Record Corporate Profits Keep Used Aircraft Market Hot

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 further maximize their efficiency.

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.

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.

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.

No matter if they are selling jets or piston singles, as the summer heats up, dealers and brokers continue to keep one eye on Wall Street. In many cases their livelihood hinges on the health of the economy.