Barter Deals

If you think barter is for rats and mice deals, think again.
 
PATTAYA, THAILAND — Big-ticket items like planes, castles, boats and Rolls-Royces are starting to turn up for sale in barter exchanges like Bartercard. It is a sign of the times.

"When we started in 1991, we described barter as a recession buster," recalls Wayne Sharpe, founder of Bartercard, the largest barter exchange in the world. In this 21st century recession, barter has come into its own.

Sharpe, chairman and chief executive of Bartercard International, jokes that he now has enough aircraft to start an airline on barter. More seriously, he says it is time to set up a specialist division to deal with aircraft sales and leasing.

The man behind the implementation of these aircraft deals is none other than Laurie Muir who heads up the Bartercard Pattaya office, but who’s experience with Bartercard started some 12 years ago as their Global Marketing Manager. "We are acting as broker for 15 aircraft on our books on behalf of an international aircraft leasing company, financiers and airlines." Laurie said.

Among the planes is a fleet of five Boeing 737-800s, until recently leased to an Asian regional airline. The airline returned the fleet to the leasing company as financial problems started to bite. "These planes are available on seven-year leases," Laurie says.

The upper asking price is $520,000 in cash and $82,000 a month in trade dollars. (Large airlines will be able to negotiate the price down.)

Sharpe and his team are talking to three British airlines that have shown interest in taking over the leases for these planes. "This is work in progress. But I hope that we could close the deal by the end of February. It will require a lot of innovative thinking at board level to close the transaction.
"Some well-capitalised airlines are still expanding. They're taking the opportunity in the downturn to take over routes abandoned by their competitors.
"And in Europe, irrespective of the economic climate, there are still a lot of people who travel for business or leisure."

Laurie said that we also have two brand-new Airbus A320 planes, that have just come out of the factory. These are soon to be mortgage-in-possession sales as the airlines walked away from the orders. The asking price for the A320-232 is $US55-60 million depending on cabin configuration and the type of engines

Normally, it takes two years to take delivery of a new Airbus plane, Laurie says, but these planes are ready now, so this also makes it very attractive to airlines. The price for these aircraft is negotiable, says Laurie, adding that most of the planes listed with Bartercard will be sold or leased with a 20 per cent barter component.

Wayne Sharpe says companies, including airlines, use their trade dollars as credit to offset operating expenses. For instance, airlines use barter and cash to provide uniforms or accommodation for crew or to purchase wines for in-flight catering and so on.

Airline tickets are a keenly sought-after commodity among barter traders. "I can say that the biggest demand is for travel because a lot of businesses are not prepared to pay cash for travel." Packaged holidays are also popular. "We are being offered a lot of opportunities as more companies start to look at barter as an alternative way of doing business. We are seeing varied and unique transactions."

Real estate is the fastest growing area in barter trade, especially in the Eastern Seaboard where there is a glut of sale and rental properties and owners are looking for new ways to get some form of return for stagnant property.

With deals such as these, barter has come a long way from being a simple neighbourhood exchange for goods and services.