Capital Aviation Group (CAG), a new division of the multi-billion-dollar Cars company (Capital Automotive Real Estate Services), has hired former Gulfstream Aerospace president Larry Flynn to its advisory board as it moves towards its first deal that replicates the highly successful model applied by Cars for automotive dealers and premises, but for FBOs and airports.
Jay Ferriero, president and CEO of both Cars and and CAG, told AIN at the NBAA 2017 convention, where it is launching CAG into the business aviation market, that he’d long been convinced that the aviation world needed better access to finance than traditional banks offer.
“My role is to introduce CAG to brokers, airports, FBOs–anyone that has a need for financing of property on an airport,” Flynn said. “This could be anything from a fuel farm, to a hangar or FBO, to infrastructure, but not rolling stock or aircraft.”
Flynn said his research to date has showed that nobody offers such a service in the market, and this has also been reflected in feedback from those in aviation he’s contacted.
It would mean aviation interests could obtain 100 percent financing “over 40 years with nothing down–you can’t get that from the banks,” said Flynn. He added that bonds are an unattractive alternative due to the high fees charged.
Flynn said also that he had found significant pent-up demand for airports and related aviation businesses to add new facilities and invest in new infrastructure.
Ferriero said it also offers McLean, Virginia-based Cars an opportunity to diversify the business. “We have $5 billion invested at the moment and 40 employees, who have just been given another part-time job to get this going. The skill base is there already, so we just need the advice [from Flynn and the advisory board, led by National Air Transportation Association president Martin Hiller] to make contacts.”
“I’d say North America is where we’d start,” continued Ferriero, who added that there was already some serious interest. “There has never been a similar specialist in aviation; almost 20 years ago [when Cars started out] automotive was the same. The traditional finance for airports is the banks or bonds.”
To underline how solid Cars’ track record is, Ferriero said that in 2008 and 2009, at the outset of the financial and banking crisis that swept the globe, 20 percent of car dealerships went out of business, but for Cars’ clients only 1 percent did.
CAG has now moved beyond the “initial marketing phase,” said Flynn, and is now ready to close some deals in the sector. Ferreiro predicted that in another 10 to 20 years, CAG will have a similar footprint in aviation similar to that Cars has built up in automotive. He noted that the first deal, which could well be in the pipeline now, will take nine to 12 months to close.