Jet likely in my future.

Flew the Citation II Scottsdale to Telluride and back after a day of skiing.

[youtube]http://youtu.be/x5qKa6mdV9E[/youtube]


Threw some numbers together...I can buy fuel at Scottsdale for $2.31/Gal


What say you?

Why not just buy a 550, pay for the fuel and engines/reserves be damned? When the time comes, dump it and buy another?

At that point, wouldn't the loss on value when you sell still be cheaper than all the costs added up if you were "doing it right" by budgeting reserves?

Here is a wrinkle. Loan covenants are typically EBITDA oriented and thus opex reduces ebitda. Way more flexibilty on capex re covenants. Argues for higher capex and lower opex resulting in higher ebitda.


The 550 strategy suggested by Garrett runs counter to this approach. High opex low capex means reduced ebitda and lower cushion.


But prudence is important too (ie there are practical limits mostly emotional on how much caps you spend. This is not a G550 kind of thing. Prolly $2m max.

That's awesome. Whose plane is it, or a rental of some kind? I want one!

Looking at the 550 market, there's a lot of supply. Sitting supply. I imagine it's all about the mission and idea, but if you grabbed a listed 500k 550 for $350k, throw fuel in it and ran it to death with the idea of recapturing all the costs at the end by selling the engines and everything else to a scrapper, you might make money.

Maybe that's highly unlikely, but I'd imagine you could get close. I think the future of those 500/501, 550's is going to be closer to that mission than otherwise. However, on that 560, sure, throw money at it and keep'er around.


Obviously as you stated, a bank probably won't go for this.

I hope Jason doesn't see this...

No matter what the numbers are, a PC12 still has a prop...

Mark,

That's an interesting analysis. I'm not sure I've seen "Exec/Hour" used in an aircraft rationalization (err, cost analysis) before but I think we all recognize the validity of the argument in a business aircraft analysis. I think you should plan to take a couple of other executives with you and see what it does… I'm flying longer distances more and more and taking the airlines because I can't afford the time to fly myself. I like your thought process...

I've been having a running discussion with a client who moved from a Jetprop to a CJ regarding jet vs. SETP. His argument centers around "what is your life worth" arguing the value of two jet engines instead of a single, or even twin turboprop, aircraft. Mike C. would like him.

Your point about operating vs. capital is very interesting and one I had not considered because I don't borrow money to operate my business really. But with that in the mix it certainly makes additional sense to go toward the Eagle. Have you talked to the people at Sierra? I have found them to be very helpful.

One other advantage of the 550 series is that there are a lot of pilots with that type certificate. In the event you want to have the plane operated carrying other employees besides yourself that might be really useful as you can arrange with a charter operator to provide pilots for you without having to hire one directly which could create a variable rather than fixed cost expense.

Why are Excels and Encore's both listed as 560's?

Jason,

They all share a common type certificate A22CE, in fact the Excel uses most of the Encore parts just larger fuselage and APU.

Better Glass on the XL and XLS+ and it holds everything that a PC-12 can only no Cargo Door and not single pilot.


Nigel

Yeah I hate that part.

So why is an Encore priced different from a CJ3?

Jason,

The company I now fly for said the same thing and upgraded from a 2006 CJ3 to 2014 XLS+ . They bypassed the Encore as wasn't a big improvement in Cabin /performance for the price.

The Director flight ops looked at the CJ4 and surmises the the 4 will most likely compete against the Encores for sale as the difference in price and performance isn't that much

Don't know why the difference really ? Cessna marketing? RD costs for the Encore have to be lower than the CJ line when spread across the total production of the 500 series / type cert.

Nigel

I'm not sure I've seen "Exec/Hour" used in an aircraft rationalization

And does your accountant also say business flights that are chartered are not deductible?

Michael:

Don't confuse tax accounting with cost accounting. It sounds like you were discussing what you could deduct for your business flights under IRS rules vs. determining cost per hour for making a choice of which aircraft to acquire. Two totally different issues.

As far as cost per exec hour? It's absolutely real. Very overlooked aspect of this type of decision. Our company is based in a hard to get to place. Luc can weigh in on this topic but from CID to SAW commercially it is an all day affair. He can make it in two hours in the RED BO. Just bad business not to account (consider) for this type of thing.

Plus with the Jet I can get senior execs of customers and partners to visit us whereas they won't if they have to fly commercially.