Aircraft Finance Corporation - Top Gun
Martin Ormon, founder of Aircraft Finance Corporation, has been financing new and pre-owned aircraft for over twenty years in a niche business that has proven to be a success.
It all started with a deal back in the spring of 1998, during Martin Ormon’s private banking days, when he was the co-owner of a hedge fund in the Northeast. Martin was tasked with assisting a client of his, an automobile dealer based in Southern California, with a short-term bridge loan to make an immediate acquisition of a partially constructed auto dealership. Ormon stepped in and facilitated the loan.In exchange, the collateral for the deal was a 1996 Hawker 800xp. Within eighteen months, the deal went sour and Ormon ended up with the 1996 Hawker in his hedge fund portfolio. Ormon, being the ‘smartest guy in the room’ was challenged by his partners, “Okay, smart guy, what are we going to do now?” Ormon replied, “Well, Gentleman, it looks like we’re going into the aviation financing business.” Ormon immediately leased the aircraft to a pharmaceutical company for three years. “That’s when I discovered an attractive quality of ‘mature’ aircraft,” he explains, “even after they have been fully depreciated, their residual value can be impressive.”
So, how do they do it? In most cases, Aircraft Finance Corporation partners with regional banks that are federally chartered and then guarantees the loans through a percentage of term of the loan. Ormon explains, “[Our work is] really not that difficult to do. We have skin in the game and that makes a very big difference with regard to rate and term.” More than 85% of AircraftFinance Corporation’s loans are made in house, as they underwrite, service and portfolio their own loans. On average, Aircraft Finance Corporation’s customers will keep their aircraft for 42 months. With this type of client loyalty, Aircraft Finance Corporation prides itself on 90+% customer retention. In fact, in 2017 Ormon and his employees closed 56 transactions with an average loan size of $3.2 million dollars. After the financial crisis in 2008, the ‘big banks’ altered the way in which loans were made on aircraft transactions. Overall, resources to finance aircraft that were anything other than factory-new were scarce. Ormon recalls, “Everybody was leaving the market, with thousands of aircraft out there and available. I saw it as a great time to aggressively take marketshare.” A Maverick worth his mettle.