Bambazonke's Views on the Secondary Market
Reading the market econometric studies that are being promulgated by my learned blogger colleagues, let me make a few comments, based on what I KNOW;
1. The Eclipse market has fallen like an oak felled by an axe. Inquiries that were reasonably brisk up until the news broke, have just died.
2. Platinum positions are languishing on the market, look at the days since listed, they are growing by the day. You can get a Platinum position, for under $1,6m and not even try.
This is a position that includes the options and includes the fact that there is no CPI unless the CPI rises above 3.6% then you pay the difference between 3.6 and the prevailing CPI for the term it was above 3.6.
Contrast this with the position that EAC is selling, you will note that you can purchase a plane today from them for 2-300k less than one that will be delivered 2-3 years after yours. This is bad economics for EAC, it means that because their order book is so deep, that they have created their own 'boogie man', the person that purchased a position in 2000.
So as hard as they try and peddle their planes, there will always be others out there that can undercut them for the same product by significant margins and deliver it sooner. This is a sure fire recipe for EAC to go broke, if the other plagues and pestilences that are afflicting them don't perish them before this.
3. All buyers want to know when delivery will take place. Right now no one can answer that question and EAC has gone into mum mode, so there is no possibility of getting an answer from them. Whilst this atmosphere prevails, the chance of making a sale on an EAC-500 wonder jet are slim to none.
4. There is something interesting about the prospective buyers that are in the market. EAC has managed to generate interest in the non flying fraternity. This you might say would be a plus, but not really, they are less trusting of the mantra that is emanating from ABQ of 'trust me it'll all be fine' than the position holders that have enough aviation knowledge to be drunk on their own perceptions of what is good and bad.
So this segment of the buying public is harder to impale with a sales contract than the pilot with the ego-jet mentality.
5. In this Internet day and age, where information is disseminated to the four corners of the globe at the flick of a send button, the price that the last wonder jet sells at, is the price that the next one starts at. Unfortunately for KKA and his merry gang of followers, many of these sellers are not banking on making the mortgage payment based on what they realize on the sale of the jet.
So whatever one of these sellers lets the wonder jet go for in the market, is not necessarily going to change his lifestyle. BUT, as each plane changes hands at a lower number, forever spiraling down into the abyss of the price range of the Barons and other lesser planes, the life style of one Vern Raburn and his crew of desert imbibers will be immeasurably altered, unless of course he can resurrect Milton Friedman and come up with some economic spin on how as you lose x dollars on each plane, the market economies are such that you can make up the short fall on volume.
Kenny, EO38X and EB, take it from your sparring blogging buddies, this is the time to sell, it won't get any better than it is now