Buyers clamor for late-model and older aircraft

 - August 1, 2007, 10:25 AM

The price of admission to taking the high road continues to ratchet upward as consecutive quarter-over-quarter activity has been high since late last year. Currently the roster of used aircraft for sale stands at 1,708, about 35 aircraft below the 12-month moving average. Roughly 35 of the 1,708 are aircraft positions, an actively traded segment of the market where sales can carry seven-figure premiums.

Challenger 300s, Citation CJ3s and Sovereigns, G450s and G550s are some of the hottest pieces of property around, often bringing prices significantly greater than those for new aircraft, since backlogs for those aircraft now extend into 2011 in some cases.

Consider the G550, of which there are four operational offerings on the used market. Three are priced around the $55 million level; the earliest one available has an asking price of $53 million. The only sale tallied this year came in April. The aircraft lasted a mere 50 days on the market and brought a reported $52 million. In contrast, the average number of days on market for the four offerings currently available is approaching twice that.

The Challenger 300 shows up with two operational offerings and three delivery positions. Those airplanes have been lasting about 100 days on the market and typically command asking prices on either side of the $24 million mark. A total of 165 CJ3s are in operation, but there are no used offerings, other than two positions for later in the year. The trading activity is brisk, with sales occurring in the low- to mid-$7 million range.

Another Citation, the midsize XLS, successor to the popular Citation Excel,
has only two used examples to consider and another position for delivery next year. That’s well below the high of nine reached a year ago and just half the 12-month moving average. In that period, prices have run from the upper $10 million range to the upper $11 million range. 

You might expect activity on out-of-production aircraft to be a bit off the pace of the current production aircraft, but such is not the case for many aircraft. Consider the large-cabin Gulfstreams, namely the GIV-SP. Recent sales of that model are occurring at extraordinary prices. Aircraft in the later half of the fleet are now reaching toward $30 million and beyond. Multiple offers are taking the prices to never-before-seen levels. In fact, one aircraft recently hit $31.9 million, which is one of the highest prices, if not the highest price, achieved for a used GIV-SP.

Attention Turns to Older Aircraft
As the GIV-SP market offerings depleted, a number of buyers cast their attention to
its predecessor and quickly reduced that market’s collection from 30 to about five, before a number of fair-weather sellers jumped in and raised the average asking price. As active as this market is right now, aircraft that have been on the market for more than 400 days and carry “Make Offer” are a bit suspect and often dismissed as not really being available for sale.

The Global Express market shines as brightly as any, with only a handful of offerings priced in the $40 million range. All but one of them have been on the market for fewer than 50 days, at the time of this writing, with the other nearing 200 days, which seems high. (That would be considered normal in any other market.) Four have sold in the last six months and commanded figures ranging from the high-$30 million area to the high-$40 million range, and all vanished from the market in 90 days.

Its counterpart, the GV, offers just as few, at four ranging in price from $35 million to $40 million. The disparity in the price range between the GV and Global is attributable to model years currently available. The latest Global available is a 2002 model, whereas the latest model-year GV for sale is a 1998. Sales of the half dozen or so that have sold this year have commanded prices in the $35 million to $42 million range. 

A glance at the Falcon 2000 market shows 10 for sale, of 231 in the fleet. As low as that is in terms of percentage of availability (4 percent), it seems a large supply compared with some of the other markets. The Falcon 2000 hasn’t reached that level of availability since June of last year. Pricing runs from the mid-$17 million range to the mid-$23 million area. There is one 2000EX available with a “Make Offer” price tag, as opposed to a set asking price. A handful of Falcon 900EXs are for sale, and prices range from the low-$29 million area to the high-$33 million range.

A growing worldwide appetite for private jet travel coupled with unprecedented manufacturer backlogs has conspired to drive many large-cabin aircraft to low
levels of availability. Add to that the relationship of the U.S. dollar to a number
of stronger currencies and you have the makings of one of the most fascinating periods in aircraft sales ever.