Aviationtoday.com: Helicopter Finance

As the helicopter market enjoys unprecedented prosperity and purchasers contend with order backlogs that can stretch back for months, if not years, the actual "value" of a rotorcraft becomes crucial — and more difficult to pin down. In turn, this value is increasingly determined by the avionics in the cockpit.

To steer rotorcraft operators through the treacherous waters of helicopter valuation, I recently sought the expertise of the field’s two premier players: Sharon Desfor, president, and Barry D. Desfor, managing director, of HeliValue$, a helicopter appraisal company in Wauconda, Ill. I conducted a podcast interview with them titled: "Helicopter Valuations: A Necessary Evil or a Necessity to Prevent Evil?" You can access and listen to this informative podcast, for free, at www.AviationToday.com.

HeliValue$ is best known for its publications, "The Official Helicopter Blue Book," "The Official Helicopter Specification Book" and "HELP (Helicopter Equipment Lists & Prices)," which have been sold around the world continuously since 1979.

When it comes to valuations, HeliValue$ has become the industry-wide "gold standard" for an international clientele of OEMs and their vendors, helicopter operators, banks, leasing and insurance companies, and law firms and government agencies.

In their podcast interview, the Desfors provided timely commentary, practical advice and in-depth analysis, concerning helicopter valuations in today’s booming market. In particular, they explained technological advances in GPS, autopilots, EFIS, flight management systems and IFR have introduced new opportunities for pilots — and new headaches for operators who seek objective aircraft valuations.

Below are the highlights, which shed light on the state of helicopter avionics.

Q: How has technology, such as more sophisticated avionics, affected the valuation process?

Sharon: Software-driven avionics and glass cockpits are significantly affecting residual values and the anticipated useful life of aircraft. Avionics suites are making helicopters more inherently valuable. Complicated avionics packages are becoming more integral to rotorcraft operation and they’re profoundly changing the worth of the aircraft, more than was the case in the recent past.

The helicopter market is undergoing historic growth and technological advancement. This is changing the helicopter procurement process and changing the way we do business. We’re seeing the internationalization of finance standards. Rising prices for both new and used aircraft are translating into more leasing activity. We’re also seeing the emergence of helicopter "super-operations" and the syndication of funding packages.

Barry: These technological trends have made our business truly international in scale, causing us to expand our staff. It’s cementing our professional affiliations, but it’s also keeping me from my long-deserved retirement!

Q: Why does a company like HeliValue$ exist? Why are you here?

Sharon: HeliValue$ is the fulcrum on the seesaw of lenders (and) borrowers. Owners and operators are becoming more and more sophisticated in the areas of business finance and in leveraging their increasingly valuable assets. There also are many tax advantages and complicated mechanisms such as off-balance sheet leases and collateral swaps. We’re experts in these matters and we provide the necessary guidance.

Q: There are many regulations, principals, guidelines, and standards that extend to the bank or leasing company. Why is it important for borrowers to know these key aspects?

Barry: Bankers and helicopter people have come to understand and appreciate the fact that the more each side knows about the other, the greater "comfort" they should have in dealing with each other. The more comfort, the more trust that is developed — and more trust usually translates into better business dealings.

Q: When a company like yours conducts an appraisal, who or what do you represent?

Barry: We represent the helicopter industry and the helicopters being appraised. It’s the "kiss of death" for an appraiser to even think about being on the side of the helicopter manufacturer, the borrower, or the finance source. We must make it clear that we have no hidden interests.