FOR SALE: 8-dr. hardtop, fully equipped. Engine excellent condition. Upholstery, tires like new. Low mileage, one owner. Bargain-priced at $28.3 million. Psst. Hey, buddy -- wanna buy a used 707? Or DC-10? Or 727-200? You can almost take your pick here at Evergreen Air Center, where there are 35 of the huge machines sprawled across a giant parking field. Custom interiors and sophisticated electronic gadgets extra. No salesman will call.
Not all of Evergreen's aircraft are for sale, of course -- some are just being stored here. But this 2,080-acre former CIA airfield 30 miles north of Tuscon functions partly as an outdoor sales lot for one of the United States' most competitive -- and least-known -- businesses: the brokering of used commercial jets.
Over the past 20 years, the industry has grown from a collection of largely fly-by-night operators to a sophisticated, globespanning operation whose revenues -- except for the industry's current slump -- easily approach $1 billion a year.
Moreover, there seems to be no real pattern to it, or any constraints. Says Jordan A. Greene, vice president of Avmark, Inc., a Miami-based wowrldwide marketing and management service that keeps close tabs on the used-jetliner business: "Everybody's trying to put together a deal."
Why buy - or sell -- a used airplane? "It's economics, pure and simple," says Fred Bearden, technical director of the San Francisco-based Tiger Aircraft Sales and Leasing Company, one of the half-dozen or so brokers who regularly rent lot space here at Marana.
Ordinarly you shouldn't have to replace a plane, Bearden concedes. Unlike ships, aircraft don't wear out every 20 years or so. Today's big jets are designed to keep running indefinitely. If a part shows signs of stress, you merely replace it. "Age simply isn't a factor," Bearden explains.
The real issues are day-to-day pocketbook considerations: Route changes or money cutbacks can alter the kind of fleet a carrier will need. Soaring fuel prices have made gasguzzling 707s and DC8s uneconomical. And new smoke- and noise-abatement standards are threatening to make some planes obsolete.
At the moment, the industry is in a tailspin, buffeted by the crosswinds of high interest rates and deregulation, (which have trimmed the need for large fleets and made financing tougher,) the looming noise-abatement deadline and the retrenchment of Braniff Airlines -- all of which have left a glut of used aircraft.
There are more than a thousand aging 707s and DC-8s in service now that will be grounded by 1985 -- either by soaring fuel costs or noise- and smoke-abatement standards -- with no domestic operator willing to buy them. "The 707's already a leper," Tiger's Bearden laments.
At the same time, the manufacturers are coming out with a new generation of quieter, more fuel-efficient planes -- the Boeing 757 and 767 as well as others that promise full compliance with the new noise standards and far-lower operating costs -- but at far-higher initial prices. It's an airline's choice as to which is best.
Avmark's Jordan Greene estimates there are 475 "surplus" commercial jets ready to be marketed -- 100 wide-bodied DC-10s and 747s, some 275 used 707s and DC-8s and a hundred 727s. "It's too much to absorb," he says. "I can't see much change."
The structure of the used-aircraft market is difficult to pin down, even during slow periods. To a certain extent, jetliner-buying and selling follows predictable patterns, says Frederick B. Ayer, president of FBA Corp. a large New York-based broker. But after that, "it's a game of musical chairs."
The planes go brand-new to the major U.S. airlines, which almost invariably buy or lease them directly. When the bigger ones decide to sell, their castoffs are gobbled up by Third World airlines and other leasing firms. Eventually, the planes are sold to "fringe" operators, such as freight carriers and tour firms.
By far the bulk of the used aircraft sold in the United States are marketed by the major airlines themselves. Some have full-time staffers assigned to the job. Experts estimate there are about two dozen top-of-the-line private brokers and another 60 marginally in the market, often combined with leasing operations.
The rest is constantly up for grabs. "There are more people than ever running around trying to put together a deal," says Avmark's Greene, "but it's getting harder and harder for them to survive. After World War II, you could operate on little bits of information you knew. But today you can't anymore."
There aren't any secrets, all sides agree. Offerings are flashed worldwide on private teletype machines or listed in Avmark's monthly newsletter. Brokers often know of a possible marketing months in advance. "Almost everybody knows everybody else -- worldwide," an insider says.
"There's not much dickering on price -- people basically know what the market is," says Hugh West, vice president of Polaris Aircraft Leasing Corp., a San Francisco-based intermediary. "It's like being a stockbroker. cWhat's important here is the firm's reputation."
Where the scrapping comes in is over which broker can bring the buyer and seller together first -- a job that often entails not only a fast sell, but arranging the financing, inspecting the aircraft, finding a place to do any necessary overhaul work and ensuring that the buyer really has the cash.
It's here that chaos seems to rule. Insiders say it isn't unusual for as many as two or three brokers to show up at a contract-signing claiming credit -- and the commission -- for the same sale. Some regularly sign up two or three buyers for the same plane. And stories of shady deals abound.
Brokers' fees, like prices, vary widely with the market, but most middlemen command 3 to 5 percent of the selling price -- with fixed dollar limits on the big-buck transactions, such 747 sales. Occasionally, the fees soar even higher -- particularly on less conventional deals.
One New York broker who put together a package of 10 used 747s for the late shah of Iran in the mid-1970s reportedly asked -- and received -- a hefty 10 percent fee, netting him a sizable $15 million in revenues. And a few Saudi sheiks are said to have paid 15 percent commisions. However, such cases still are rare.
But it's the buyer who reaps the biggest gain -- by avoiding a big captial outlay, thus keeping his cash flow intact. A new 727-200 sells for a helfty $16 million, but a "previously owned" version can be obtained for only $6.5 million. With a 747, the gap is wider: $55 million new, $25 million used.
Inevitably, peddling used aircraft turns up its share of zany stories. West, for example, recalls a DC-8 sale to a tiny central Afican country whose pickup pilot demanded he provide a spare tire. "I get one when I buy a car," the man protested. Not one to quibble, West rounded up an extra wheel.
Another time, a broker became suspicious when a little-known western airline contracted for a $575,000 worth of Electras sight unseen -- a rarity in the used-plane market. When he questioned the buyer's credit, a check arrived mysteriously within 15 minutes. The "purchaser" turned out to be a CIA cover.
Sometimes the industry's stories aren't true. "The most remarkable thing about this business is the amount of misinformation that exists," says Morten S. Beyer, Avmark's president. One Saudi airline was widely credited with buying so many planes they couldn't have fit in all the hangars in the world.
In this dog-eat-dog business, how do you avoid buying a lemon? The same way you do with a car: First, deal with a reputable broker. Second, check the aircraft out thoroughly. Although U.S.-bound planes must meet rigid Federal Aviation Administration controls, "there is a buyer beware aspect," one broker concedes.
In a good many cases, the sale involves extensive modifications -- from overhauls and replacement of engines to revamping the plane's interior configuration and adding more electronic and navigational equipment. There's also the inevitable multicolor paint job with the new owner's logo and colors.
That's where the Evergreen Corp. comes into the act. Serving as a corrosion-free storage lot is only a loss-leader for the Marana firm. You can park a 707 here for a token $6.66 a day, but the facility also offers complete overhaul and maintenance service -- often running as high as $1 million per plane.
"We can rebuild anything from a helicopter to a 747," says John R. McCormick, the stocky 44-year-old transplanted Chicagoan who serves as marketing director for the Marana operation. Overhals are McCormick's bread and butter: "If the airplane is being stored here, why fly it somewhere else?"
Still, for all the occasional sideshows, the industry still faces the serious problem of what to do about its glut. Revamping the older big jets to meet the new standards just doesn't seem practical, says Stan Bernstein, a Tulsa-based broker. The job takes two years -- and the price tag is $13 million.
To Avmark's Jordan Greene, the turning-point could come next year, when the airlines decide whether to buy the newer, more fuel-efficient models or turn for the first time to the used market, where they can buy planes more cheaply.Some also are pressing the military to buy the old 707s as a reserve fleet.
Meanwhile, the surplus airplanes are piling up, with more expected as the 707s and DC-8s are retired. Besides the planes sitting idly here, there are 69 more parked at less-hospiable fields in Ft. Lauderdale and Miami -- known as "corrosion corner" because of its salt-air problems. And more are on the way.
If you're in the market for a slightly-used 727, analysts say this could be the time to look seriously at what's available. Prices are down from where they were a year ago. The selection is pretty good now. And if you have a Cessna you're willing to trade . . . Well, for you they have a special deal.