Top Cessna Salesman Becomes The Object of Hate-Love Affair
Don Love of Kansas Gambles On Jet Delivery Positions, Draws Flak of Producer
Reprinted In entirety from WALL STREET JOURNAL. By Neil Maxwell
Staff Reporter of THE WALL STREET JOURNAL (1983)
Don Love sees himself as a gambler but not a high roller. "If I lose $5,000in a night, I quit," he says. But his job involves unquestionably high stakes and enough anxiety to make a poker player switch to solitaire.
Mr. Love, a dapper 57-year-old Kansan who is addicted to cowboy clothes and expensive cars, deals in corporate jet aircraft built by Cessna Aircraft Co. in Wichita, Kan., where Don Love Aircraft Sales Inc. is also located.
He says he has sold about 100 new or used Citation jets, about 10% of the total built, although he doesn't work for Cessna. He even has a letter of commendation from the company proclaiming him its all-time best salesman - at a time when he worked for a Cessna dealer.
So how does the factory feel about Mr. Love? It is a definite hate-Love relation- ship, spelled out clearly in a letter from J. Derek Vaughan, senior vice president of the Citation marketing division, warning Mr. Love to "keep off Cessna property at all times and until further notice." That was in 1978, and Mr. Love says further notice still doesn't appear to be imminent.
Mr. Love, in effect, competes with Cessna in sales of its planes. He buys delivery positions on inbuilt Citation jets and later resells the positions at a profit to buyers who want to avoid the long wait for a plane (more than three years for a Citation III ordered today) and the higher pries posted by Cessna in the meantime.
Two things have to happen to make his gamble work: Delivery times have to remain long, and pries have to keep rising. So far, the System has paid off like loaded dice. Mr. Love says he has held delivery positions on 38 Citation jets and made money on every one - except maybe the last, and he expects he is breaking even on that one.
The reason he may have problems on his latest deal is that with some models supply is catching up with demand, and price increases aren't as steep. In the past, Mr. Love says, Cessna has raised prices "unmercifully." He adds that the Citation II nearly doubled in price in four years. "That's not inflation, that's greed," he says.
Now he thinks the days of profitable speculation on earlier-model jets may be ending, but the new Citation III promises to be another big-pot winner for Mr. Love, at least at first. The Citation III hasn't yet been certified for production by the Federal Aviation Agency, but 150 buyers have already signed up for deliveries starting in December.
Among the early order placers, unbeknownst to the factory, which refuses to sell him planes, is Don Love. He has about $350,000 tied up so far in advance payments on a Citation III. He hopes to clear a personal record of $800,000 by selling his place on the waiting list to an impatient corporate buyer - or actually take delivery and resell the plane at a profit.
The profit won't be ail his in this instance, because he has had to use partners to place his orders since Cessna stopped letting him buy its aircraft. "They thought they could cut me off, but they just made me go underground. Now I'm the silent partner in what they think is a legitimate purchase," Mr. Love says.
Mr. Love is particularly piqued at Cessna's cutting him off, because he insists (but the factory denies) that it was Cessna's idea for him to buy and resell places on the delivery list in the first place, back at a time when early Citations hadn't caught on.
"They came to me and said 1 could double my money by buying early-delivery positions on the Citation I," Mr. Love says. "For them, it was a great way to get sales moving. It's a tremendous advantage for a factory to be sold out a year or two in advance. You can get your subcontractors lined up, you can negotiate for prices, you can predict costs. And your customers aren't buying an airplane from somebody else."
But when they saw how well he was doing, Mr. Love says, "They tried to cut me off. They thought they were losing control of their marketing, and they were."
Cessna agrees that its decision not to sell any more aircraft to Mr. Love "has to do with marketing." The company says, "He puts down $100,000, and if he can turn it, he makes a lot of money. If he doesn't, we have an airplane sitting on the ramp. Those delivery positions turn into metal airplanes, and if there isn't a buyer, there's a problem."
The company adds that its practice now is to try to ascertain that delivery positions are taken by bona fide final users instead of middlemen. Most other aircraft makers similarly try to discourage speculation in their aircraft.
Mr. Love isn't the only one speculating in aircraft-delivery positions. Doctors and other individual and corporate investors have tried to get in on the gamble to such an extent that some industry observers predict a marketing shakeout when buyers can't be found and the speculators can't take delivery of the finished aircraft.
Mr. Love sees other reasons for Cessna to try to squeeze him out. "It was very destructive for the marketing people to know that 1 had a Citation for sale for less than their customers could order one from the factory," he says.
Mr. Love thinks his flamboyant ways were part of the problem, too. Cessna is a coat-and-tie company, he says, and "they didn't like to see me show up out there wearing jeans and driving my Excalibur" when he would go along with a customer to accept delivery of a plane.
But whatever the reasons, the attempt to make Mr. Love stop buying Cessna airplanes didn't work. "They thought they were going to stop me, but what they did was just motivate the hell out of me," he says, sipping a Chivas at a Houston hotel bar while he waits for an aircraft sale to jell.
The motivation is easy to understand, because the stakes are high, and so are Mr. Love's costs of living, what with a second house at the Grand Lake of the Cherokees in Oklahoma, life at a local country club and his car, currently a Lamborghini Espada. But beyond ail that, he feels he has a wager to settle with Cessna, and he is dog-determined to win.
He got into this business in 1975, when he bought out a partner in his used- aircraft business. He got a bank in Clinton, Iowa, to go into a partnership with him to buy $2 million in used aircraft from Cessna, which was getting out of the used-plane business.
Bread and Butter
But the speculation in delivery positions soon became his bread and butter. And he sees no reason for that to change, despite Cessna's objections. What's important is the length of the waiting list, which remains long for the Citation III, and price increases, which continue to be hefty. The Citation III started selling in 1977 for $3.9 million, but four price increases have brought the current price to $5.2 million plus escalators to compensate for inflation, so that the actual price isn't determined until about six months before delivery.
Sometimes the spreads are great enough to allow Mr. Love to wheel and deal on the spot and be assured of coming out ahead. For instance, he was calling Kansas from an airport in Munich, Germany, one time, when someone over- heard him and asked whether he worked for Cessna. It turned out to be a pilot whose boss had two Citation jets on order but decided to substitute a Learjet for one of them and thus had a Cessna delivery position he didn't want.
Mr. Love quickly offered $50,000 for the position, which was accepted. He caught the next plane for Kansas to get the money, caught the next back to Munich to deliver the check and sign the papers, and shortly resold the delivery spot for an additional $50,000.
Another easy-money deal came along when Mr. Love learned that a unit of Texas Eastern Corp. wanted a Cessna jet in a hurry, and he knew that Ryan Aviation in Wichita had one coming up for delivery that it didn't really need.
Because of price increases, he was able to make early delivery of the jet to Texas Eastern for the same amount as the one the company would have had to wait for and split a difference of$ 100,000 between himself and Ryan.
His customers are pleased with the relationship, it seems, even if Cessna isn't. Texas Eastern says it is happy about its transaction, and Roy Ryan of Ryan Aviation says that in a business that has some unsavory practitioners, Mr. Love flies above that crowd. "I don't know of anybody he's sold an airplane to that says he lied to them or cheated them."
Sometimes Mr. Love helps to bail out plane buyers who can't come up with the purchase price. On one occasion, he heard about a doctor on the West Coast who couldn't afford to take delivery of a Citation jet. He made a quick deal to sell the plane to singer Wayne Newton for a modest profit. "I think I made $10,000 and the doctor made $ 10,000.00," he recalls.
But timing is always important. "You sell your spot too quick and you lose profit; you hang on too long and the economy could turn sour or you can't find a buyer in time," he says. The state of the economy posed a problem with his latest deal, involving a Citation II on which he and his cover-up partners had to take delivery. He sold it recently but had to take a trade-in he didn't want, and he won't know until he resells that plane if he has made or lost money on the transaction.
Don and Barbara Love tour the Excalibur plant in Milwaukee, where Barbara chose her very own Series III Excalibur.
Barbara Love was on a business trip in California when she recalls seeing an Excalibur for the first time. "That's the kind of car I want," she told her husband, Don Love ... and that's the kind of car Barbara is driving today.
It took a bit of searching before Barbara found out where she could buy one, but a year later, her dream came true in the form of a Series III Excalibur.
When Barbara went to the bank to request a cashier's check to pay for her Phaeton, her banker asked what this money was going to buy. When she told him an Excalibur, he insisted on accompanying the Loves to the factory in Wisconsin to personally deliver the check ... and he did!
This Wichita couple is not new to the world of fine automobiles. Don is the owner of a Lamborghini Espada, and Barbara has owned and driven both Mercedes and Jaguars. They also own an Excalibur boat, made by our good friends and fellow Excalibur owners, Bill Farmer and Don Abel in Sarasota, Florida. "Everybody thinks we bought the boat to match the car. It is purely coincidental. I'm just afraid someone will pull the 454 engine from my Excalibur and put it in the boat, because we've been having some problems with the 454 engine in the boat. Believe me, there'd be no easier way to 'make a Love, hate'!"
Being one of the few owners of an Excalibur in Wichita surely makes Barbara distinctive when she drives around. Forget- ting that she had "Barbara" written in script on both doors, she is often shocked when admirers give her the thumbs up sign and yell, "I like your car, Barbara!"
Barbara likes her car, too. In fact, it was "Love" at first sight.