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Bizjet Customer deposits

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Bizjet Customer deposits

Old 19th Nov 2019, 01:06
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Join Date: Nov 2019
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Bizjet Customer deposits

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.

Last edited by tcasblue; 20th Nov 2019 at 16:46.
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