2007 Volume 4

MARKET LEADER™

The Quarterly Newsletter of Vref - Used By Smart People Everywhere Since 1994!

Synopsis

- - As we move into 2008, the U.S. Stock Market continues to vacillate. Record personal bankruptcies, foreclosures and high gas prices appear in just about every conversation. While this seems to have no negative effect on new turbine deliveries, the remainder of the resale market is nervous.

We’re all looking for a sign, a forecast...anything that will give us a glimpse into tomorrow. Some things about the current market are very different than anything we remember – primarily the spectacular ramp up of prices in the new and nearly new jet market. There is every reason to believe the new economies emerging outside the United States will continue to be prosperous in the long term. That is good for general aviation. Most of the new wide-bodies delivered in the next several years will not have an N-number. However, some common themes remain. Good airplanes sell and junk sits. It doesn’t matter if
it’s a Falcon or a Piper. Second, there is volatility. Each market fluctuates, and always has. Since 2004, Cessna 152s and G-IVs look very similar on a Value Trend Graph (VrefOnLine.com). When markets get flooded they fall - no rocket science there.

Newly emerging markets will always want what the West has had for many decades - lots of cars, steaks and airplanes. Demand will ebb and flow, due to recessions, but the want will only get stronger. Then why are some airplanes losing value? Despite masterful restorations, 30-year-old jets with ProLine II, or piston twins with KX170s, will become increasingly difficult to sell as new generation airplanes populate the market.

Piston Singles
This segment continues to be price driven, however prices appear to be stabilizing. Many complex singles were down in the recent quarter, but the changes were relatively small. A few owners are getting realistic, or perhaps buyers are sensing the bottom surely must be near. As activity improved toward year-end, the persistent downtrend seemed to flatten – mostly for the better airplanes. There is a glut of pre-1990 airplanes, and more are coming to the market everyday. Mid time or higher, with no recent paint or panel update, still must be discounted. Even then, holding times can be very long, because today’s buyer can be very picky. As always, the most expensive airplane, with new Garmin and new paint & interior, is probably the best buy.

The weak dollar, long credited with helping the jet market, is now boosting single engine trainers. There is a steady market outside the U.S. for ready to go Cessna 152s and Skyhawks, and some prices are up. Beech Musketeer/Sundowner/Sierra, holding steady; later model F33A Bonanza, down markedly; V35B, down slightly; A36, down again, early models softer than later; Cessna 152, up again; late model 172s, good; Cardinals, all up; 180s & 185s, prices up slightly; too many 182s, prices down, completed crankshaft SB helps; later model 210s, down; Cirrus market continues slide; older Mooneys, stable, downward pressure in newer ones; Piper Comanches, down; Warriors, up; older Cherokee 180s & Archers, up, late models down; 200hp Arrows, slight up trend; Dakotas, Cherokee Sixes & Lances, stable; Saratogas mixed, depending on condition & time; Malibus, holding..


Piston Twins
We won’t repeat the adjectives used to describe this segment, but it’s not pretty. A new uptrend in fuel prices is not helping. Through it all, twin buyers are there if the price is right. There is a mission that only a pressurized twin can fill – small growing company who wants twin-engine safety on short legs with two or three passengers. More importantly, an overhaul on a GTSIO-520 can be a quarter million dollars less than a PT6.

In the recent quarter, Aerostars, flat; Beech Barons, still trending down; Beech Duke, flat; Cessna 310s & 340s edging down; 400 series, mostly unchanged, older 421As & Bs, down again; Piper Twin Comanche, Aztec & older Senecas, downtrend continues; Navajo, stagnant unless it’s pristine; Piston Twin Commanders, down again.

Turboprops
For seventeen straight quarters, including this one, the turboprop market has posted gains. The trend remains up, but not at a frantic pace. Low time King Airs, with recent paint and interior, don’t stay around long. Airplanes nearing overhaul, original P&I, or other negatives are piling up. King Air C90As, strong; C90B, good activity; E90, good, no change; late model F90, up; B200, highest prices ever; King Air 300s & 350s, still edging up; Cessna Conquest I, slowing, prices flat; Conquest II, prices down due to looming inspection; Fairchild Merlin IIB & IIIA, down, IIIBs, flat; Mitsubishi, down; Pilatus, tight as can be; TBM700, good, prices stable; Piper Meridian, flat; Cheyenne I & II, down slightly; Cheyenne IIIA & 400LS, move up; Twin Commander, flat.

Jets
Russia, China, India, the Middle East and a declining Dollar add up to a win-win situation. Buyers seem happy to pay multi-million dollar premiums due to the very favorable exchange rate, and manufacturers and dealers are scrambling to accommodate. America might be the ‘gotta have it now’ society, but the rest of the world is learning fast.
Beechjet, soft; Premier, down; Bombardier Challenger 300, up again; 601-3A, active, but prices off; 604, good, but stable; late model Global Express, very strong; Cessna Citation I, active due to high CJ prices; all CJs, demand strong, prices up; Citation II, generally off, depending on times & condition; Bravo, little soft; Ultra market better than Citation V, both down; Encore, good activity; Excel, prices down; Citation III & VII, stable; VI, down; Sovereign, good; Citation X, mixed niche market; Falcon 2000 & 2000EX, upward pressure; Falcon 50, loaded market; Falcon 900B & 900EX, prices moderating; Falcon 7X, very rare; Gulfstream G100 putting downward pressure on Astra SPX; G200, crowded market, but selling; Gulfstream III, ok unless over 10,000TT; GIV & IVSP continue upward trek; G300, G400, G350 & G450, very tight, prices up again; GV, still trending up; G550 buyers don’t want to wait 5 years for a new one; Hawker 800A & early XPs, down; ProLine 21 800XPs, very strong; Lear 45, prices up; backlog of Lear 60XRs keeping late model 60s strong.

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© 2007 by Vref Publishing, Inc. All Rights Reserved.

Past Articles:

• Vref 2003 Volume 3
• Vref 2003 Volume 4
• Vref 2004 Volume 2
• Vref 2004 Volume 3
• Vref 2004 Volume 4
• Vref 2005 Volume 1
• Vref 2005 Volume 3
• Vref 2006 Volume 3

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