BeechTalk - BT

Username Protected · **Posted:** 08 Aug 2019, 07:55

Username Protected wrote:

I'd also like a definition for "light jet". IMO that's everything from an Eclipse to a Falcon. Mustang and Phenom 100 I would put in the VLJ or mini Jet category.

There is zero chance any new airplane depreciates only 3% a year. However, JetAviva is in the 2nd hand airplane business and don't sell new...... I don't think. So perhaps they only mean the 2nd hand market which could be possible especially over the last few years. But that doesn't mean it will stay that way.

I've never seen so many airplanes on Controller. There are 48 Phenom 100's listed right now. Granted, many could be fake listings but there have never been so many. I think it's a great time to be throwing out lowball offers on "light jets".

Yeah. They're just now finding out about their 10 year gear overhaul.

Username Protected · **Posted:** 08 Aug 2019, 07:57

Username Protected wrote:

Good luck on that. The good ones are very much in high demand.

I never said they weren't so not sure where you're coming from with that comment. I simply pointed out that Controller is full of airplanes of all types.

But I would love your definition of what a "good one" is.

Username Protected · **Posted:** 08 Aug 2019, 07:57

Username Protected wrote:

Latest JetAviva report shows light-jet airframe price depreciation at ~3% per year.

What age range did this report cover?

How much a light jet depreciates depends heavily on several factors, its age being one very important one. I have a hard time believing that all light jets average 3% decline in value. I would think it is much more. BWTHDIK

Prices are also very dependent on the economy, which has been good in recent years. Look at the average depreciation over a 5-10 year period that also includes a good recession and I think you'll see substantially more average depreciation.

Bryan makes a good point with regard to OpEx. If one is going to fly lots of hours, the savings in operating expenses can mitigate, if not eliminate, any loss in value.

Username Protected · **Posted:** 08 Aug 2019, 08:02

Username Protected wrote:

Good luck on that. The good ones are very much in high demand.

I never said they weren't so not sure where you're coming from with that comment. I simply pointed out that Controller is full of airplanes of all types.

But I would love your definition of what a "good one" is.

Username Protected · **Posted:** 08 Aug 2019, 08:05

Username Protected wrote:

Those ones don't last. As an example, when I purchased my Mustang, there were 22 for sale. 6 months after closing, there were 31 (I was helping a friend look at the market). Interestingly enough - of those 31, 14 were STILL on the list from when I was looking. So the "good ones" tend to go quickly. The ones that miss some of the boxes above tend to stick around for a while.

My comment was not meant to be confrontational. I was simply pointing out that in this market, offering "aggressive" offers on the "good ones" will be a very difficult prospect.

And as I already wrote.... many listings could be fake. I know when I call on planes I like many times the ad is bogus.... "oh, we already sold that one".

Username Protected · **Posted:** 08 Aug 2019, 08:17

Username Protected wrote:

Those ones don't last. As an example, when I purchased my Mustang, there were 22 for sale. 6 months after closing, there were 31 (I was helping a friend look at the market). Interestingly enough - of those 31, 14 were STILL on the list from when I was looking. So the "good ones" tend to go quickly. The ones that miss some of the boxes above tend to stick around for a while.

My comment was not meant to be confrontational. I was simply pointing out that in this market, offering "aggressive" offers on the "good ones" will be a very difficult prospect.

And as I already wrote.... many listings could be fake. I know when I call on planes I like many times the ad is bogus.... "oh, we already sold that one".

Username Protected · **Posted:** 08 Aug 2019, 08:52

Username Protected wrote:

Quote:

Bryan makes a good point with regard to OpEx. If one is going to fly lots of hours, the savings in operating expenses can mitigate, if not eliminate, any loss in value.

I have to put some qualifiers on this:
- Assumes purchase AFTER the initial 5-7 year large depreciation event. I don't purchase anything newer than that as it doesn't work in my financial model (i.e. - I'm too poor).
- Assumes a normalized economy. Average out the boom and bust.
- Assumes the manufacturer is supporting the unit (i.e. - no Eclipse issues)

Based on that, you will see about 3% per year to the floor of the value, where it will steady. For the Mustang, that's about $1.3 (engine value plus avionics value plus hull value). So if you purchase at $1.7 (about 60% of new price) and you've got a floor of $1.3, you'll see about 3-5% a year down to the floor. 10 years from now we’ll hopefully

Again, round numbers, but you get the point.

What holding period are you assuming? Long term, there is no “floor” on the value of a light jet, nor does it decline at a constant rate. 10 years from now we’ll hopefully see a new generation of engines that will make the FJ-44 become the gas guzzling engine not worth the expense of overhauling.

Username Protected · **Posted:** 08 Aug 2019, 10:12

I don't know why so many are on controller. I think the economy is too good to get a "steal" on a light jet right now. the amount of disposable wealth right now is eye-watering.

maybe those are listed as people are buying bigger... challengers and gulfstreams.

Username Protected · **Posted:** 08 Aug 2019, 14:36

Username Protected wrote:

I don't know why so many are on controller. I think the economy is too good to get a "steal" on a light jet right now. the amount of disposable wealth right now is eye-watering.

maybe those are listed as people are buying bigger... challengers and gulfstreams.

If you talk to the people at Cessna, it's simply people trading up. Personally, I know of three people right now. One trading a Phenom 100 for a 300. One trading a Mustang on an M2, and another going from a Mustang to a CJ3+. The guy I bought my Mustang from went from the Mustang to a CJ3+ as well. I think the barrier between one jet vs another is a bit easier to cross vs going from a turboprop to jet, so people tend to move up a lot.

Username Protected · **Posted:** 08 Aug 2019, 19:11

There seems to be two types of people that are buying entry level jets.
One is simply making the step because it satisfies the mission, is within budget, and plans to keep it long-term.
The other is moving up for the first type rating and to gain more experience, then plans to move up to a higher performance jet after that.

The first group takes entry level jets off the market, while the second group keeps putting them back on the market. Currently, the second group is feeding the first group.

Username Protected · **Posted:** 09 Aug 2019, 11:06

Conversation in OSH with the ultimate Cirrus insider.
Me: so, how soon could I get one if I signed today. I was sitting in it, and I think my tongue was hanging out while drooling. I was also making vroom vroom noises.
Answer: depends on your experience.
There are a few used ones on the market. They paid close to $1.8 mil for them and are selling them for $2.1 mil. Nice investment!
If you had no experience or low hours, we would first put you in a Cirrus for a few hundred hours and then start training you.
If you have experience and need one “now”, we have a few demos we use. We put you in one of those and deduct $1500 hrs for every hour it has flown. Give or take $2.5 mil.
If you insist on a brand new, your options and your tail number one, it’s a about 4 years.
With no guaranteed price.

Username Protected · **Posted:** 09 Aug 2019, 11:14

Username Protected wrote:

Conversation in OSH with the ultimate Cirrus insider.
Me: so, how soon could I get one if I signed today. I was sitting in it, and I think my tongue was hanging out while drooling. I was also making vroom vroom noises.
Answer: depends on your experience.
There are a few used ones on the market. They paid close to $1.8 mil for them and are selling them for $2.1 mil. Nice investment!
If you had no experience or low hours, we would first put you in a Cirrus for a few hundred hours and then start training you.
If you have experience and need one “now”, we have a few demos we use. We put you in one of those and deduct $1500 hrs for every hour it has flown. Give or take $2.5 mil.
If you insist on a brand new, your options and your tail number one, it’s a about 4 years.
With no guaranteed price.

Insurance has gone nuts. Everyone here's first call should be to their insurance agent. I was a told a story of a new SF50 owner paying $60K plus premium. My insurance folks told me that when I decide to buy a jet I need to keep hull value at or below X. Insurance has too much business right now. They can pick and choose.

Username Protected · **Posted:** 09 Aug 2019, 12:40

Username Protected wrote:

Conversation in OSH with the ultimate Cirrus insider.
Me: so, how soon could I get one if I signed today. I was sitting in it, and I think my tongue was hanging out while drooling. I was also making vroom vroom noises.
Answer: depends on your experience.
There are a few used ones on the market. They paid close to $1.8 mil for them and are selling them for $2.1 mil. Nice investment!
If you had no experience or low hours, we would first put you in a Cirrus for a few hundred hours and then start training you.
If you have experience and need one “now”, we have a few demos we use. We put you in one of those and deduct $1500 hrs for every hour it has flown. Give or take $2.5 mil.
If you insist on a brand new, your options and your tail number one, it’s a about 4 years.
With no guaranteed price.

Insurance has gone nuts. Everyone here's first call should be to their insurance agent. I was a told a story of a new SF50 owner paying $60K plus premium. My insurance folks told me that when I decide to buy a jet I need to keep hull value at or below X. Insurance has too much business right now. They can pick and choose.

Username Protected · **Posted:** 09 Aug 2019, 12:44

Username Protected wrote:

This is SO TRUE and so often overlooked. Have a friend that is moving up into a larger jet. Used. $5m or so. His insurance for year 1 - $70k. Yup. Wow. The insurance market has gone just crazy...

Hmm, that could mean that lower priced/older aircraft are going to increase in value as they can be flown with liability only, or very limited hull, which I (assume) you can't do with a financed aircraft.

Username Protected · **Posted:** 09 Aug 2019, 13:38

Username Protected wrote:

Hmm, that could mean that lower priced/older aircraft are going to increase in value as they can be flown with liability only, or very limited hull, which I (assume) you can't do with a financed aircraft.

Or that the ones stuck in the middle will be dropping in price because they are in-between.

-Jason

Mustang vs Phenom 100