Exit Strategy – the Consignment Dilemma
Hold, Sell or Consign?
As an airline or corporate operator, you have a few options to deal with excess parts after retiring or selling an aircraft.
1. You can “give” the parts away to the new owner
This is not a very attractive option, and certainly not profitable, but if the goal is to get the cost of the parts off the books and get rid of the hassle of parts collecting dust on the shelves, this will certainly do the job for you!
2. You can try to sell the parts yourself — one at a time
This option works best for airlines and operators with a deep network of parts buyers and an ability to carry the inventory on the balance sheet until the parts are sold.
3. You can complete a “bulk sale” of all of the parts to one distributor
If you only have a short amount of time to sell your parts, or if cash is needed quickly, this is the best option. The downside is, although you will move the parts out quickly, you will only recover a small percentage of the inventory value.
4. You can place your inventory with a Parts Consignor
For many companies, this is the best way to recover much of the book value of the parts inventory without taking up space or man-hours!
Not all Consignees are equal!
If consignment is the best option for your company, here are a few things you should look for in a consignee, to protect yourself and your assets:
- A company that offers high-profit return on your parts inventory
- A company that guarantees your parts will sell! Yes, a GUARANTEE
- A physically secure facility with completely environmentally-controlled storage space to protect your parts against damage or loss
- A company with a CERTIFIED Quality Management System
- A consignee that holds appropriate insurance against casualty and loss
- A consignee that retains a professional sales force with industry knowledge of the aircraft type, a wide network of buyer contacts, and that PROACTIVELY markets your parts
- FAIR commission schedule to sell your parts for the highest possible profit in the lowest possible time.
- Routine sales reports that are informative and easy to read!
The aircraft parts consignee you select should operate in your best interest, and have the systems, sales knowledge and network in place to help you turn your surplus aircraft parts into cash as quickly as possible! Make sure your partner also limits the number of parts consignments of similar aircraft models, ensuring that you are not “competing” with another consignor!
Consignment is not the best option for everyone, but if it is right for you, then it may be time to reclaim that valuable storage space and let a professional take care of selling your surplus inventory!