Nervous Times for
NBAA Booth Dwellers
Today the House passed a $700 BILLION dollar "rescue" bill that they originally had defeated. What the "tell" is here is that the pork-laden legislation only passed after the Senate added on another $100 BILLION in earmarks to buy enough "yea" votes in the house to pass this pig. And the speed at which this bill was rushed under Bush's pen so he could sign it into law should also be more proof that this entire bailout mess smells of back room politics and cronyism.
Whether this ends up being the needed catalyst that wards off the next Great Depression remains to be seen. But there can be no debating one thing, SOMEONE has flown our economy into the ground, and our credit markets are completely in the dumpster.
This all comes on the eve of the biggest U.S. trade show of the year for the business jet sector, the 61st NBAA Annual Meeting & Convention October 6–8 in Orlando. As the rich and famous gather to buy and sell seriously sexy flying hardware, it's not helping matters that the Internets are exploding this week with stories like this:
MSNBC: "The credit markets finally got a bailout bill, but the stranglehold hasn’t let up — a troubling sign that lenders and investors believe the package will only be a baby step in the long road to economic recovery."Ouch.
The New York Times: "Small businesses often live at the mercy of their creditors. When times are good, loans are easy to get. When business sours, loans can dry up. With banks handing out fewer loans and raising interest rates, even healthy businesses are becoming worried that they will not get the credit they need to keep their doors open and their bills paid."
AP: "The government reported Thursday that factory orders took the biggest drop in two years in August as businesses cut back on purchases of large equipment and consumers spent less on autos, electronics, appliances and other goods. Credit markets, meanwhile, remained locked up as banks are wary of lending to each other, unsure of which might be the next to collapse."
So when an estimated 33,000 attendees gather at NBAA to gawk at the goods shown off by 1,200 exhibitors and 120 aircraft on static display this coming week, there will be a sense of uneasiness in the air. Sure, the filthy rich will still be paying cash for the high end stuff, and there might still be enough pre-existing loans still in the credit pipeline to spur on some sales.
But the middle income businesses and those individual buyers who have watched their personal wealth and 401Ks be plundered by Washington – these are the buyers of VLJs and PJs, a scary sector to be sure. I see no way this ends up being a normal sales year at NBAA for Cirrus and their Vision, Piper with their PiperJet and Eclipse with their EA-500 and -400. The reason is that these ships serve a pilot population moving up from a King Air, a Beechcraft A36, a Cessna 310. And unfortunately this might just be the group of buyers who will be sitting this one out, waiting for the election to be over, waiting for the credit markets to stabilize, and waiting for some sanity to return to their businesses.
Most of those 1,200 exhibitors will survive this economic mess, but not all. Those upstart makers and charter/air taxi operators – think Dayjet – that needs massive credit lines just to cling to life will have no choice but to fold their tents as available credit dries up. This is a sad, sorry situation for all those business owners and their employees who in a normal economy would be kicking ass and taking names.
Will this bailout – er, I mean "rescue" – bill be enough to get GA back on track financially? Maybe. Will it come soon enough to insure survival for many of the aviation brand names we know and love? That, unfortunately, remains to be seen.
But one thing is for certain: If you have the money to pay CASH for a jet this year at NBAA, you can count on some spectacular deals as hungry exhibitors drop their prices to the floor to move something, anything with wings.