Big Profits in Gulfstream G650 Flipping

A London business jet broker reports it has sold a Gulfstream G650 for an owner who took delivery in July. The jet went to a Japanese real estate firm for $70 million, netting a profit of $10 million, according to The Jet Business (despite the fact that list price on the G650 is $64.5 million). In September, billionaire Bernie Ecclestone, CEO of Formula 1 auto racing, sold his G650 to a Japanese businessman for $72 million.

It is not uncommon for new owners to flip a business jet shortly after taking delivery, though the practice is frowned upon by manufacturers for a variety of reasons. For example, when the original order holder has a high profile, as in the case of Ecclestone, the quick re-sale looks on the surface like a deal gone sour.

A CNBC report on the Ecclestone sale quoted a blogger who wrote that the G650 was too big for some of the airports Ecclestone uses. But when the original order is signed early in the development process, it can be years before delivery. Sometimes demand for the jets skyrockets, production backlogs grow and new buyers are willing to pay millions to get their aircraft sooner rather than later.

Still, manufacturers have strict contract stipulations against marketing delivery positions, and in most cases, the original buyer must take delivery when the jet rolls off the production line. Gulfstream includes "non-assignability" clauses in its sales contracts to ensure that the person who signs on the dotted line is the one who accepts the keys on delivery day. But that can lead to circumstances such as these two deals, and many more.

G650 backlogs now stretch out to Q4 of 2017, so buyers in Asia, Russia and other growing economic regions are willing to pay a premium for not having to wait. According to The Jet Business, another of its G650 resales could close soon.

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Mark Phelps is a senior editor at AVweb. He is an instrument rated private pilot and former owner of a Grumman American AA1B and a V-tail Bonanza.

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