organization.

If you are interested in pursuing this opportunity, please visit the complete job posting and application here.

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Guardian Jet to Host First Two Demo Events for Citation X Elite Jet

Citation X Elite business jet avionics, interior, exteriorWe’ve got great news for those in the market to buy a business jet in 2015!

It’s called the Citation X Elite program, and we’re proud to announce that Cessna has selected the Guardian Jet team as the exclusive sales agents.

As many of you are aware from the recent press in Aviation International News, Aviation Week and The Wichita Eagle, Cessna is buying back its Cessna Citation X series from NetJets and completely refurbishing them as nearly new models comparable to that of a brand new 2015 jet. You’ll get nearly all of the modern conveniences of a Citation X+ for a guaranteed price of $6.5 million. This new avionics, completed updated and reconfigured interior and (the best part) a 5-year guaranteed maintenance program.

It’s truly an aircraft you have to see to believe.

Since that’s the case, Guardian Jet is teaming up Banyan Air Service in Fort Lauderdale and Eagle Creek Aviation Services in Naples, FL to showcase these remarkable aircraft to an invitation-only crowd.

Here’s where you find us for our first two showcase demos of 2015 – and we’re planning more!

4 to 8 p.m. on January 14, 2015  

Fort Lauderdale Executive Airport

Banyan Air Service

5360 Northwest 20th Terrace

Fort Lauderdale, FL 33309

4 to 8 p.m. on January 15, 2015             

Naples Municipal Airport (hosted by Eagle Creek Aviation Services)

Naples Jet Center

377 Citation Point

Naples, FL 34104

Interested in learning more? Download the technical specs or visit our Citation X Elite web page.

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Textron Aviation teams with Guardian Jet to market Citation X Elite

News Release

Media Contacts:

Lindsay Adrian


Textron Aviation teams with Guardian Jet to market Citation X Elite

 WICHITA, Kan., Nov. 5, 2014 — Cessna Aircraft Company, a subsidiary of Textron Aviation Inc., a Textron Inc. (NYSE:TXT) company, today announced plans to enter into an exclusive agreement with Connecticut-based Guardian Jet, LLC to market the Citation X Elite business jet.

“Guardian is a great addition to the Cessna sales effort for the Citation X Elite due to the company’s global experience with the midsize jet market,” said Brad Thress, senior vice president, Customer Service. “The Citation X Elite program is unique in the industry and having Guardian now as our sales partner extends our ability to communicate the many benefits the Citation X Elite offers.”

The Citation X Elite program sends legacy Citation X aircraft through a complete refurbishment and systems update at the Textron Aviation Service Center in Wichita for customers seeking a low-cost option for owning one of the fastest civil aviation aircraft in the world.

Elite package upgrades to the Citation X include a new Honeywell Primus Elite avionics suite capable of supporting future requirements such as ADS-B, RNP approaches and synthetic vision. Customers also get a graphical weather upgrade, FMS 6.1 upgrade with WAAS/LPV capability, and ADS-B Out.

The upgrade also includes an aileron regearing to enhance lateral control efficiency in gusty or crosswind conditions, a new exterior paint, refurbished interior including new crew and passenger seats, a new cabin management system and monitors and optional enhanced connectivity for Internet and global voice service.

The Elite package also offers guaranteed rates for ProParts and ProTech maintenance programs for five years or 1,500 flight hours, allowing operators to precisely project the cost of operation (excluding fuel). Operators also have access to regular Citation ProAdvantage programs including Rolls-Royce Corporate Care for engines and Cessna AuxAdvantage for the auxiliary power unit.

Citation X Elite image


About Textron Aviation Inc.
Textron Aviation Inc. is the leading general aviation authority and home to the iconic Beechcraft, Cessna and Hawker brands, which account for more than half of all general aviation aircraft flying. The Textron Aviation companies include Cessna Aircraft Company and Beechcraft Corporation, bringing together decades of unmatched experience in designing, building and supporting airplanes. It provides the most versatile and comprehensive general aviation product portfolio in the world through five principal lines of business: business jets, general aviation and special mission turboprop aircraft, high performance piston aircraft, military trainer and defense aircraft, and a complete global customer service organization. Its broad range of products include such best-selling aircraft as Citation and Hawker business jets, King Air and Caravan turboprops and T-6 military trainer aircraft, all of which are backed by the industry’s largest global service network. For more information, visit
About Textron Inc.
Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems. For more information visit:
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How Engine Programs Affect Resale

One of the most common questions we get at Guardian Jet is “should I enroll my airplane on an engine program?”  The majority of the time this question has to do with the resale of an aircraft.  Will it sell faster?  Does the buy-in cost really get fully recouped when it sells?

The answer, like many others in aviation, is “it depends.”

Aircraft Model

Whether or not you should enroll your aircraft is mostly based upon which aircraft model you own, and specifically how the market for this model is reacting to engine programs.  Here are some of the metrics we track to help us make this determination.

  • What percentage of aircraft for sale are enrolled?  How does this compare with the percentage of recent sales?
  • Are buyers paying a premium for engine programs? A discounted rate?
  • How long have aircraft been on the market with an engine program? Without?
  • For the recent sales, how long did it take to sell aircraft on an engine program? How long for no program?

As an example we will take a look at the G450 market.

Current Market Enrollment (Number for sale enrolled/total number for sale)

G450: 10/20 (50%)

The G450 market is split with half the sellers enrolled in a program, but how does this affect buyers purchasing behavior?  Compare this percentage to the same calculation with recent sales.

Previous 6 Months Sales Enrollment (Number sold enrolled/Total number sold)

G450: 3/9 (33%)

In the past 6 months the market has been favoring aircraft not enrolled on a program with 6 out of the 9 last sales not enrolled in a program.  While this provides an important snapshot of the current buying tendencies we don’t want to overreact to the data due to its small sample size.  For example, over the past 24 months 14 G450s have sold with an engine program compared to 15 without, closely resembling the 50% market enrollment much closer.

Engine program selling at a premium or a discount?

When Guardian Jet values an aircraft the penalty for not being enrolled in an engine program is equal to the buy-in to the program.  When we look at recent sales we also look to see where aircraft enrolled and aircraft not enrolled are selling in relation to their Aircraft Value Calculation (AVC).

In the previous 6 months of sales in the G450 market, aircraft on an engine program sold at 97.8% of their AVC.  Aircraft not on an engine program sold at 100.8% of their AVC.  Over the past 6 months aircraft not on a program have been selling a slightly higher percentage of their AVC.

Days on the Market/Days to Sell

At Guardian Jet we track two statistics when determining how long aircraft are sitting on the market.  The first is how long the aircraft currently on the market have been for sale. The second, how long it took the most recent aircraft to sell.

G450 Average Days on the Market

On a Program: 302 Days

No Program:  278 Days

G450 Average Days to Sell (Past 6 Months)

On a Program: 173 Days

No Program: 134 Days

G450 Average Days to Sell (Past 24 Months)

On a Program: 221 Days

No Program: 258 Days

Recent statistics once again show an advantage to aircraft not a program with the aircraft selling in a faster period of time.  Interestingly, however, when we look at 2 years of data the advantage is with aircraft on a program.

Let’s summarize our G450 market findings:

Current Market Enrollment vs. Recent Sales Enrollment:

Slight Advantage to Not Enrolled

Recent Sales Pricing:

Slight Advantage to Not Enrolled

Days on the Market/Days to Sell:

Neutral (Recent Activity favor not enrolled while Historical favors enrolled)

Right now the G450 market data suggests buyers are slightly favoring aircraft not on an engine program, but not significantly.  To make a recommendation as to what to do with your aircraft we have to take into consideration a couple of other factors.

The G450 market is only one market and this is only one snapshot in time.  Every market reacts differently to engine programs and they must be studied to make an informed decision.

Other Considerations

Where your engines are in relation to overhaul can also effect our recommendation to enroll.  If the engines are right up against an overhaul the majority of the time we will recommend putting them on the program.  Buyers tend to penalize aircraft up against an overhaul more than just the cost of the overhaul (which will be roughly equivalent to the engine program buy-in cost).  Conversely, if you have on condition engines that are past the hard time equivalent for overhaul it typically makes little sense to enroll in a program.  The cost to buy in to the program becomes more expensive than the overhaul.

If the program buy-in costs seem overwhelming but you’re in a market that has an advantage to aircraft enrolled one option is to enroll at closing.  The aircraft can be marketed as “delivered on an engine program.”  This will satisfy buyers wanting an aircraft enrolled on a program and you can enroll at closing with the proceeds from the sale.  This also gives you flexibility if you find a buyer that does not want an engine program.  One downside to this approach is if something is found in pre-buy you are not covered in the program but are still going to pay the enrollment costs.

Engine programs will occasionally offer significant fleet discounts if you are willing to enroll multiple aircraft at once, especially if you are willing to enroll new replacement aircraft on the program.  This can make it advantageous to buy-in at the lower cost while the market gives you the full benefit of the program.

All things being equal we still like aircraft enrolled on an engine program.  Engine programs are getting more popular as time goes by.  I’ve taken a significant number of calls from buyers looking for an aircraft enrolled on a program I’m still waiting for the first person to ask for an aircraft not enrolled.

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The Treasury Function Belongs in Fleet Planning

The purpose of this article is to encourage the idea of syncing how your company views capital expense to your fleet plan.Treasury belongs in fleet planning because it yields a more nimble, valuable asset (your airplane) which can result in a lower life cycle cost.

In the past, it was not uncommon for aviation to have very little to do with any of the discussion about cash, finance, book depreciation schedules or leasing.  Aviation managers, when included in the equipment decision, were sought to discuss the appropriate type of aircraft to fly and the best practices to operate safely.  Once acquired, as delivery approached, Treasury was included and the decision to pay cash, finance or lease was made in purely financial terms.  Book depreciation schedules were often as conservative as possible in order to preserve earnings and not considered again until it was time to sell.  At that time the loss or gain was trued up, often coming as a surprise in either direction.  Lower book depreciation also favored the aviation manager that was absorbing that expense in the flight department budget.  Aviation managers are often consulted on participation in engine programs but often times it is from a cost perspective as opposed to enhancing aircraft value.   We want to discuss the advantages of bringing all these topics together.

Let’s review some definitions we need in this conversation.

Cash purchase:  We pay cash for the airplane, it’s an asset on our balance sheet.  The plane is expensed to the P & L over the life of the asset through book depreciation.

Debt purchase:  The aircraft is financed with debt, the plane is still an asset on the balance sheet, it just has a corresponding liability equal to the size of the loan balance.  In addition to the book depreciation  like the cash purchase, the interest on the loan is also treated as a P & L expense

Book Value:  We develop a book depreciation schedule for this particular class of asset that attempts to match the value of the asset to the market.  A typical schedule might be 20 years to a 50% salvage value.  Ex: $10M airplane, Annual Book depreciation =.  ((10,000,000/2)/20) = $250,000/year.  At the end of the first year, we would have expensed $250,000 on the P & L and we would have an asset on our books for $9,750,000.  If we sold the airplane on the first day of year 2 for $9,650,000, we would take an additional expense for the book loss of $100,000.  If we sold for $9,850,000, we would incur a $100,000 profit on the sale and it would be treated as ordinary income.

Tax basis:  For the purposes of calculating income tax, the IRS allows an accelerated tax depreciation schedule that allows a 5 year write off for Part 91 aircraft (5 year MACRS actually takes 6 years and the annual deductible expense schedule y1-6 is, 20%, 32%, 19.4%, 11.4%, 11.4%, 5.72%, __%).  The larger the deductible expense and income tax bracket, the larger the incentive to replace equipment for companies with profits to offset.  When a fully depreciated asset is sold, income tax is due on the gain of the sale unless the gain is deferred in a 1031 like kind exchange.

Aircraft Lease:  In a traditional operating lease, a third party lessor steps in, buys the airplane and leases it to the operator.  This allows the operator to not show the airplane as an asset of the company.  As such, it does not depreciate the asset from either a book or tax basis.  The capital expense to the P & L is simply the sum of the annual lease payments.  Leases typically have fixed terms and the ability of the lessee to walk away at the end.

Residual (Terminal) value:  The amount the airplane is worth at the end of the period of time being considered.  This is either a projection based on historical data in an ownership scenario or the calculated purchase option at the end of a lease for the Lessee if Lessee would prefer not to just toss the keys and walk away.

Fleet plan:  Determine the right aircraft, the right number of aircraft and the right timing for aircraft replacement.

Now let’s look at some of the issues we want to consider as aviation managers that are managing assets.

Optimal ownership period

In addition to the right aircraft and the right number of aircraft, it is integral to fleet planning to consider the replacement schedule for the existing equipment.  When aircraft replacement is not being driven by negative factors, obsolescence, poor reliability, near term significant maintenance, poor company performance, public opinion lately, it begs the question, “What is the optimal ownership period?”  Understanding treasury functions is crucial to this.

When deciding how often to replace, an obvious starting point is every five years.  That is when tax depreciation benefits are essentially gone.   Five year warranties from manufacturers keep operating cost lower during that period than subsequent years.  Residual values are higher with lower time equipment than older aircraft.

From a cash flow perspective, before considering the time value of money, life cycle costs almost always point to replacing in five years.  Depending on the discount rate as the cost of capital, that period of time can stretch out to 7-10 years as an optimal ownership period.   Defining that period of time to own, using treasury’s capital expenditure criteria, can’t be done without being attune to the finance function.

Paying Cash vs Debt

Paying cash for an airplane yields the most flexible approach to managing an asset.  The down side is the opportunity cost of the money and the competition for capital vs. investments that earn returns.

Understanding Net Present Value (time value of money) analysis for capital expenditures can help the case for debt vs. cash.  In low interest rate conditions, financing will always beat cash purchases in an NPV comparison.  It’s true that in out of pocket terms, interest always adds to the life cycle cost but it wins the NPV math due to the return on the capital that is preserved by not paying cash.

When considering debt which carries amortization schedules and potentially balloon payments, the current aircraft value calculation and projected aircraft residual values during the ownership period need always be considered in relation to the unamortized balance of the loan.  This allows an asset manager to see where he stands in relation to current market conditions and what he owes.  Any asset with a positive relationship between aircraft value and loan balance is a more liquid, or nimble asset as discussed in the opening.

Book Value – creating schedules and keeping them current

Another important liquidity feature for treasury is the relationship of aircraft value calculation and book value (mark to market).  Again, an aircraft value that is lower than book yields a hit to earnings which is a detriment to selling even if other factors favor it(less liquid).  Also, even if there is agreement to sell, there can often be disagreement about publishing an ask price below the value of the asset on the books which will cause the asset be considered impaired(FASB 144) and immediately written down, often months or quarters before a sale is realized.  Keeping the book value in sync with the market value yields a more nimble asset.

Staying right side up

Being “upside down” in a loan or book conversation can often drive strategy that makes the airplane more difficult to sell.  I am not discussing liquidity in it’s purest academic sense which is the time and ease of converting an asset to cash.  I am using the term because of our familiarity with liquidity.  I prefer the term nimble because always truing our current aircraft value calculation to book and amortization schedules over the life of the asset, gives us more flexibility and options.  The significant savings that come to the asset manager are from more dynamic market opportunities as opposed to non starters that take us by surprise.  Staying in an asset because of a hit to earnings or cash is a trap that we want to avoid.  If we can’t avoid it at least we need to be prepared with a contingency plan.


Let’s look at leasing as a great way to avoid the two traps we just discussed.  All of our exposure in owning is relative to poor resale markets that make the airplane less than we thought it would be in the future.  A great way to avoid those threats is to lease.  Leasing spreads our capital cost over time, fixes our replacement term, has all the NPV advantages that debt offers and allows us to throw away our crystal ball about future values.

There are two downsides, first, life cycle cost goes up, meaning out of pocket cash and the corresponding aviation budget.  Second, you trade liquidity for predictability, our nimble factor.  If something happens to change the mission or requirement for the airplane, the lease still stands.  So this conversation certainly belongs in fleet planning which led us to say, in our opening remarks, if we choose a fixed term, it is done proactively.  We pay expensive early termination values to get out early, so we can be stuck, by choice but still stuck.

Engine Programs

Engine programs produce equity which can be transferrable and keep the airplane in the economic equivalent of zero time engines as long as the hourly fees are being paid to the engine program administrator.  While it is fairly easy to calculate the buy in to an engine program, there are times during the life of the engine where buying in is, neutral, favorable and unfavorable.  In unfavorable conditions, there can be negative consequences to for the owner resulting in a less liquid asset.

Winning means spending less.

Let’s define winning, it is spending less over the life of the asset since this a non revenue producing asset.  While our goal is to spend less, we still have the biggest impact on that by taking advantage of market opportunities.  Market opportunities that create the largest win for operators do not occur at predictable, foreseen times. As we create fleet plans, we are not privy to new product announcements, precipitous economic changes, new regulatory requirements, changes in our own company circumstances or the economic condition of aircraft manufacturers.  Private jets are certainly amongst the most elastic capital goods.  This elasticity is what compels us to focus on the liquidity of our asset.  A well managed asset within a current and vibrant fleet plan should always be evaluated as to replacement opportunities.

By keeping an asset in a condition in which it has fewer barriers to trade, it is more likely to always be able to take advantages of replacement opportunities as they arise.  The treasury function belongs in the fleet planning process.

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