The buying momentum that had been building during the fourth quarter of last year seems to be spilling into this year, as evidenced by a move lower in inventory to levels not seen in more than two years. In fact, since pre-owned inventory peaked about 18 months ago we’ve seen a fairly steady decline, despite an inordinate number of aging aircraft or leftovers from the downturn whose prices never got the needed downward adjustment, making them look out of sorts with the real market.
Super-midsize Revival
As has been the story for quite some time, it seems to be the late-model aircraft, especially those in the large-cabin segment, that have garnered the lion’s share of buyer interest, but they may start to have company as the super-midsize aircraft start to come back to life. For example, just a few months ago there were 30 Falcon 2000s for sale, near the all-time peak for the model. That has moved down to 22 in less than 90 days to the point that inventory now has dropped just below 10 percent, an important benchmark often used to define an average supply of any model type.
Similarly, the G200, which had also reached 30 a year ago, has since ratcheted down to 20 at present, about half of its peak and dropping its availability to 8 percent, a number perhaps even more impressive in light of the fact it endured not just a huge upheaval, but also the announcement of a successor model replacement. As often happens, after the dust settles buyers eventually realize the aircraft still performs as it always had, and with prices as low as they have been you could easily buy two G200s for the price of one G250 and go in two different directions at the same time and have money left over. Of course, the same could be said about many other models, where values in some cases have fallen 50 percent from their peak.
The Challenger 300, a perennial favorite, has experienced a drop from 35 a year ago to 23 today, squeezing inventory to 7 percent of its fleet of more than 300. The average selling price over the last six months is $13 million, according to AircraftPost, a far cry from the heyday when every 300 was commanding $20 million or more.
Sovereigns and Citation Xs continue to offer a plentiful supply, about 37 Sovereigns compared to 30 Citation Xs. The Citation X has dropped to an average supply percentage figure of 10, while the Sovereign is perched a couple of percentage ticks higher. The Sovereign market has not budged much from this inventory figure, which is about the highest level we’ve seen, and this stagnation could just make it the next target for buyers looking for an opportunistic trade.
Plenty of Small and Midsize Choices
Speaking of opportunity, while it’s going to take a bit more digging in some of the large-cabin model types, it shouldn’t be as challenging in the small and medium-cabin aircraft. For example, the Learjet 60, well off its peak of nearly 80 available, has almost reached 50. It has bounced around between 50 and 59 for more than a year, which at twice the good-times figure is just too many to drive anything positive on price–unless of course you are a buyer.
While a sizeable number of bank repos set the tone for the bargain-basement pricing, we’re starting to see sales occurring off those lows. In fact, none of the Learjet 60s sold over the last six months has traded below $3 million. Current asking prices of some earlier serial numbers suggest that will occur again, but the appetite lately has been for later models.
The Learjet 60 has plenty of company, with Hawker 800s, Excels and Astras (as well as their successor models) all in abundant supply at attractive prices. Hawker 800As and Astras are being touted throughout the $2 million range, with some falling below that floor.
The light-cabin segment is full of choices, with 16 percent of the CJs and Premier IAs for sale and 22 percent of the Learjet 31A market up for grabs. What’s interesting and perhaps a bit discouraging for sellers is that only one of these models, the CJ, has reduced its number of choices in the past year, while the other two expanded, perhaps a sign that soft pricing will persist for some time.
While no one was expecting a quick turnaround, it seems to be inching its way down from the top–first with the large-cabin aircraft and now with some signs of life resurrecting super-midsize. If confidence continues to build, one could expect this to filter down into the ranks of the midsize and owner-flown segments, which appear to be loaded with some compelling values right now. While no one can accurately predict how the year will unfold, buyers seem ready to continue their slow but steady march back into the markets.
