Philippe Foulon is Global Head of Specialised Asset Finance and Aviation at Societe Generale Equipment Finance (“SGEF”). Philippe has successfully grown SGEF Aviation activity over the last seven years, making it a global business unit after decades of sustained development on local markets where the group has a direct presence. After graduating from ESSEC MBA, Philippe started his career at The Chase Manhattan Bank, where he gained experience in Banking and Financial Services for 10 years. Philippe then left Chase to found the ILC Group with other former Chase Executives, and served as CEO of ILC France, a Financial Institution which was to be taken over by Societe Generale in the late 90’s and then amalgamated to form Societe Generale Equipment Finance.
What is SG’s view of the market in Central Europe?
Central Europe (CZ, SK, PL) is an integral and important market for SGEF´s aviation financing businesses. SGEF has been an active and reliable player since Corporate Aviation Business developed on these markets due to our longstanding presence in the region and thanks to our well-established expertise and team of professionals.
We serve business aviation clients in financing all types of corporate aircraft and helicopters manufactured by established OEMs, with all of which we have good and solid relationships.
Combined with the economic stability in CZ, SK and PL, we trust these businesses will grow further due to both general economic development and the increasing demand for traffic flexibility by corporations operating in Europe or overseas.
Which aircraft are you finding most popular in the region?
From my perspective, there is an increasing interest/demand in mid-size jets, ranging from 15 to 30 MUSD e.g. Falcon 2000, Gulfstream 280, Challenger.
The entry-level jet segment is quite saturated (Cessna and Bombardier sales for entry model figures are very modest), but clients are thinking about certain upgrades to newer models.
As far as light jets are concerned, we see some potential growth in demand for financing brand-new light jets.
How much business does your portfolio of jets conduct in Central Europe?
The Business Jet Portfolio in Central Europe (CZ, SK, PL) contributes ~20 % to SGEF´s total European Aviation Portfolio.
What changes do you see in the future? What changes would you like to see when doing business in Central Europe?
Business Jet clients are becoming more interested and educated in the economic cost of aircraft, not just focusing on the mere financing rate. Ongoing operating costs during the term of financing are being considered more carefully than before. The concept of TCO (Total Cost of Ownership) is making progress, although there is clearly some need for more professional and expert advice in this field. As a Financier, we view this trend as a very positive development and we frequently address questions from prospective or existing clients on such matters. This has helped change prior customer behaviour where, before the crisis, end-users would often acquire vintage jets at low acquisition prices, but did not keep ongoing maintenance costs in mind, which eventually resulted in substantial dissatisfaction when later both asset values plummeted whilst maintenance costs continued to rise.
SGEF provides a one-stop-solution for clients, not only taking care of the financing requirements of buyers, but also supporting customers in selecting the appropriate type of aircraft, operator, insurance and maintenance programmes thanks to our vast experience and strong market position.
What is your opinion on predictions of future growth in the region (Czech Republic and Slovakia)?
Unlike the past, we see a developing trend in the emergence of reliable and well-established local players (operators, distributors) that have developed enough local capacity, together with very efficient coordination with international OEMs, to better serve all clients’ needs, with a far better understanding and servicing ability than OEM sales departments normally have. In that respect Europe has always been far behind the US, but this is now changing and this improvement will translate into increased traffic and hopefully new sales.
This positive factor is combined with the fact that, in our view, many existing clients have a need to upgrade their aircraft or enlarge their fleet. The fact that they may rely on specialised operators to sub-charter and optimise the management of their aircraft is a major contributor to the liquidity of the market, which can only become effective when achieved at a local level.
What are your most preferred financial products for the region?
The simpler, the better is often the rule. Straightforward Aircraft Loan and Finance Lease structures, rather than complicated and economically uncertain Tax Lease structures, are our preferred options.
Operating Leases are a separate category as the objectives are different from the objectives related to traditional investment (usage cost becoming the only source of concern as opposed to the rationale of making a profitable investment over a long period).
How do you compare growth rates in Central Europe with other regions?
Hard figures (announced by EBAA) prove that the fleet of business jets in CZ, SK, PL and other countries has remained almost unchanged since 2009.
My impression (and this is confirmed by manufacturers) is that many existing clients are thinking about upgrades, but are facing some trouble when it comes to selling their current aircraft to cover their outstanding financing exposures, or simply getting adequate financing facilities from Financiers who understand their needs.
SGEF looks forward to being consulted by prospective clients, operators and OEM representatives in the CEE market. Combined with our strong network presence and long-lasting in-depth experience in financing business aircraft in Central Europe, our priority goal is to support the development of business aviation in this region, with full local dedication, listening to all potential customer needs with great care.
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