Vol. 20, No. 2 | June 1, 2008 | Go to Charts

Orders for New Aircraft Remain Strong

by Carl Janssens, ASA | Aircraft Bluebook – Price Digest

Seems like everywhere one turns these days, it is easy to cue in on the worst-case scenario revolving around the  depressed U.S. real estate market and the subprime mortgage scandal. Still, by official definition, the United States does not fit the mold that would indicate an economic recession has occurred. As Johnnie Cochran, the well-known defense lawyer once said in a high-profile trial, “If the glove doesn’t fit, you must acquit.” His statement would fit well with those who want to doom our economy to a recession.

Sure, the U.S. economy is currently working through some uncertain economic woes, but keep in mind these concerns will mend in time. This is easy to predict because the United States is still the land of opportunity and resources. And every time we pull a U.S. dollar bill out of our pocket, we are reminded that the nation recognizes a higher authority in its commerce. Printed on every U.S. dollar bill in any denomination: “In God We Trust.”

Jet

Bluebook-at-a-glance
Increased — 100
Decreased — 130
Stable — 565

New orders for corporate jets are at an all-time high. There are no signs of a slowdown. Orders are not being dropped as waiting lists for new deliveries continue to grow at record paces. The aircraft market does not reflect the uncertainties of the general economy. Why is this? As one aircraft dealer summarized at the National Aircraft Resale Association meeting in May: “Think of the industrialization the United States experienced last century. That’s what the rest of the world is going through now.”

For pre-owned jets, it has been business as usual in this segment reported by Aircraft Bluebook. Some of the notable changes in this market segment include early-model Cessna 500 series with $50,000 gains after a long run of nearly no movement. In the larger-cabin segment, Falcon 2000s generally were up another $300,000. There is no inventory for the newest Falcon, the 7X, so who knows what the checkbook will reveal should one come up for sale?

Ten-year-old and newer aircraft still continue to sell at record paces with minimal time on market.

Turboprop

Bluebook-at-a-glance
Increased — 44
Decreased— 65
Stable — 506

As one aircraft dealer noted, the current turboprop market is reflecting a normal economy. Inventories are stable, and interest in acquisitions remains steady. Aircraft Bluebook noted this stability. Prices did not show much activity moving in either direction in this reporting period. Of the few aircraft models that did see positive increases in value, the list was pretty limited to predictable models. Some King Airs, P180s and the PC12 all contributed. Declines included the MU-2.

Multi

Bluebook-at-a-glance
Increased — 4
Decreased — 135
Stable — 529

The multi market continued to be predictable. Well-equipped, low-time, late-model aircraft do not stay on the market long when offered in the resale arena. The same held true for earlier models that have low time and have recently been restored with upgraded avionics. The Aerostar was the only aircraft with noted increases, and even those were modest in the $5000-$10,000 range. In the negative, select models across the board were noted down several thousand dollars as well. Again, the majority of this market segment remained stable.

Single

Bluebook-at-a-glance
Increased — 223
Decreased — 148
Stable — 2033

The single market continued to hold its own during this reporting period. Several dealers reported record sales activity during the first quarter of 2008. With the single market most exposed to the effects of an economy that is slowing down, sales continued. Again, with the little movement in values reported by Aircraft Bluebook, gains and losses were minimal when compared to the previous quarter. The majority of the market held steady.

Helicopter

Bluebook-at-a-glance
Increased — 228
Decreased — 26
Stable — 676

Helicopter values remained strong during the first quarter of 2008. With manufacturers continuing to focus primarily on government contracts, the waiting list for new acquisitions continued to grow. Late-model helicopters with low component times are selling well. For turbine helicopters tracked by Aircraft Bluebook, gains were in the $50,000-$100,000 range with some of the elite twin-turbine class gaining several hundred thousand dollars when compared to the previous reporting period. Values for some Robinson models were down slightly from last quarter.

[Go to Charts.]