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René’s blog January 3- 2011

A Positive Outlook

Two thousand ten definitely ended with some victories in our industry. In the U.S.- legislation renewed tax incentives for new aircraft purchases. Worldwide- buyers seem to be emerging from their holding patterns and looking at previously unheard of prices for new and used aircraft. Market analysts seem to agree that although we’re a long way from full recovery- it appears we’re on our way.

Laws passed in the United States allow businesses 100-percent accelerated- or 'bonus' depreciation of investments in capital assets- including new aircraft- through December 31- 2011. The legislation also provides for a 'bonus' depreciation allowance of 50 percent during 2012. Thus companies with excess cash—or plans to upgrade or add to a fleet—have new incentive to do so this year. And the more sales activity in the market the better everyone’s aircraft values become.

We expect to see global market stabilization this year. Demand for aircraft in Asia and Brazil is increasing- making both of those geographical areas a great target for aircraft sales. As brokers and service centers gain experience in exporting aircraft to those regions- the volume of sales should continue to grow.

We also expect prices to rise as supply decreases. A number of companies in bleak financial conditions had their aircraft on the market and now are in a position to retain these assets and put them back to work. We think that supply of on-market aircraft will return to normal 8-10 percent levels by mid year—especially on newer jets and popular turboprop models. Several industry analysts have projected market recovery (if that can actually be defined) in 2012. In order for that to happen- 2011 must yield what the last quarter of 2010 also did. Motivated sellers. Serious buyers. Sustained growth. We see it on the horizon. Happy New Year!

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