Posts Tagged ‘economy’

Piston values have stopped dropping

Tuesday, September 17th, 2013

A few months ago I reported in AOPA Pilot that all aircraft were dropping in value; if it flew, it was down. Recently I checked back to see if things are looking better. Rarely would we celebrate being drug along the bottom of the used aircraft value “ocean, ” but that is the case with piston-engine singles and twins. Vref, the airplane value reporting firm, says prices that dropped into the toilet, let’s make that the vast clean ocean, have stopped dropping. They bounce up and down, but there appear to be no more cliffs ahead. They should stay where they are for another year, says Vref’s Fletcher Aldridge.

Aldredge looked at 25 jets and found all but seven of them are in a buyers’ market. If 10 percent of the fleet of, say, Lear 60XR aircraft are for sale, then it is a buyer’s market. If the percentage is less and few are available, it is a seller’s market. The Lear 60XR is in a buyer’s market because 22 percent of the Lear 60XR fleet is for sale, and the used inventory is growing. The Global Express, Falcon 900, Citation II, Beechjet 400A, CitationJet 525, and Gulfstream IV, IVSP, and V, are all in a buyer’s market. The Gulfstream 450 and 550 are in a seller’s market. You can see the whole list for yourself right here.

For small jet sales to recover, small companies must get happy

Friday, August 30th, 2013

Right now, they aren’t happy about the economy, says Alasdair Whyte of Corporate Jet Investor. The small jet market is sick because small companies don’t have confidence in the economy and are holding back on purchases. They are not seeing a recovery. Larger companies are driving the economic recovery and don’t feel the same way, so they are moving back into the jet market. It’s tough on those who want to sell a used Cessna Mustang or similar light jet. It was so tough on Cessna that top execs closed the door on bargain hunters who were asking for unprofitable sales prices. Small jets aren’t heading for the sunset, just waiting for small businesses to find confidence in the economy. Whyte suggests we all buy something from a small business.

Diamond withdraws from major consumer shows

Saturday, July 9th, 2011

Diamond Aircraft will not exhibit at EAA Airventure, the National Business Aviation Association convention, and AOPA Summit as a cost-savings measure. The company will continue to exhibit at law-enforcement and government security shows to demonstrate its special mission aircraft. The decision was a cost-saving move to focus on the D-Jet program and continue support of the piston-engine fleet, said Diamond President Peter Maurer. A recent loan from an unnamed source was to support development of the D-Jet. Maurer said the decisions were necessary because of the “…continued weakness of the economy,” and “…slow industry wide retail sales.” The company’s September open house at the factory in London, Ontario, will continue as planned.

Used aircraft prices attract attention, few sales; Dealers can’t move new aircraft or jets

Wednesday, March 18th, 2009

Used piston-engine aircraft buyers are at last returning to showrooms but only to kick the tires and leave. Jet prospects and customers for new piston-engine airplanes don’t even show up. It’s not just buyers and sellers under stress–dealers face a daily financial dilemma of their own.

Mike Long of Air Orlando Sales in Florida says a 2005 Cessna 172S with 1,900 hours on it that in a normal economy would sell for between $155,000 and $162,000 is on the market for $135,000. The aircraft is equipped with the Garmin G1000 avionics suite. That’s bringing in tire kickers, but they are still reluctant to sign the deal.

Long said the bad economy started in 2006 but, “Everyone was too busy to see it coming.” In 2007 the economy slowed noticeably, Long said. Then almost overnight on a day in mid-October 2008 the crisis hit with unexpected intensity.

Howard and George Van Bortel are also seeing lower prices at their Cessna dealership in Arlington, Texas, where a 142-hour total-time Cessna Skylane that in a normal economy sells for $305,000 instead costs $269,500. But they are finding buyers. By March 18 they had equaled the sales total of 10 aircraft sold in March 2007. However, they sell jets, too.

The business jet story for the Van Bortels is different and with a wicked twist–no buyers. A used Cessna Citation CJ3 that in a normal economy would cost $7 million is going for $5.5 million. A CJ2 that in a normal economy would cost $5.5 million is priced instead at $3.5 million. And a used older straight CJ that last year sold for $2 million is available for $1.5 to $1.7 million. They noted that the current issue of Controller lists 748 used Cessna jets for sale, but a year ago the number was half that.

The recession is hard on the dealers, too. Rich Manor of Tom’s Aircraft at Long Beach, another Cessna dealer, described what it’s like on a daily basis to sell aircraft in this market, and his e-mail to AOPA Pilot is printed verbatim below.

What follows is an e-mail from Rich Manor of Tom’s Aircraft:

“Aircraft sales have dropped dramatically over the last nine months, particularly new aircraft. Used aircraft prices have dropped significantly, so there is at least action on pre-owned aircraft which are market priced. The same cannot be said for new aircraft.

 “We are a Cessna dealer, and Cessna has cut production,” Manor continues.  “However, even at the lower volume of new aircraft entering the market, we are still carrying more inventory. Our holding costs are higher too, as wholesale financing has dried up and we’re paying higher interest rates for longer periods of time on our inventory aircraft.  Those factors coupled with deep discounts required to sell new airplanes, make it very difficult to make a profit in this market.
 
“Retail financing is also tougher to get as lenders have tighter qualification requirements, and are much more conservative on terms. For example, Cessna Finance Corporation, who used to do 80 percent of our deals which were financed, raised their retail rates to almost two full points above the competition on single engine piston aircraft.
 
“As far as turboprops go, we are also a new Caravan dealer, and that market has slowed as well although not nearly as bad as light piston aircraft. Cessna recently upgraded the Caravan to [Garmin] G1000 and TKS [deicing system], so we’re still working through the backlog of orders that those two enhancements created. Even though production volume on Caravans is relatively low, in my opinion, if this market continues, it’s only a matter of time before the Caravan market will suffer.”
–Rich Manor, Tom’s Aircraft