tcasblue
19th Nov 2019, 00:06
Strictly from a blog but interesting nonetheless....
"There is no industry standard for customer deposits on new airplanes under development.
To establish credibility in the marketplace, start-up companies typically will be quite emphatic, CUSTOMER DEPOSITS WILL GO INTO ESCROW ACCOUNTS. This sends the signal, we are a well financed, legitimate company and don't need customer deposits to fund the program. Further, if we don't do what we say, you will not be taking a risk, you will get your money back.
In the late 70's, Canadair bought the design rights to Bill Lear's LearJet 600 which would later be renamed the Challenger. Business jets represented a new market where Canadair had no credibility. They elected to put the $100,000 customer deposits into interest bearing escrow accounts that paid 10% per annum to the customer.
The deposits also guaranteed the price of the airplane to be under $4 million.(First Challenger deliveries did not begin until the early 80's. By then, the airplane had grown in size and price, somewhere around $8 million. There were speculators who took advantage of the "no lose" deposit program and purchased early delivery positions. Later they sold their positions, making millions on each $100k investment."
It would be nice to hear your story about this general subject.
"There is no industry standard for customer deposits on new airplanes under development.
To establish credibility in the marketplace, start-up companies typically will be quite emphatic, CUSTOMER DEPOSITS WILL GO INTO ESCROW ACCOUNTS. This sends the signal, we are a well financed, legitimate company and don't need customer deposits to fund the program. Further, if we don't do what we say, you will not be taking a risk, you will get your money back.
In the late 70's, Canadair bought the design rights to Bill Lear's LearJet 600 which would later be renamed the Challenger. Business jets represented a new market where Canadair had no credibility. They elected to put the $100,000 customer deposits into interest bearing escrow accounts that paid 10% per annum to the customer.
The deposits also guaranteed the price of the airplane to be under $4 million.(First Challenger deliveries did not begin until the early 80's. By then, the airplane had grown in size and price, somewhere around $8 million. There were speculators who took advantage of the "no lose" deposit program and purchased early delivery positions. Later they sold their positions, making millions on each $100k investment."
It would be nice to hear your story about this general subject.