Customized Financing for Private Aircraft

Transcription

1 Customized Financing for Private Aircraft

2 Our clients appreciate the personal service. The aircraft finance team has been attentive to our clients as they purchased their aircraft. Financial Advisor

3 The Benefits of Aircraft Ownership Owning a plane has many advantages over commercial flying. Perhaps the greatest benefit private-aircraft owners enjoy is the freedom to set their own schedules. Owners of private aircraft have access to a large number of airports around the world, compared with a relatively small number of airports available to commercial carriers. In the US, for example, 5,400 airports accommodate private aircraft, while only 500 accommodate commercial planes. Another advantage to owning a plane is that owners who finance their purchases may be able to deduct interest for income-tax purposes. An aircraft is a valuable asset typically costing between $5 million and $50 million and most buyers choose to finance their purchases. Their reasons vary, ranging from long-term cash-flow management to the ability to deduct interest for income-tax purposes, which would depend on the tax jurisdiction of the owner or operator. When it comes to acquiring and financing a plane, the aviation specialists at Citi Private Bank offer comprehensive guidance every step of the way.* *Not all products and services are provided by all affiliates of Citi or are available in all locations. Citi Private Bank Aircraft Finance

4 The Citi Private Bank Edge Our in-house aircraft finance team is dedicated solely to assisting clients during each stage of acquiring and financing a private aircraft. We help current and prospective aircraft owners in several ways: Customized financing. We offer credit facilities that meet personal and business cash-flow requirements. We make the process of buying a jet aircraft easier and can help you close on a purchase within a few weeks, if necessary. Experienced professionals. As part of one of the world s leading private banks, our team specializes in working with high net worth individuals and privately owned companies. And we can draw on the expertise of Citi s global banking and lending specialists to provide you with almost any financial product, almost anywhere in the world. Global Reach. Our offices span the globe, reaching every major market. In fact, our aircraft finance team has closed deals all over the world. Our Services Whether you are thinking about buying a plane or have already committed to a purchase, we can help. Our services range from assisting with evaluating and selecting an aircraft to structuring and funding your financing options. Services for Prospective Owners. Our aviation specialists can help you select an aircraft by assessing your needs and travel patterns. We frequently introduce clients to brokers and manufacturers, who help clients find the right aircraft. If you are based in Canada or the US, we can provide information and advice on fractional ownership, whereby you purchase shares of an aircraft. We can put you in touch with fractional-share providers so that you can explore the many opportunities available in this growing segment of the market. Services for Committed Buyers. If you have already chosen an aircraft, due diligence is critical. In certain markets, our aviation specialists can help you evaluate an aircraft s integrity and its history of maintenance and damage, as well as the fairness of the seller s asking price. In several cases, our experienced team has uncovered instances of undisclosed damage and has helped our clients negotiate a better price. Services for Owners. We can help you with aircraftownership issues by providing referrals to aircraft insurers, maintenance providers and charter companies. The Acquisition Process Once you have decided to pursue private-aircraft ownership, our aircraft finance team will help you decide among the different types of ownership and the various options for financing and maintaining your aircraft. Ask yourself the following questions: How many hours a year do I spend flying? How far do I fly? Is my travel domestic, international or both? How many passengers do I need to carry? The answers to these questions will help you decide whether to buy an aircraft or shares of an aircraft (where fractional-share financing is available), and if you need a long-, medium- or short-range plane. As a general rule, for 100 to 200 hours of annual flying time, a fractional share may suffice; for 200 to 400 hours, the decision should be based on your personal financial situation; and for more than 400 hours, full ownership is almost always a better option. We can perform an analysis to help you determine which option is best for you. Citi Private Bank Aircraft Finance

5 Citi s aircraft finance team performed a great deal of financial analysis in a short time. I appreciate their hard work and valuable insight. Family Office Advisor Citi Private Bank Aircraft Finance

6 The aircraft finance team was extremely helpful. They provided industry reports and even called me from home to keep me abreast of developments in the market. Wine Importer Citi Private Bank Aircraft Finance

7 Aircraft Financing and Ownership Structures Our financing expertise enables us to offer buyers an extensive choice of credit structures, including fixedand variable-rate loans, flexible lines of credit, and innovative interest-rate swaps. Lending terms and payment schedules can be designed to accommodate your specific requirements, including issues pertaining to tax efficiency, cash-flow management and other financial goals. Full Ownership. We specialize in financing the full ownership of an aircraft, and we offer a variety of loan structures and maturities at competitive rates. Most aircraft models qualify as collateral for these financings, enabling us to tailor a loan to meet your particular requirements. Refinancing. Refinancing can be a valuable way to free up some of the equity in an aircraft owned outright. If current interest rates are lower than those on an original aircraft loan, refinancing may be a cost-effective option that may yield substantial savings. Our rates and terms are competitive. In addition, for clients with variable-rate loans, we can help lock in low rates through a fixed-rate transaction or swap. Fractional Ownership. We also finance fractional ownership, which can be a cost-effective way to secure the benefits of owning a private jet, but without all the responsibilities. Fractional shares range from one-sixteenth to one-half of an aircraft. We provide the financing for the shares, which are available only through an independent fractional-share company and are not available in all locations. Once you purchase the shares, you become a titled owner of a fraction of the aircraft and are registered as the titled owner with the US Federal Aviation Administration and the International Registry. The fractionalshare company manages all the day-to-day operations and maintenance of the aircraft. Leasing.* If you decide to lease an aircraft or shares of an aircraft, we can introduce you to prospective thirdparty lessors. *It s important to note that leases can be terminated only through an early buyout option, so they are less flexible than loans. Loan and Lease Benefits Benefits of a Loan Percentage of purchase price is dependent upon the aircraft and its age Long-term financing Preserved liquidity through low payments with balloon at expiration Depreciation/tax benefits may be available to the borrower if the aircraft is for business use Aircraft often retain value all upside remains with the borrower and can be used for trade-in or trade-up Benefits of a Lease Percentage of purchase price is dependent upon the aircraft and its age Long-term financing Residual risk is taken by the leasing company Less flexible regarding early termination; only available at time of Early Buyout Options (EBOs) Low payments due to depreciation benefit flow-through and aircraft s high residual value Flexibility to buy out of the loan at any time Full ownership upon loan repayment Citi Private Bank Aircraft Finance

8 I would like to say thank you to each of you for making this aircraft financing deal close on time. That was an amazing task, one that could not have been completed without this exceptional team. Citi Private Banker Citi Private Bank Aircraft Finance

9 Assembling the Team Once you decide on the type of ownership and the general type of aircraft that is right for you, a team of experts should be engaged to complete the acquisition process. We work with a number of leading industry professionals and can help you choose an aircraft broker or acquisition consultant, an attorney who specializes in aircraft financing, and a management and maintenance company. They can assist you with the many steps in the acquisition process. Deciding on the ownership structure. You can purchase an aircraft as an individual, a corporation or a limited liability company; this decision may affect both your tax planning and legal liability. You should consult your tax and legal advisors about all tax and legal issues before entering into a transaction. Deciding whether to finance or to pay cash. The benefits of financing include the ability to lock in a low, long-term interest rate; to free up cash for other purposes; and to adjust loan-amortization schedules to adapt to particular long-term financial requirements. Purchase Process Once you have made all of these decisions and have chosen an aircraft, the actual purchase process can begin. Although this process usually takes between four and 10 weeks, we have closed transactions in as little as two weeks in the US, under certain circumstances. This process includes the pre-purchase inspection (which is necessary when buying a used aircraft); the negotiation of loan terms and conditions; and, finally, the closing, including filing the title with the Federal Aviation Administration and the International Registry in the US, or the appropriate regulatory authority in other jurisdictions. Our team of advisors can also help you with other decisions, such as whether to charter the aircraft when it s not in use to help defray some of the costs. Citi Private Bank Aircraft Finance

10 The Experience and Resources of Citi A s one of the world s leading private banks, Citi Private Bank has a history of expertise and intellectual leadership that few institutions can claim to match. We are a leading provider of investment, banking and lending services, and we provide access to capital to some of the most prominent individuals and families in the US and around the world. Citi Private Bank draws on the vast capabilities of Citi to offer comprehensive global investment and financing structures enhanced by knowledgeable professionals and highly personalized service. Let us introduce you to Citi s world of opportunities. To learn how Citi Private Bank can assist you, your family or your business with aircraft finance, please get in touch with your Private Banker or Aircraft Finance professional. Citi Private Bank Aircraft Finance

11 We appreciate, as does the client, your ability to bring value from your experience and connections to him for this transaction. We were really impressed with your knowledge and energy. Financial Advisor

12 Citi Private Bank is a business of Citigroup Inc. ( Citigroup ), which provides its clients access to a broad array of products and services available through its bank and non-bank affiliates. Not all products and services are provided by all affiliates of Citigroup or available in all locations. In Asia, Citi Private Bank is a business unit of Citibank, N.A. All credit services are subject to credit approval. Citigroup Inc., its affiliates and employees are not in the business of providing tax or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice, based on the taxpayer s particular circumstances, from an independent tax advisor. This document has been prepared for your personal use for information purposes only and is not an offer, or the solicitation of an offer, to buy or sell a security or enter into any other agreement. Projections of potential risk or return are illustrative and should not be taken as limitations of the maximum possible loss or gain. The information and any views expressed are given as of the date of writing and are subject to change. While the information has been obtained from sources believed to be reliable, we do not represent that it is accurate or complete, and it should not be relied on as such. Citigroup Inc., its affiliates and subsidiaries ( Citigroup ) can accept no liability for any direct or consequential loss arising from use of this document or its contents. In the UK, this document is approved by Citibank N.A. London Branch. Citibank N.A. London Branch and Citibank International PLC, Citigroup Centre, Canada Square, Canary Wharf, London, E14 5LB, are authorized and regulated by the Financial Services Authority. If you have any doubt about the suitability of this investment, you should contact Citi Private Bank for advice. Investment Products: Not FDIC Insured No Bank Guarantee May Lose Value Citibank, N.A. Member FDIC 2007 Citigroup Inc. All rights reserved. US1550A (05/07)