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U.S. STOCK JITTERS RIPPLE THROUGH GLOBAL MARKETS

Vol. 19, No. 3 | September 1, 2007 | Go to Charts 


Aircraft Values Remain Strong

by Carl Janssens, ASA | Aircraft Bluebook – Price Digest 

If there were any question that amergence of a global economy is a reality, one would only have to look at the impact U.S. markets had on global markets during the second week of August. The jitters experienced in U.S. markets with noticeable declines in a wide range of stocks set a rippling effect into world markets. While negative speculation created a wave of sell-off frenzies, the seasoned investor, like a professional pilot flying through unexpected turbulence, remained steady knowing their knowledge, expertise and skills would see them through into calmer air. Behind every cloud is a silver lining.

As markets recover from a case of jitters, it is a proven fact a global market does exist even though each market is an independent entity. The good news is products and services remain strong, and the opportunity for economic growth is limitless.

Jet

Bluebook-at-a-glance
Increased — 151
Decreased — 254
Stable — 380

Corporate aviation is the efficient action of time and resources that creates growth in our economy. This is a simple insight with a huge impact. With all of this opportunity for growth, corporate aviation has met the challenge to bring people together that makes businesses grow. No wonder late-model, large cabin-volume, long-range aircraft continue to increase in value at record pace. The investment in these aircraft is well rewarded in the corporate portfolio’s economic growth. The jet market is like mid-August weather in the Midwest: It’s hot!

Mid-range corporate jets are no slackers either. Values currently reflectmore traditional depreciation curves. Inventories remain steady with backlogs for new aircraft extending outward past a year-and-a-half or more. Light-range jets, including the Cessna CJ series, Hawker 400XPs and Premier, remain active as well. Interest in the upcoming VLJ market has added new interest to these light jets with most that are properly priced on the resale market finding new homes in eight months or less. The ratio of aircraft on market for resale and total inventory remains manageable.

Older jets manufactured prior to 1990 are enjoying the contrails of their later-model relatives. Depreciation in values has shown some signs of slowing. Factory-authorized modifications to airframe, engines and avionics have added new life and value to these aircraft.

Turboprop

Bluebook-at-a-glance
Increased — 196
Decreased — 67
Stable — 349

The turboprop market remains competitive. Increases in value have outweighed decreases while the rest of the models tracked by Aircraft Bluebook remain stable. While new technologies are focusing on the jet market, the tried and true workhorse has not found its match or replacement for that matter.

For the late model years, the Beechcraft family of King Airs enjoyed a stable if not positive value increase. Pilatus and the venerable PC-12 continued to show strong market support with increased values. Cessna Caravans were in the plus column for yet another quarter. Socata TBM 700 experienced increases of $100,000 across most of its model years. The Piper Meridian market remained stable.

Earlier-model turboprops — those older than 20 years—mostly experienced positive increases when compared to the previous Bluebook quarter. In all, no jitters were found in the confidence of the turboprop market.

Multi

Bluebook-at-a-glance
Increased — 109
Decreased — 315
Stable — 241

The average composite score of the multi-engine market defined by Aircraft Bluebook continues to trend slightly downward. No, the sky isn’t falling, and the market is not falling apart. Aside from aircraft in this category being less exposed to business use versus private, it is more vulnerable to the affects of outside economic forces such as the cost of 100LL and insurance.

The Piper Chieftain did not follow the normal trend of its multi-piston brethren. Chieftains experienced a significant increase over the previous quarter. Although Bluebook is only reporting “history,” it is interesting nonetheless to see what other stimuli are contributing to the upward value trend. One such factor is Mike Jones Aircraft Sales, which specializes in the total refurbishment of select Chieftains and Navajos. Restoration includes new Colemill Panther engine conversions, airframe restoration and modifications along with new avionics. Completed aircraft are selling in the $1 million range. Although these restored aircraft are in a niche market, the average PA31 has experienced stronger values in sales, which do affect Bluebook values.

Single

Bluebook-at-a-glance
Increased — 579
Decreased — 964
Stable — 820

The single market continues to be an active market. According to FAA data, there were approximately 4000 transactions in the previous quarter. Like the multi-piston market, fuel, insurance and mission have indirectly impacted this market. Late-model singles follow the standard depreciation curve while early-model singles for the most part remain steady.

There has been interest and discussion regarding these older single-engine aircraft and what will happen to their values. The answer has been proven in the market and it is quite simple: Reconditioned, modified aircraft are holding value. The affordability of these aircraft has a wider audience with values generally less than $100,000. With the FAA’s diligence in monitoring airframe fatigue factors, these Fifties and Sixties vintage aircraft are a long way from becoming obsolete.

Helicopter

Bluebook-at-a-glance
Increased — 491
Decreased — 65
Stable — 360

The helicopter market continues to flex its muscle with positive growth in values. Late-model single and twin-turbine helicopters are in great demand. Like oil, the global need is far greater than the available resources of these ships. All of the helicopter manufacturers in Aircraft Bluebook experienced shared stability in values with current in-production models. Because of specific distinct missions associated with this market, values will no doubt continue to hold strong.

CHARTS — SEPTEMBER 1, 2007

2007Q301.jpg

 

Used Aircraft Market: This chart displays each model's quarterly value in relationship to its average equipped price at the inception of the aircraft. The study begins in the spring quarter of 1994 and includes the Jet, Turboprop, Multi, Piston and Helicopter. For all charts, the red number indicates the first reporting date after 9-11.

2007Q302.jpg 

Jet: The jet chart depicts the average price (in thousands) of the six 1990s jets listed in the box.

2007Q303.jpg 

Turboprop: The turboprop chart depicts the average price (in thousands) of a 1985, 1986 and four 1990 turboprops listed in the box.

2007Q304.jpg 

Multi: The multi chart depicts the average price (in thousands) of the six multi models listed in the box. Each model’s year will precede the name of the aircraft.

2007Q305.jpg 

Piston: The piston chart depicts the average price (in thousands) of the 10 pistons listed in the box. Each model’s year will precede the name of the aircraft.

2007Q306.jpg 

Helicopter: The helicopter chart depicts the average price (in thousands) of the six helicopters listed in the box. Each model’s year will precede the name of the aircraft.

2007Q307.jpg 

NASDAQ: This ratio scale chart depicts the change for the NASDAQ daily average from quarter to quarter beginning at the end of the first quarter of 1992. Each data point represents the closing daily average on the last trading day of each quarter. This study originates in the first quarter of 1971.

2007Q308.jpg 

Aircraft on Registry: The Aircraft on Registry chart depicts the number of aircraft reported in Aircraft Bluebook that are listed on FAA records and considered to be in the U.S. inventory.

2007Q309.jpg 

Export Data: These numbers include both airplanes and helicopters. The numbers do not include aircraft that have empty weights in excess of 33,069 lbs.

2007Q310.jpg 

Single/Multi: The blue line in the Single/Multi chart depicts change-of-ownership data for singles. The black line represents multis.

2007Q311.jpg 

Jet/Turboprop/Heli: The black line in the Jet/Turboprop/Heli chart represents change-of-ownership information for jets. The blue line depicts turboprops, and the gray line represents helicopters.

2007Q312.jpg 

Total Market: Depicts change-of-ownership data for all aircraft included in the Aircraft Bluebook. The numbers are from the FAA Registry. Gliders, homebuilts, airliners and other aircraft not found in the Bluebook are not included in this study.

 

RECORD CORPORATE PROFITS KEEP USED AIRCRAFT MARKET HOT

Vol 19, No. 2 | June 1, 2007 | Go to Charts


by Paul Wyatt, Managing Editor | Aircraft Bluebook – Price Digest

General aviation hitches its horse to one very important wagon: a wagon filled with corporate profits from companies all over the world. When the coffers are full, businesses turn to aviation to maximize their efficiency further.

Corporate profits impact not only the new and used long-range business jet, but they even affect the newly minted pilot’s ability to purchase a used single-engine piston. If corporate America is posting record gains, as it has for the last four years, those profits “trickle down” (remember Ronald Reagan?) to everyone involved in aviation.

And even if corporate profits begin to level out in 2009 (as many predict), an emerging international interest in general aviation (both new and used) will be there to pick up the slack. Of course, this assumes the global economy will continue to flourish in the shadow of war, terrorism and another impending energy crisis.

Jet

Bluebook-at-a-glance
Increased — 114
Decreased — 293
Stable — 358

As has been the case for two straight years, the jet market remains the strongest segment of the industry. Manufacturer backlogs are still breaking records; the demand for new aircraft combined with newly strong international interest in business aviation has fueled furious competition for late-model jets. However, peddling aircraft more than 10 years old continues to be tough as inventories bulge at the seams.

Again, brokers and dealers report that the market is super-tight for long-range jets, and offers arrive seemingly the minute planes come available. Gulfstream prices continue into the stratosphere with 2005 and 2006 G-550s receiving a $3 million adjustment. The G-V models were up $2 million. The G-IVSP market remains hot with prices up $1 million. Demand for straight G-IVs remained stable, and prices were unchanged.

The prices of the Global Express were also up $3 million for the 1999 through 2001 models. Challenger 604 prices are stable; however, high inventories of Challenger 601s resulted in a $300,000 loss for 1A, 3A and 3R derivatives.

Late-model Falcon 2000s were up slightly with the EX option being the most desirable. This was reflected by a $500,000 rise in value.

For mid-size corporate transportation needs, the Citation Sovereign was up $500,000. Learjet 40 series have cooled, and
prices were down as much as $200,000 for the 40XR. The Lear 60 also declined with a loss of $200,000 for late models. Astra 1125s were off the pace and were down $100,000. Sabreliners continue to ebb away with 60 and 75A models down $20,000.

For small jet offerings, all versions of what is now called the Hawker 400XP (once known as the Mitsubishi 300 and the
Beechjet 400/400A) remained flat, with only the 2006 model experiencing the average one-year depreciation. The Citation CJ3 led the Citations with a $400,000 bump for late models. The CJ2+ was right behind with a $300,000 increase. The Encores and Excels are both active with a $50,000 and $100,000 increase respectively.

Falcon 100s fell by $100,000, and the Lear 35 and 36 models remained firm.

Turboprop

Bluebook-at-a-glance
Increased — 202
Decreased — 169
Stable — 231

The turboprop market continues to mirror the jet market. It’s a simple equation: When the economy percolates, flight departments upgrade their equipment. However, the same dynamic between new and old is just as pronounced in this market; planes younger than 10 years old often sell quickly while the older aluminum sits forlornly in the back of
the hangar.

Single turboprops continue to sell well, and prices have climbed. The venerable Cessna Caravan, Grand Caravan and Cargomaster were up $25,000 for early models and as much as $50,000 for new versions. Piper Meridians are on the move and experienced a $50,000 boost as well. Pilatus PC-12 prices have stabilized, but the model is still in great demand. The Socata TBM was the only turboprop single to slip and declined $50,000 for several year-models.

On the eve of the great VLJ revolution, used turboprop twins (whose prices were expected to crash as a result) continue to be strong. The Cessna Conquest I and II have bounced up $50,000 and $100,000 respectively. Mid-eighties versions of the King Air B200 were up $100,000. The C90B and E-90 King Airs are trading briskly and got a $50,000 boost for many year-models. The 300 King Air continues to hum along with another $100,000 increase.

The older turboprops faired less favorably. Nearly every model from Fairchild continues a long, slow descent. Merlin IIs, IIIs and IVs all slipped anywhere from $10,000 to $30,000. Mitsubishi MU-2s once again lost $10,000 across the board.

Multi

Bluebook-at-a-glance
Increased — 160
Decreased — 385
Stable — 99

After briefly stabilizing during the winter months, the piston twin market is again flailing. The soaring price of avgas (what now seems to be an annual rite of summer), is pummeling the planes with two gas hogs mounted on the wings.

There are exceptions to the rule, however, and again age is the main factor when looking at value direction. Twins that bucked the overall trend included late model Piper Seneca Vs. Late models were up as much as $20,000. Decent Piper Chieftains are still sought after and remain in the $200,000 to $300,000 range. Many year-models moved up as much as
$10,000.

The appreciation winner in this market segment was the Aerostar 601P. Several strong sales resulted in a 20 percent increase for mid-1970s models.

More than 385 model years of piston twins fell in value. Leading the pack was the Baron 58P, which took at $20,000 hit. Fuel burn, maintenance issues and sky-high insurance premiums continue to dog this former standout.

The Cessna 414A offerings are peppered with very tired aircraft, and prices fell $20,000 for the last ones produced in 1984 and ’85.

Piper Seminoles round out the batch of descending twins. Even late models were down $20,000.

Single

Bluebook-at-a-glance
Increased — 482
Decreased — 1401
Stable — 478

As we moved into the prime spring selling season for piston singles, many dealers and owners came to grips with reality: This market segment has adjusted substantially downward. More than 1400 year-models in the Bluebook lost ground—the most ever in a single quarter.

Many believe this market has seen a correction that most likely will never reverse. As we’ve said before, no one is looking for a “project.” Singles in excellent condition with updated avionics still sell relatively quickly, but a plane with a high-time engine and original gauges seems to have no market whatsoever.

Conventional economic wisdom dictates that when prices fall low enough, buyers should emerge with the desire and resources to buy a diamond in the rough that can be resuscitated back to a shiny new life. Evidently these individuals have become hypnotized as they stare into the glass cockpits of several new piston singles.

One New Jersey dealer summed it up this way: “These tire kickers out there all want these planes for nothing, and then they expect perfection at the pre-buy.”

The ubiquitous Cessna Skyhawk has always been a mainstay for used aircraft dealers decade after decade, but now bloated inventory is putting downward pressure on prices. Some late model 172s (the ones with the steam gauges) fell as much as 10 percent in the last quarter.

Late model Skylanes are suffering the same fate and were also down a similar amount.

Newer Mooney Ovations slipped $10,000 or more. Piper Archers from the late 1990s were off substantially and were adjusted down as much as $12,000. The Arrows of the same age lost as much as $20,000.

Early Saratogas were down $4,000, and later models of the Saratoga SP fell as much as $15,000 for early 1990s offerings.
Planes that experienced a boost in value were few by comparison. The Cessna 180/185 markets remain strong, and prices were up $5,000 for many iterations. Commander 114Bs saw renewed interest and increased by $15,000.

Helicopter

Bluebook-at-a-glance
Increased — 131
Decreased — 261
Stable — 525

The used helicopter market continues to show considerable strength, though the main beneficiaries continue to be the newer models. While theOEMsstruggle to meet demand, many “slightly” used ships are actually bringing more than the new MSRP.

While everyone else bemoans the recent rise of prices at the pump, the helicopter industry (both new and used) is reaping the rewards of renewed oil exploration, particularly in the Gulf of Mexico.

In addition, the law enforcement and EMS market segments are “trading up” in record numbers. Again, the backlogs of new helicopters are forcing several public municipalities to enter the used market for the first time.

The models that experienced increases included the Eurocopter AS 350B series, which experienced a $100,000 increase for all models. The Agusta A109C was up a strong $100,000 as well. The Bell 206 L-4 moved up $50,000, and the Bell 222 was also up $100,000 for mid-1980s models.

The Sikorsky S-76 also received a bump of $100,000.

On the down side, trading of Eurocopter SA 315s has slowed, and prices received a $50,000 adjustment. Bell 206Bs fell $20,000. Robinson R44s were off slightly and were down $10,000 throughout the production cycle.

CHARTS — JUNE 1, 2007

2007Q201.jpg

Used Aircraft Market: This chart displays each model's quarterly value in relationship to its average equipped price at the inception of the aircraft. The study begins in the spring quarter of 1994 and includes the Jet, Turboprop, Multi, Piston and Helicopter. For all charts, the red number indicates the first reporting date after 9-11.

2007Q202.jpg 

Jet: The jet chart depicts the average price (in thousands) of the six 1990s jets listed in the box.

2007Q203.jpg 

 

Turboprop: The turboprop chart depicts the average price (in thousands) of a 1985, 1986 and four 1990 turboprops listed in the box.

2007Q204.jpg 

Multi: The multi chart depicts the average price (in thousands) of the six multi models listed in the box. Each model’s year will precede the name of the aircraft.

2007Q205.jpg 

Piston: The piston chart depicts the average price (in thousands) of the 10 pistons listed in the box. Each model’s year will precede the name of the aircraft.

2007Q206.jpg 

Helicopter: The helicopter chart depicts the average price (in thousands) of the six helicopters listed in the box. Each model’s year will precede the name of the aircraft.

2007Q207.jpg 

NASDAQ: This ratio scale chart depicts the change for the NASDAQ daily average from quarter to quarter beginning at the end of the first quarter of 1992. Each data point represents the closing daily average on the last trading day of each quarter. This study originates in the first quarter of 1971.

2007Q208.jpg 

Aircraft on Registry: The Aircraft on Registry chart depicts the number of aircraft reported in Aircraft Bluebook that are listed on FAA records and considered to be in the U.S. inventory.

2007Q209.jpg 

Export Data: These numbers include both airplanes and helicopters. The numbers do not include aircraft that have empty weights in excess of 33,069 lbs.

2007Q210.jpg 

Single/Multi: The blue line in the Single/Multi chart depicts change-of-ownership data for singles. The black line represents multis.

2007Q211.jpg 

Jet/Turboprop/Heli: The black line in the Jet/Turboprop/Heli chart represents change-of-ownership information for jets. The blue line depicts turboprops, and the gray line represents helicopters.

2007Q212.jpg 

Total Market: Depicts change-of-ownership data for all aircraft included in the Aircraft Bluebook. The numbers are from the FAA Registry. Gliders, homebuilts, airliners and other aircraft not found in the Bluebook are not included in this study.

ANOTHER VERY HEALTHY QUARTER

Vol. 19, No. 1 | March 1, 2007 | Go to Charts


New and Almost-New Aircraft Market Crazy Hot,
but Older Planes Very Slow to Move

by Paul Wyatt, Managing Editor | Aircraft Bluebook – Price Digest

We’ve often commented that the used aircraft market is a direct reflection of two major influences: the U.S. economy and the production levels of the new aircraft manufacturers.

Both of these entities are heading into record territory in 2007.

Recently released sales figures from the General Aviation Manufacturers Association showed that 2006 was a spectacular year for new aircraft sales. Total sales reached $18.8 billion dollars (up 24.1 percent) on 4,042 deliveries (up 12.9 percent). The huge backlogs at the OEMs have resulted in many impatient buyers locating late-model planes to meet their immediate needs.

Demand for these new and used planes is directly tied to the ebb and flow of the stock market and corresponding corporate profits. Inflation has slowed, the housing slump has hopefully bottomed out, and economic growth is strong. In short, things are on track for another record-breaking year in general aviation.

But the news isn’t rosy for dealers with older inventory. Again, whether it’s a jet or a piston single, everyone is clamoring for late-model planes. New paint and a re-rag on a plane built twenty-five years ago is still a difficult sale.

However, new products are popping up such as the Alliant glass cockpit retrofit for older King Air 200s. Combined with the upcoming Garmin G1000 package for King Air C90s and the G600, which will be marketed to the entire piston retrofit market, these companies and others are working to keep these older planes viable in the used market.

Jet

Bluebook-at-a-glance
Increased — 118
Decreased — 54
Stable — 582

A record 2097 used business jets traded hands in 2006. That figure is almost twice the number sold in all of 2001. Jet dealers are bullish on 2007, and early sales reports to the Bluebook reflect that optimism.

In the smaller jet market, the Beech 400As are active, but prices again were unchanged. “The Beechjet is an exceptional value,” commented one dealer. “It runs around a million less than the Citation Vs of the same age with the same engines. I can make that sale every time.”

The Cessna 525 series continues to firm up with earlier Citationjets steady and a slight increase for 2000 and 2001 CJ1s (up $50,000). Late-model CJ3s are very hard to find, and prices were up $200,000. Citation Bravos were up as much as $100,000 and the Encores were up an impressive $200,000.

Other small jets such as the Falcon 100 and the Lear 35 remained firm.

Most medium-sized jets were unchanged from the previous Bluebook. The Cessna 650 series (VIs and VIIs) has seen little price fluctuation during the last two quarters, but the Citation III was down $100,000. The late-model Citation XLS is still very hard to come by, and late models were up $300,000. Hawker 800s and the Lear 55/60s are steady.

Several large long-range jets made the biggest moves of all with several Falcon 900EX up as much as $1.2 million. Most earlier model 900s were up half a million. Late model Falcon 2000EXs were up $2 million as well.

The late model Global Express was up an astounding $4 million. This was the largest single one-quarter adjustment in the history of the Bluebook. The Gulfstream G-550 was close behind with a $3 million bump.

However, older Falcon 50s were not at the party, and values fell $200,000.

Turboprop

Bluebook-at-a-glance
Increased — 121
Decreased — 11
Stable — 165

Traditionally, the fourth quarter has been prime time for turboprop sales and 2006 was no different. There were 406 sales in October, November and December. This market shows no sign of cooling, and many dealers report 2007 has started with very intense activity.

Beech King Air 350s continue to rise and were again up an additional $100,000 for the entire production run. In turn, the King Air 300s are sharing that popularity and were also up $100,000. The 200/B200 King Air market continues to be extremely active with much activity, but prices are currently steady.

The hot-rod F90 King Air is regaining ground and was up $100,000 for late models. The E90s were up slightly by $25,000 and C90As and Bs received the same slight adjustment.
The Pilatus PC-12 continues to shine, and late models were up as much as $200,000. Cessna Caravans were up $25,000 for recent year-models.

The Piaggio P180 is grabbing attention, and prices were up $200,000.

The Cessna Conquest Is and IIs, as well as the Piper Cheyenne Is, IIs, and IIIs were all unchanged.

Multi

Bluebook-at-a-glance
Increased — 39
Decreased — 20
Stable — 601

For the most part, prices have stabilized in the piston twin market. It’s too early to proclaim that the freefall is over, but later model planes are selling, and in some instances, they are even bringing decent money.

One dealer commented, “I sound like a broken record, but the light twin market is still very soft. But after the first of the year, I’ve really seen an increase in response to my ads.”

To convert those phone calls into completed sales is still difficult in this market. The plane had better be a pristine late-model specimen to close the deal. Late model 58 Barons are good candidates to be in this condition and received an increase of $5,000 for early 90s models.

Pressurized Barons were up $10,000 for several year-models. Cessna 310s are getting looks again and were up slightly (plus $3,000).

The spar AD still looms over the Cessna 400 series, and the newest models of both the 414A and the 421C were off $10,000.

Piper twins both large and small, old and new remained steady.

Single

Bluebook-at-a-glance
Increased — 77
Decreased — 49
Stable — 2234

It’s been a cold and lonely winter so far for the single piston market. One dealer commented, “Even the bargain hunters are lying low and waiting for the thaw.”

However, some singles are selling. The late-model Cessna, Cirrus and Columbia shoppers are out there and are not letting the weather freeze their desire for the latest in glass cockpit technology. Though not climbing, prices for these planes have remained strong.

The older complex singles still go wanting for buyers, and unless they’ve undergone a transformation similar to AOPA’s “better than new” restoration, sellers are going to have to slash prices. Prices for these planes took a hit in our previous book, but this time most have remained flat. Buyers always emerge when the prices fall, but how low these planes will have to be priced will be revealed as we move into spring and summer.

Among the singles falling in value were the late-model Cessna 206s (down $5,000).

Bonanzas built in the 80s and early 90s bucked the trend and experienced a small amount of appreciation. The A36 gained $3,000 and the F33 moved up $5,000.

Helicopter

Bluebook-at-a-glance
Increased — 123
Decreased — 10
Stable — 756

The used helicopter market is still on the rebound, and sales numbers have been healthy in both turbine and piston segments. However, a stabilization of petroleum prices will temper the recovery in 2007.

Traditionally, the turbine helicopter market (both new and used) hinges on the ability of government agencies to improve and update their equipment. When larger police and EMS departments opt for new ships, smaller cities and towns are able to purchase the trade-ins. The robust economy has resulted in fuller tax coffers that make these purchases possible.

The models that experienced increases included the Eurocopter AS 350B series which experienced a $100,000 jump (up 20 percent). Other ships on the move include the EC 135P1 and T1 (up $25,000), the Agusta A109C (up a strong $50,000), the Bell 412 and 412SP (up $50,000) and the Bell 430 (up an impressive $1 million for several year-models).

Several iterations of the Sikorsky S-76 received upward adjustments of $500,000.

Late-model Robinson R22s are trading briskly and experienced a modest bump of $5,000 to $8,000.