M&A Trends in BiazAV; should the TSA be privatized? Podcast Video

Chapters

00:00 Introduction to Private Aviation News

01:00 M&A Insights in Private Aviation

03:52 Consolidation in Charter and Management Companies

06:50 Market Dynamics and Political Influence

09:51 Challenges in Emerging Aviation Technologies

11:43 FAA's Digital Transformation

16:58 Hydrogen-Powered Aviation Innovations

22:39 Debate on TSA Privatization

27:31 Manufacturing Challenges in Aviation

Jessie Naor (00:00)

All right, good morning and welcome to the VIP seat. Today is January 30th and our top stories today this week are about Pratt & Whitney's new hydrogen powered engine and how DOGE might be targeting the TSA for the chopping block coming up soon. Your hosts today include yours truly, Jesse Neor, and today our co-host is Ramsey Ammar. Ramsey, welcome to the show.

Ramsey Ammar (00:18)

Thank you very much for having me today, Jessie. I look forward to it.

Jessie Naor (00:21)

Alright folks, sit back, buckle up, and let's take

All right, Ramsey. So every week we always have someone different on the show, you know, whether it's a maintenance person, pilot, management company, you name it. And today we have an M&A attorney who works in private aviation deals and aviation deals specifically. So we really want to pick your brain on what's going on in this space. We know that, you know, the FBO market and maintenance organizations have been pretty hot the last year while charter companies, maybe not as much. I guess just off the bat, you know, what are, what are you seeing in trends and in the market going into 2024?

five

here.

Ramsey Ammar (01:01)

Yeah, I think first of all, I love all the other people you've had on the show. I love the diverse array of participants that you've had and look forward to sharing on M &A as well. So in 2025, I'd say, we're probably going to see a steady deal flow. I'm optimistic about the market in 2025.

What I'm seeing is exactly what you said is FBOs and maintenance orgs, think are hot topics and targets for buyers right now. I think more and more private equity companies are moving into that FBO space. And so what I've personally seen is a lot more of the strategic buyers. traditional aviation companies,

that aren't backed by a private equity player are looking, at least in the FBO and maintenance market, at sort of the smaller companies or the smaller FBOs that aren't, I suppose, what you would call a crown jewel in a highly trafficked area. So as the private equity players move more and more into the FBO space, I think you're going to start seeing those multiples continue to rise.

Jessie Naor (02:01)

people.

and that's

Ramsey Ammar (02:19)

and even some of the strategic as they see those Assets grow in value. I think they also will want to participate in that area as well as they grow out their own portfolio I think they Will start seeing more strategics get into the FBO space as well knowing that there's going to be money flowing into that area so In in 25, I think as I said steady deal flow

Jessie Naor (02:28)

Shh.

Ramsey Ammar (02:43)

optimistic about it. think continued high focus on FBOs and maintenance orgs, as you said.

Jessie Naor (02:51)

I mean, I was looking yesterday, a friend of mine, Preston Holland, he has a newsletter that he does and your friend too, we both know Preston. But you he did a newsletter and he was talking about, you know, the cost of operating and I was just thinking to myself, you know, as a former operator,

You we exited in 2021 or early 2022. It was 2021 deal essentially. But our operating costs were so, so different. I mean, the variable costs on our airplanes was, you know, 1200 to 1500 an hour. Those costs are now 2600 an hour. It's very hard right now.

Ramsey Ammar (03:17)

Mm-hmm.

Jessie Naor (03:27)

you know, if I had to go back in time and look at, you know, what was our EBITDA, what were we doing, I think it'd be very difficult today to do the same thing. Because I just haven't seen prices and revenue come up in the same way that costs have, you know, in that operator space. But I don't know, maybe this year we can, you know, start to see some flow there. You see any interest in, you know, management companies or charter companies, or that's kind of on the sideline for the moment.

Ramsey Ammar (03:52)

I think you'll continue to see consolidation. We always see consolidation in the charter space and the fractional space and the management space. And I think we'll continue to see that consolidation just so that those companies can get greater economies of scale to start bringing those costs even further down. And I think also people target those types of companies for different reasons. So perhaps they might want

a certain company or target to flow into another line of business that they might have. So in the management space, we represent a company right now that's interested in acquiring a management company for the purpose of growing out their 145 and their MRO business. So they want to buy up assets in the area that will help feed into that line of business.

Jessie Naor (04:21)

That's right.

Thanks

Well, that's interesting. So maybe more strategic, you know, focus, you know, if someone's out there trying to, you know, build their business and look for potential buyers. I just I don't see private equity so much in the charter space or maybe a little in the fractional. I don't know. But, you maybe the strategic buyers where they should look.

Ramsey Ammar (04:46)

So, yeah.

I

don't think we will because it's so, think charter companies are so operator heavy. You really need a lot of Intel and manpower to operate a 135 as efficiently as you possibly can. So if I was a private equity company and I'm looking to purchase an FBO where I can not necessarily sit on the asset, but

Jessie Naor (05:29)

and

Ramsey Ammar (05:29)

watch as it grows in value and not have to have my hands in that pot and stirring up the dough as much as you would if you're just watching the real estate grow in value. It's certainly much more attractive to a buyer and FBO would be as opposed to a charter company. That said, I think you will start seeing, as I said earlier, more consolidation in the space and

Jessie Naor (05:47)

Yeah.

Ramsey Ammar (05:54)

They're in 2025. I think we'll see an uptick in deals because last year I would say was perhaps a little bit slower in the middle of the year, especially as we were uncertain. Many of the buyers and sellers were uncertain about what would happen with the election and what that outcome might be. But I think now that we have greater political certainty and market certainty related to that,

I think we'll see some of those deals that have been suspended in 2024 start coming to fruition.

Jessie Naor (06:30)

Yeah, mean, and there's been a lot of, you know, for non-finance folks out there, there's been a lot of dry powder over the last couple years. know, that's funds available for investment, but really not executed in any way. You know, they've had a harder time, I think, finding deals. I mean, maybe this is the year where that's some of that really starts to get executed. That would be pretty exciting.

Ramsey Ammar (06:37)

Mm-hmm.

Yeah, I I think in 2021, whenever you had the huge uptick in deal flow, the prices start shooting up. So the prices had to start coming back down. This is in the aircraft transaction space as well as the aviation M&A space is those prices started having to come back down and normalize. And I think we're at the point now where those prices have normalized and with normal prices more.

Jessie Naor (06:57)

Thank you.

Yeah.

Ramsey Ammar (07:16)

supply and demand, think you'll see greater, continue to see greater deal flow.

Jessie Naor (07:21)

Yeah, well, it's exciting. yeah, that tech space as well. Actually, we didn't really touch on that, but I do know a lot of deals have been happening on the aviation technology side. I'm sure that will probably continue through this year too, because we all need more efficient operations. And maybe that's a little more like the mailbox money versus a charter company. Like there's operations involved that's not as complex, perhaps, from a people perspective.

Ramsey Ammar (07:46)

think you're exactly right. Again, I think a private equity buyer is going to be more attracted to a technology play, not only because you can be a little bit more hands off, but also in the technology space historically, you're going to see much greater multiples on that side than you would in your traditional aviation company space. So with more buyers, I think you're going to have greater valuations.

because there's more demand for the product and I think the areas of software or New fuel systems. I think we're going to talk about hydrogen here in a little bit. I think those are ripe for being targeted

Jessie Naor (08:26)

Yeah, well, we actually don't cover eVTOLs this week, which is unusual because I feel like there's always an eVTOLs story. But I mean, just to pick your brain a little on that, it feels like some of the investment enthusiasm is drying up a bit just because expectations of when these things are going to be ready to go are drying up a little bit. I mean, what's your take on that?

Ramsey Ammar (08:32)

Yeah.

We represented an eVTOL manufacturer and that was taking on significant amounts of investment and it just takes time. And I think that there's pros and cons to being a first mover. I think that the pros are clear. I mean, you're first in the space, it's novel. You can claim the IP. You're the first brand in the space.

Jessie Naor (08:59)

Yeah.

Ramsey Ammar (09:14)

But on the flip side is the money that it's gonna take to prove the technology, to get the technology certificated and flying and up in the air, it just takes a significant amount of time and effort and research and development money. I think the technology is amazing, but it...

It is slow to market and I think I'll probably say something similar when we start talking about hydrogen in a little bit is there's a number of reasons why these technologies are slower to market than I think people would like.

Jessie Naor (09:41)

Thank you.

Yeah, it's not the five-year horizon that private equity is usually looking for, so that's not happening.

All right, cool. Well, thank you so much for that update. I think it's really helpful. You know, we have a lot of listeners that are, you know, owner operators trying to figure out, you know, what's the best play and approach when they want to exit one day. So I think that's helpful context for now. And I do hope we start to see some reinvestment back in the management charter group at some point, but costs are pretty high today. We need to get our EBITDA and our earnings back up a little bit, I think, after all these costs have increased.

Ramsey Ammar (10:25)

I believe in them. I believe in the charter operators. They've always found a way in the past and no matter what though, I think it's a space that's fragmented, I think, both regionally and from an industry perspective. So I think that there will always continue to be consolidation in the space. So there will always be some activity and companies to keep me busy.

Jessie Naor (10:34)

Thank you.

Great.

Jessie Naor (10:47)

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Jessie Naor (11:38)

cool. All right, well, speaking of technology and things actually developing, I'm...

really shocked that it's taken this long, but it seems like the FAA is actually going digital, which is really exciting. A couple months ago, they announced they're going to be digitizing pilot certificates. And the FAA this week actually ruled that now you can do your aircraft registration documents online, which is, I think, great news for a lot of people because it's been a really complicated process in the past. You have to have it ink signed, you have to have it stamped in Oklahoma City. So that's some positive news.

Ramsey Ammar (12:10)

Mm-hmm.

Jessie Naor (12:12)

for the FAA, I guess.

Ramsey Ammar (12:14)

Yeah,

I'd love to see it as an aircraft transaction lawyer as well. We do, you know, a ton of deals every single year where the closing just feels archaic. In aviation M&A deal is those deals don't have to follow the whole, you know, wedding sign or historically wedding sign process that you do in an aircraft transaction.

So I think we're sophisticated on that side, but on the aircraft transaction side, I love to see it. I absolutely love to see it, I think. For me too, we do a lot of tax planning and we'll swoop down with an airplane and touch down for just a second in a certain location in order to minimize taxes on the closing of that aircraft. And so they might only be in a jurisdiction for

Jessie Naor (12:44)

Yeah.

Ramsey Ammar (13:02)

an hour or so and then they're gonna, you know, wheels up again and they're off to wherever they want to go. And I'm sitting here waiting for when did that deal close? Did that deal properly close whenever we were touched down? That means you're waiting for the relevant title company to say, yeah, we went and we put these papers and we, we dropped them in the bin. The deal is closed. And,

Jessie Naor (13:18)

Mm-hmm.

Right, we got it.

Yeah.

Ramsey Ammar (13:30)

To me, it's just always felt so archaic to do it that way. I think that there are a lot of sophisticated title companies out there. And so I think that all of the title companies that we work with are amazing and great. And I think that this will make their lives so much easier as well. And I love to see it.

Jessie Naor (13:46)

Yeah. It takes away a little of their edge perhaps

though. feel like, and maybe it's just in my brain, but I feel like, you know, there's like someone at the title company who's got like the relationship, it goes to the window and I was like, here you go, you know, make sure my stamp's on there first. I don't know how it actually works in practice, but in my own mind, it's like some lady who's been there for 30 years, you know, just getting her. It's a beauty.

Ramsey Ammar (14:02)

Yeah.

Yeah, I don't think

it's a window anymore. Now I think that they have a bin. So they go and you drop your registration documents and you drop it in the bin. When you drop it in the bin, that's when the title comes in. Yep, all right, we're closed. We've dropped the documents in the bin. And to me, I'm like, there's got to be a better way here. And so many, whenever you form companies or you merge companies or you do any sort of corporate re-orgs

Jessie Naor (14:21)

that's official.

Yep.

Yeah.

Ramsey Ammar (14:36)

All 50 states will also have different processes within their secretary of state offices on how to do any of those types of transactions. And I'll toot where I live, Colorado's horn a little bit because you can go on and do just about anything like that. File it online. The transaction is immediately kicked back to your stamped. So you form the company or you've merged the company or whatever. Some states are still, you have to wedding sign and,

Jessie Naor (15:04)

around.

Ramsey Ammar (15:05)

mail

it in or whatever the case is and it can be you know seven 14 days and we just don't operate like that anymore people want expediency people want speed especially if the technology is there to back it up and we have the technology here to back it up so i'm thrilled to see it it's about time

Jessie Naor (15:20)

Yeah.

that's so interesting. See now in Florida, you know, I'm a Florida resident. Yeah, it's the same way. You can file stuff online. It takes two seconds. So I guess it's just each state to his own, but maybe they'll all get there one day. If the FAA is progressing on this, I feel like anybody can. So.

Ramsey Ammar (15:36)

I so, yeah. And

I think from a legal perspective and title companies and anyone who's doing aircraft deals, I think we're just all gonna have to be cognizant of the old way of doing things and the new way of doing things and all aviation attorneys and everyone who's in the space is just gonna have to continue to track what's happening here. It's definitely relevant in my world. Because the difference in...

Jessie Naor (15:59)

yeah.

Ramsey Ammar (16:01)

As I mentioned earlier, the difference in closing in one location as opposed to another can be millions of dollars, literally millions of dollars. And so for me, knowing I can click a button, register, close the deal, it gives everyone so much greater certainty around the deal.

Jessie Naor (16:08)

That's right.

Yeah,

I have some relief there. Yeah, and if you ever fly into California, they still might try to come after you, even if you've already closed the airplane, who knows? I won't go there, but I will maybe a little bit.

Ramsey Ammar (16:25)

Fair statement. Fair statement.

Jessie Naor (16:28)

All right, well, so all right, that's, it's great news. It's things moving forward. And also, I was really excited to see this week, Pratt & Whitney has been doing a partnership with the government. It's under their ARPA-E program, which I imagine is kind like the DARPA program, you know, that did all these really cool developments over the years. But they've been testing a hydrogen steam injected intercooled turbine engine. I had to read that because that's a lot of words, the HySIITE concept. But this is really cool. think every,

Everybody understands the limitations in terms of batteries, you know, and how much power we can pack into an aircraft. Everyone's always looked at hydrogen and said, wow, what a great solution, but it's got some cons. A, the Hindenburg, it's very flammable, it's rocket fuel, it's a dangerous propellant. But, know, Pratt & Whitney, and I'm sure there's other people working on this, but they're starting to come up with the idea of...

Ramsey Ammar (17:15)

Mm-hmm.

Jessie Naor (17:22)

You know, how do we take the pros and the cons of this fuel and make it work the best, you know, for these these turbine engines? But what they figured out is, you know, potentially it has the potential to reduce energy use by 35 percent because a byproduct of hydrogen burning is water. So they're using water to somehow push that back into the engine and make the system more efficient. I'm not an engineer. I don't pretend to be. So don't judge me if I'm saying this wrong. But in a nutshell, that's what I understand.

So it's pretty cool. I think we're still a long way away from hydrogen power, but at the top of it, it looks pretty interesting.

Ramsey Ammar (17:57)

Yeah, think, similar. It's a similar conversation that we had in the eVTOLS space is there's a number of reasons why I think the technology will be slow to come to market. I think you've got to first off with it being so highly flammable, you've got to make sure it's safe. So the certification standards have got to be super high on making sure that it's a safe product and you slowly introduced that to market and that you have the regulatory.

backstop in place to certificate it. You have the technology first, then you have the regulations to back it up. And that historically with the FAA just takes time for them to get comfortable with new technologies. And I think also you have infrastructure development around, know, an EVTOL is gonna take off and land differently than a normal aircraft. And I think hydrogen powered aircraft will

Jessie Naor (18:49)

It's just that.

Ramsey Ammar (18:51)

take off and land and refuel differently than a normal aircraft will as well. you have to deal with the infrastructure development side of things as well. So I love seeing new technologies like this. I am not very bullish on how quickly they come to market.

Jessie Naor (19:08)

Yeah, and even, you know, I was...

I was watching a video of them talking about this project two years ago. They've just now kind of gotten to a significant point in the project. And they even mentioned then, like, look, the airplanes and commercial airliners specifically that we're building today, those airplanes are going to be used for the next 30 years. So anything built today is not coming to fruition in the next 30 years. So we look at a hydrogen-powered aircraft. A hydrogen is going to be heavier. So how do we deal with that? It's going to be much more expensive potentially.

because even though hydrogen is abundant, there needs to be a process to collect it. That's also energy intensive. There's always been a lot of things why people say hydrogen is not good solution. But if this engine is proving it can be efficient to the point where you're reducing costs, who knows? But we'll have to see. I do think there's an opportunity for business aviation specifically, because I don't think we have as long a life cycle of production. Maybe I'm wrong. Maybe the Embraer's or someone out there, if this new technology was available, it'd be easier

for them to build a clean sheet design around it. But who knows? I guess we'll just have to see, you know, 20 years from now where this ends up.

Ramsey Ammar (20:16)

Fair, fair statement. I think 20 years from now is probably a good estimate. I don't think any anytime soon. And I think with hydrogen too, very, very cool. But additional protocols around the significant flammability of hydrogen. So when you think about how dangerous it can be or something to ignite up in the air, I think there is going to be far more scrutiny over certificating a product like that.

Jessie Naor (20:19)

I'm willing to wait.

A minimum. It is cool though.

Yeah.

yeah, well, I mean, look at, you know, even all the legal cases that have happened around, you know, fuel tanks combustibility, you know, and especially in helicopter world, that's caused a lot of really bad fatalities by not having like crash resistant tanks. Like there's just there's so much that goes into it. It's like the engine is kind of step one and then everything else has to fall into place on top of that. But I mean, at least it's an efficient fuel. I to say it's more efficient than batteries. So we'll see.

Ramsey Ammar (21:12)

I like seeing innovation in the space. EVTOLS, hydrogen, I love seeing it. Again, I think I would go back to that first mover. Is the first movers in the space, the second movers are gonna be watching those first movers with a very keen eye as to what they're doing right and what they're doing wrong and letting those first movers perhaps spend more of the money

to R &D it and to spend on lawyers to get it certificated and all of the operational aspects you have to go through to certificate a new product. And I think that's to some benefit to the second movers in the space. Yeah.

Jessie Naor (21:50)

Yeah.

Well,

love it. And I think this is going to have to come from, you know, government private investment, you know, like this partnership with the government here working on this. I'm so glad to see it because if we're not innovating, I think, you know, we have a goal of, you know, net zero sustainability one day. I mean, hydrogen fuel actually gets you to zero zero emissions. So if there's a way for the whole aviation ecosystem to be sustainable, that could be a decent way. But it's through innovation and not through just, you know,

cancelling flights or doing any of that. Like let's keep fueling the innovation of the technology. Let's not, you know, cancel private jet flights in Europe up over this. Like let's be smart about it and grow our economies and grow businesses and do well.

Ramsey Ammar (22:34)

I agree

with you and I think it's a wonderful step in that direction.

Jessie Naor (22:38)

Yeah, for sure.

All right. Well, speaking of government and their influence, you know, it's going to be a lot coming at us the next four years. That's for sure. It's already been a very eventful couple of weeks since the new administration took over. And I am now watching Twitter because or X because there's all sorts of posts every day and back and forth. And when you have Elon Musk running DOGE, it's going to be interesting to see what he actually suggests. But this week, Senator Mike Lee said that we should get rid of the TSA

that

we should privatize it. For those who don't know, it was a private entity up until 9-11, and then the TSA came in with the Department of Homeland Security, and Elon Musk retweeted the tweet, said, yeah, it would be better if it was privatized, we'd save money, let's the airlines pay for it. So, I don't know, what do you think? Do you want the TSA to be privatized, Ramsey, or should we keep it as is?

Ramsey Ammar (23:29)

I think there's pros and cons to that argument of whether it should be privatized or not. mean, I think we have a history around it being privatized and then we have a history of it being run by the government. I'd like to be, instead of a hot take, I prefer to be a little bit more analytical around something like that. And I'd probably prefer to see whatever data the lobbyists are

Jessie Naor (23:33)

Yes.

Ramsey Ammar (23:57)

would bring to bear on the pros and cons of each side of that. think there may be one of the pros could be that there is a cost reduction, the government's not paying for it. I think one of the cons that people would argue is that you're gonna have less standardized security protocols and therefore there may be vulnerabilities and certain security protocols that one air

Jessie Naor (24:07)

Thank you.

Ramsey Ammar (24:21)

or one region might have as opposed to another region. on the same token, people can argue that security might even be better though. While some might say that there's vulnerabilities that come with it not being standardized, some might say, well, supply and demand, the best security companies are gonna be the ones that have the best, exactly.

Jessie Naor (24:41)

gonna win the contract, so they're doing the best job.

Yeah, Yeah, it's so hard to say. I mean, I will say it's a $10 billion budget, so I can see why he's probably going.

Ramsey Ammar (24:44)

Exactly.

Yeah.

Jessie Naor (24:52)

Hmm, that's worth at least looking at and considering. But I do wonder too, you know, we pay passenger facility charges for every landing at a commercial airport. And I believe that's where the money for that program comes from. But no one quote me on that because I probably need to look that up. you know, so mean, someone's already paying for it as a passenger, I believe. I don't know how much that budget is actually coming out of the American taxpayers general budget more than the people that are actually flying. But it'd be interesting to look at.

Certainly things like federal air marshals and things like that, we absolutely have to have that. I just imagine the 47,000 employees they have is probably more TSA officers. That got privatized, I don't know, we'll to see. But I did read a study, undercover tests that were done a few years ago showed the TSA's failure rate ranges between 80 and 95%. Those are not great numbers.

Ramsey Ammar (25:47)

Do we have the numbers on whenever it was private?

Jessie Naor (25:50)

I don't know, you know, I would be interested as well. And I think DOGE or what's the group, the Oversight Management (Office of Management & Budget) OMB, I think someone should definitely, you know, take a look between those two. There was a, we don't want to have, you know, government agencies just because it looks good. You know, post 9-11, we're like, we really wanted to like take control of our security, but if it makes more sense, it makes more sense. I don't know if it does or not though, if they're going to have to figure that out.

Ramsey Ammar (25:52)

I would be interested in that.

Yeah, I mean, I think the paramount concern is clearly safety. And so that should be the factor most important to decision making is will it be, will the people be safer if it's privatized or will be people be safer with TSA? But there are also other factors important to the decision making selfishly. The passenger experience is one of them. And right now with the TSA, mean,

Jessie Naor (26:41)

And

Ramsey Ammar (26:44)

to go there and have to sit in lines for two hours at a time or whatever the case may be, I think could absolutely be more efficient if it was privatized. again, pros and cons to each. At the end of the day, my two senses, safety is paramount and whichever one is going to lead to safer passengers in the air is the one that ought to be prioritized.

Jessie Naor (26:49)

Okay.

Yeah.

Yeah, and this is one of those areas. It's not, it's not given out, you know, cell phones or something like we're talking about, you know, aircraft and safety. It's a little more high risk. So maybe that's one of the ones lower than typical, but we'll see how it goes. All right, so our last story of the day, and this is kind of happening. I think Textron's the first, but it seems like Q4 was a little rough for manufacturers.

I this all makes sense. saw so many strikes last year. Textron specifically had a strike in Q3 that was going through Q4, but it really impacted their deliveries this year and they've had to adjust their guidance for next year because of that. But I mean, they do say they're on the mend. Parts are not as much of an issue anymore. They're starting to get back to full capacity, but I think we'll continue to see this. Bombardier hasn't done their earnings yet, but if I had to guess, they're probably maybe not in the exact

same situation, but we might see the same thing coming up with them. But we'll see.

Ramsey Ammar (28:03)

I think with seeing the Q4 deliveries go down, think we, the year prior when there wasn't as much emphasis around a new administration, Q4 historically has always been really hot, especially with bonus depreciation, sun setting by 20 % every single year. I think it continues to sunset with the current laws in place. So last year,

Jessie Naor (28:16)

Amen.

Ramsey Ammar (28:29)

was 80 % sunsetting down to 60 % this year.

I think with the new administration coming into place, a lot of buyers who think that Trump was a little bit more, not a little bit, a lot more emphatic about bonus depreciation staying or being bumped even further. If Kamala had come in, I mean, it would have continued the sunset down to zero. And if you have Trump coming in, you have it potentially going up to a hundred.

Again, and then there's the question of, he make it retroactive at all to bump bonus to a hundred percent for any of the years prior? So for us, it was deals that, especially after we knew the outcome of the election deals that historically we feel strongly would have been incentivized to close in 2024.

Jessie Naor (29:06)

image.

Ramsey Ammar (29:25)

are getting pushed into Q1 of 2025. we've sort of seen instead of that historical big Q4 push and then it kind of slows down, we've sort of seen a steady flow across Q4 and Q1. So could speak to the earnings being less than Q4 that you didn't jam everything into that year in 24. And it was more normalized. So perhaps

Jessie Naor (29:40)

Yeah.

And we'll

Ramsey Ammar (29:51)

where they might have felt more pain in 24, it might be a stronger Q1 in 25.

Jessie Naor (29:56)

True. Yeah, I mean, think they've got pretty solid demand. For one, they have NetJet's orders. You know, they say they're coming in every month, which I was like, that's interesting. You know, they don't do big packages. They, you know, kind of consistently order, order, order, which is great for the manufacturers. But yeah, I mean, they say that those are doing, those are doing well. The Bell helicopter line they have is doing well. For those who don't know, they actually, they...

create ATVs and off-road vehicles. They say there's some softness in that market, which I was like, interesting. They've got some military support vehicles that they do. So there's some softness, I think, in that part of their business. But it seems like, mean, new jets, at least, are doing well. I just don't think they have the capacity to really produce them right now. But maybe, maybe, too, some demand softness, just waiting until the all-coveted 100 % depreciation comes in next year, which I think everyone

anticipates at this point. I think there's probably no doubt that that's going to happen. It's just a matter of when and how long and will it be retroactive. Everyone's talking about it being retroactive. Like, I don't know if anyone actually published that or said that, but everyone's like, yeah, yeah, I think they'll do it. So we'll have to see.

Ramsey Ammar (31:01)

Well,

what they had tried to pass prior on the bonus depreciation front, was making, it would have made the prior year retroactively bumped up. So if I think with the way president Trump thinks about taxes, especially with him recently saying we might abolish federal income taxes altogether and push those taxes over to tariff world.

Jessie Naor (31:11)

Yeah. Okay. So that's where it's coming from.

Ramsey Ammar (31:26)

I think as many tax breaks and cuts that he can push into the economy that he may. So I, tend to agree with those that think that it will be made retroactive, but on the same token, um, not a for sure thing. And so for those that had more confidence that he was going to pass something higher this year, it makes more sense for those buyers to push their acquisitions into 25 and leave it in 24.

Jessie Naor (31:55)

Yeah, we'll have to see what happens with manufacturing long term too. know, Cessna is producing a lot more aircraft in the United States, with the exception of Bell. I think most Bell helicopters are produced in Canada. But if those tariffs start to actually rear their heads and what happens there, it'll be interesting to see how they do. It's just going to be a wild ride the next four years until we get some rules on the books. Watch out. Who knows?

Ramsey Ammar (32:04)

Mm-hmm.

True.

Yeah, I agree. mean, in his first day, what did he pass? He passed dozens of executive orders where I, have government contract clients that, um, basically the executive orders came down and said, these agencies are no longer paying for any of the government contracts that are targeted towards DEI, for example. And so there's a lot of uncertainty. You should see my email inbox right now about

the uncertainty around what these executive orders mean and how to interpret them and What does that mean if you have a prime contract that is on? That is targeted by one of those executive orders and how does that then flow down? contractually to all the subs underneath that is He's gonna be keeping us busy. That's for sure He's gonna be keeping the lawyers busy here for a little while until we get greater certainty around

Jessie Naor (33:10)

we have.

Ramsey Ammar (33:12)

what exactly is happening.

Jessie Naor (33:14)

No, for sure. And then, you know, the federal judges that are putting injunctions in place and who knows what else. So, yeah. You have job security, I think, for a few years, at least.

Ramsey Ammar (33:23)

For little while, I agree.

Jessie Naor (33:26)

All right, folks, well, we're gonna wrap up the pod today. We love to keep things short and sweet for your morning commute so you get all the information you need for the week for biz aviation. Thank you, Ramsey, for joining us today. It was a blast. Love picking your brain, and if anyone wants to reach out to you, I'll make sure I put a link to your information But comments and suggestions on what we should cover next are always welcome, and we'll see you next time on the VIP seat.