Q2 2018 Market Update

Our Q2 2018 Market Reports were just distributed, and they brought mostly good news. For more in-depth market information, sign up to receive our market reports at www.wepushtin.com/reports. In the meantime, check out a quick snapshot of the market below.

Bombardier

The Bombardier market, overall, seems to be in a healthy state. The suffocating depreciation lines that we saw from 2008 to 2017 are leveling out significantly. Not many of the Bombardier fleets even dropped a penny in value this past quarter, which is fantastic news for everyone in the industry!

Fifteen Globals sold last quarter, which is great activity. While Global 6000s saw a big jump in inventory, Global 5000s saw the exact opposite. Meanwhile, XRS and classic Express fleets saw a decent amount of movement between January and February 2018.

The Challenger 605 market, which really had me worried in Q4 2017 with zero transactions, is back to its normal healthy self—now at 10 solds in Q1. But if you want to talk about good activity, we have to mention both the Challenger 604 at 16 transactions and Challenger 300s at 13. Both aircraft fleets seem to be historically among the healthiest in private aviation.

Learjets continue to kind of limp along compared to other light jets in the industry. Except, surprisingly, for the Lear 31A, none of the Lear markets got above the double-digit transaction mark. But the good news is that, although the market might not be as hot, the loan values are really holding strong!

 

Citation

The Citation markets continue to outperform most other models in their respective categories.  We saw a busy quarter across most of the Citation models, adding to the string of consecutive good quarters. A lot of transaction trends are going “down,” but note that these decreases were from an abnormally high end to 2017. Even though transaction numbers were “down,” they were still better than normal!

Strangely, the Citation X market has slowed way down. There were only 2 “on market” transactions and 5 total this past quarter. Values have stabilized, but buyers haven’t come knocking, yet.

The Latitudes continue to be delivered at an astonishing rate. Charlie Bravo’s Ryan Lutz was able to visit the assembly line in March and was told there is a healthy backlog into 2019.

The Sovereign/+ had really good turnover, with 13 total transactions in the first quarter. We’re seeing a lot of Excel and XLS owners stepping into this slightly larger cabin.

On that note, the XLS/+ and Excel markets had a great quarter, as well. Following a strong end to 2017, inventory is low and there are still buyers out there.

There’s been a dip in 525 model (CJ4, CJ3/+, CJ2/+, CJ1/+ and CJs) transactions, but it simply isn’t an issue. There is still good turnover on all of these markets, and some of them, like the CJ4s and CJ3s, are undersupplied. We’re expecting a good summer for these aircraft across the board.

The Mustang market is about as healthy as they come. We’ve seen an inventory drop and market turnover of nearly 40 percent this quarter!

The Encore market is experiencing a spring bloom, as well. After consecutive quarters of lackluster turnover, the market has tightened and 4 out of 12 aircraft for sale are currently under contract. This is because the CJ3/CJ4 markets are undersupplied, so buyers are opting for less expensive and bigger (albeit slightly older) Encores.

The Bravo market has seen a big dip in the number of aircraft for sale this quarter, which is a really good sign! Inventory is down from 55 aircraft to just 31 in early April. Transactions are sluggish, though, with only 2 sales this quarter. There has only been one sale above serial number 1000 in the past 8 months.

The Ultra market had a surprisingly good first quarter, as well. Inventory went up slightly, but transactions remained level—a much needed boost for this model.

 

Embraer

There is so much positive energy coming from the Embraer new and pre-owned side. The Phenom 100 continues to be one of the most desirable private jets in the world.

Embraer Legacy 450 and 500 markets are still relatively young, so they don’t have much pre-owned movement, but deliveries remain strong.

Good news for Legacy 650 owners: the available inventory was cut in half and the movement is showing signs of picking up.

 

Falcon

The 7X is the big winner in the large cabin category this quarter. It seemed like everyone’s been looking for one of these since January 1st. We are seeing 7Xs sell before even making it to market. If you are considering selling your 7X, please reach out to us immediately as we can get buyers for your aircraft quickly!

The other real winner this quarter was the Falcon 2000 This is another aircraft that buyers can’t seem to get enough of right now. This model has the range and operating costs that are attractive to buyers that are getting into a larger-cabin aircraft for the first time. The upgraded Falcon 2000EX and 2000LX markets suffered slightly, due in large part to the interest in the classic 2000s.

The Falcon 900 series of aircraft remained slow and steady this quarter, while some of the less popular models (Falcon 900C and DX) saw some stagnation. When the fleets are only 10 to 15 planes, that isn’t a big deal.

Falcon 50EX transactions were also slower than normal, but it wasn’t an alarming dip. I think this model will be slow through the summer before picking back up with the normal fall upswing!

 

Hawker/Beechcraft

Every quarter, it seems that each Hawker/Beechcraft market is either boom or bust. While the overall uptick in the business jet market is helping pull some of the less popular Hawker/Beechcraft models along, there is really no telling which models are going to get hot from quarter to quarter. Lots of these aircraft continue to make their way to the boneyard or south of the border—a trend that will only increase as 2020 compliancy approaches.

The Beechjet 400 market saw a sharp decrease in aircraft for sale, without a corresponding transaction increase. This means many were sent to scrap, as there is still a decent demand for Beechjet parts. The 400A market cooled off from the end of 2017, but there is still a lot of interest from places like Mexico and Brazil.

The Hawker 800A and 800XP is a safe bet where you’ll always find some activity. 800A inventory has fallen for the third consecutive quarter, which is a good sign. Both markets posted good transaction numbers, with the 800A market posting 15 and the 800XP market posting a surprising 22!

The Hawker 1000 and 4000 markets continue to be slow. No transactions took place in either of these markets last quarter. Without the support of Textron, buyers are opting for similarly priced Gulfstream and Citation products. We don’t see this trend changing anytime soon.

The Hawker 900XPs had a great end to 2017, and sustained this rebound through the first quarter of 2018. Values fell slightly, due to more market turnover, but we have a feeling owners are okay with this minor deduction if it means getting their aircraft sold!

The Premier I and IA models were surprisingly stagnant this quarter. Both markets experienced a productive fall and winter, so I expect the stagnation was due to the best aircraft having been picked over already. We will probably see this market rebound as fresh inventory becomes available.

 

King Air

Overall, the King Air market had a fantastic start to the new year. New deliveries dropped to normal levels, but there were more pre-owned transactions to pick up the slack. We have even seen some King Airs being purchased as auxiliary aircraft—a midsize jet for longer-range missions and a King Air C90 or B200 for short regional hops. It is a good time to upgrade into a jet if you are considering it, as demand is going to remain high for these aircraft into the summer.

The C90 line of King Airs had a strong quarter across the board. Most of the models saw a reduction in inventory and increase in sales! The C90, C90B, C90GT and C90GTi all performed really well. We expect a customary slight summer dip in these models, but they are in a good position going into the rest of the year.

B200 transactions picked way up, with 29 aircraft changing hands. Stability and turnover here is usually a good indication of the market as a whole. The market could actually use some more supply right now, as only 5.7 percent of the fleet is for sale.

The King Air 250 market is also undersupplied, which we believe is putting a damper on the number of transactions. If there aren’t several good options out there, buyers will look for upgraded B200s, or even step into a 350.

The King Air 350 models saw a dip in new deliveries from the frenzy at the end of 2017, but used transactions were still high, which is a good sign.

 

Gulfstream

From the looks of the activity from quarter one this year, Gulfstream markets across the board are still healthy. Activity in the newer fleets has slowed, but older vintage fleets are steadily picking up. That might change as we near the “ADS-B Out apocalypse” of December 2019!

No fleet really jumped off the page this quarter in terms of depreciation, the highest being the G200 and G300 going down an average of $100K. That seems to be a trend right now in private aviation: loan values holding tight. It’s safe to say that I think we’ve established a new norm in depreciation—less free-falling and more gradual coasting.

By | 2018-05-10T15:59:04+00:00 May 10th, 2018|0 Comments

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