Freestream Aircraft celebrates 25 years
Launched in September 1991 by Alireza Ittihadieh (right), Freestream Aircraft has just celebrated its 25th anniversary. The aircraft broker and dealer has closed more than 700 transactions worth more than $18 billion.
Ittihadieh started the business in London. It now also has offices in New York and Miami run by Rebecca Posoli-Cilli who launched Freestream US 10 years ago. Posoli-Cilli has completed more than 400 transactions during her 25 years in business aviation, more than 100 of them at Freestream.
As well as aircraft sales Freestream also has teams advising on aircraft interiors, pre-purchase inspections and managing completions. It regularly buys aircraft for its own inventory.
Corporate Jet Investor: What was the first aircraft that Freestream sold?
Ittihadieh: The first deal was co-brokering a 727. But that does not really count, the first solo deal was a Jetstar 731 for $1.2 million in 1993. We made a $75,000 commission. Right after that we sold a Hawker 700 from Marathon Oil to Fairchild Industries and made $120,000.That led on to a GIII and $300,000 commission and GIV with a $450,000 commission.
I am highlighting the commissions to show how the market has changed. I know brokers who are getting $140,000 commissions selling $70 million G650s today. Soon clients will be hiring monkeys as they are happy with peanuts.
Corporate Jet Investor: Why has the broker dealer market changed?
Ittihadieh: Thousands of brokerages have been launched by pilots and others. Many of these have undersold or simply not understood the complexities and issues involved in selling aircraft. They have also cut fees.
Sadly, the breakdown between knowledgeable and unknowledgeable brokers is 50:50.
It is really frustrating dealing with someone who simply does not know what they are meant to be doing.
Whether it is a Citation sales guy trying to get involved in a BBJ deal for the first time or a pilot thinking they are a broker.
It used to be common for a broker to charge 2% to 3% commission on a medium size jet. This has been eroded – largely by people who do not know what they are doing and make transactions much more work for everyone else.
You still come across brokers who think any aircraft which is not N-registered has cockroaches and tell their clients to stay away from such aircraft.
There are lots of people with a great sales patter who can sell refrigerators to Eskimos but they do not know what they are doing on a complicated transaction. A lot of corporates and individuals fall for fancy charts and graphs they are shown and low commissions. I promise you charts and graphs do not sell aircraft.
Corporate Jet Investor: Do you have a favourite deal in the last 25 years?
Ittihadieh: One of the funniest ones was a Falcon 900 EASY option that we were selling. The guy selling it was very keen to get it done and keen to be involved. We found a major corporation that wanted it.
Like all contracts, we agreed to hand over the Bill of Sale at closing but the corporation did not worry about that and wired the entire funds before closing – which for some reason the escrow company had released against an original Bill of Sale as instructed by the Buyer.
The client called me to find out what time the closing call is going to be.
He said: “What are going to be the main issues? What should I be worried about?”
I said: “Nothing just check your bank balance.”
Corporate Jet Investor: Few aircraft broker dealers last for 25 years because founders retire or staff move to other firms. Do you have a succession plan?
Ittihadieh:There are not many – although AvPro is one that stands out. I do not have a succession plan yet but we have a young team who will hopefully take over when I go. I have a great loyal team – the best team.
Corporate Jet Investor: Will we ever seem a boom market like 2007 and 2008 again?
Ittihadieh: “Never. Never. Never. Never.
We will never see the same craziness. The world has changed – it is not just the market. It is the world.
In 20 years the aircraft market will be very different. Telecommunications will keep improving and so will virtual reality. People may not need to fly as much for business and when they do they will want speed – supersonic aircraft. That means that the world may not need as many aircraft.
Corporate Jet Investor: What advice would you give to someone thinking about becoming an aircraft broker?
Ittihadieh: Learn from the bottom up. Spend time learning about the different products and how the industry works. Do not bluff or lie. You will be found out.
Do not work for nothing. Never be desperate.
Corporate Jet Investor: You have a reputation for getting very angry at lawyers, other brokers and others involved in transactions. Is this fair?
Ittihadieh: Yes it is.
If people talk nonsense, try to be manipulative or do not know what they are doing, I can be blunt. I say things the way they are.
But when I am dealing with professionals I rarely get angry. My job is to get deals closed. There are lots of great brokers who I really enjoy working with. There are some amazing lawyers who understand their role, work hard to get deals done and are real professionals.
Anger nearly always comes when people do not understand the direction the deal is going in or are trying to move it in the wrong direction.
I really cannot stand stupidity or ignorance. There is nothing more frustrating that being told what you should be doing by someone who does not know what they are doing. I do not tolerate people trying to reinvent things or go beyond their remit.
I am not a Yes Man. I have never been. Life is too short for political correctness.
Corporate Jet Investor: Does it actually help?
Ittihadieh: Not always. It is my biggest character defect. But it has not hurt me too much.
Some clients like the fact I am prepared to fight for them when it matters. Shell hired me after I bought an aircraft from them. After that Brian Humphries [then Shell’s head of aviation, now head of the European Business Aviation Association] said that he always wanted me on his side of the table.
I do not see myself changing any time soon.
Corporate Jet Investor: Will you still be selling aircraft in 25 years?
Ittihadieh: No. I cannot see me lasting for more than another 10 years. I do not have the patience for dealing with useless people or others telling me how to do my job. But who knows.