JBA Aviation Quarterly Report, 3rd Quarter 2010

October 2010

3rd Quarter 2010

A LOOK AT THE LAST QUARTER

3rd Quarter 2010 There are several signs around us that fall has finally arrived. The weather is cooler, football season is in full swing and buyers are making offers on jet aircraft. The summer months are usually pretty slow in the turbine aircraft resale market. This summer seemed to be even slower than usual as motivated sellers tried in vane to entice offers with frequent price reductions.

However, since the first of September, most dealers and brokers have reported a strong surge in activity and a large spike in transactions. The increase in demand paired with a slow but steady decrease in supply over the last six months are two very good indicators that things are starting to improve. Although many markets appear at first glance to be flooded with inventory, when the list of aircraft for sale is narrowed down to the truly desirable aircraft, many times there are few alternatives to consider.

The charts on the right side of this page give a quick snapshot of the jet market over the last several months. Because of the long lead time necessary to close a transaction, .the recent spike in activity will not be reflected in the jets sold chart for some time. However, you can see the decrease in supply has continued. Current inventory levels are down more than 12% from where they were this time last year.

2650

2700

2750

2800

2850

Apr

'10

May

'10

Jun '10 Jul '10 Aug.

'10

Number of Jets for Sale

0

100

200

300

Apr '10 May

'10

Jun '10 Jul '10 Aug

'10

Number of Jets Sold

A LOOK AT THE LAST QUARTER

3rd Quarter 2010 With a couple of notable exceptions, pricing has continued to fall slightly over the last several months. Although a modest price increase was seen in the G-550 & Global Express markets a few months ago, those increases were not enough to overshadow the continued decline in the small, midsized and large cabin markets.

Turnover rates remain slow as It is still taking quite a long time to sell in today’s market. The average days to sell has been hovering around the 12 month mark for quite some time. When prices finally stabilize, that trend should correct itself as aircraft owners will have a clearer picture of what their aircraft is worth when they decide to put it on the market. Today’s seller can only look at the most recent transaction for an estimate, than try to price the airplane “ahead of the market” to compensate for dropping prices.

$4,400

$4,600

$4,800

$5,000

Apr

'10

May

'10

Jun

'10

Jul

'10

Aug

'10

Average Jet Asking Prices

0

100

200

300

400

500

Apr

'10

May

'10

Jun

'10

Jul '10 Aug.

'10

Average Days to Sell

4th Quarter 2010

LOOKING FORWARD

It seems as if the recent surge in activity is being driven primarily by the need for lift, as opposed to

opportunistic buyers attempting to capitalize on low pricing and desperate sellers. Driving that need

would be an increase in domestic flying, which seems to have been steadily increasing over the last 9

months. Assuming we continue to see the stock market indices improve and domestic flying continues

to improve, I think it is a safe bet that there will be an active market through the end of the fourth

quarter. The approval of bonus depreciation for 2010 & 2011 should keep the OEM’s backlog growing,

which should drive more and more buyers to the pre-owned marketplace.

. The following chart was compiled from the U.S. Energy Information Administration which

tracks U.S. Jet Fuel sales in Average Thousand Gallons per Day.

40,000

50,000

60,000

70,000

Jan '10 Feb '10 Mar '10 Apr '10 May '10 Jun '10 Jul '10

GULFSTREAM

DASSAULT FALCON

BOMBARDIER

HAWKER BEECHCRAFT

CESSNA

0

10

20

30

40

50

60

Available G100 Available G150 Available G200

Available GII Available GIII

GULFSTREAM – Midsized Aircraft Available

Supply of aircraft in

the Gulfstream

midsized category has

been fairly flat over

the last year, with the

exception of the G-

200 which has

displayed a steady

decline since last

September.

Availability of G-II’s &

G-III’s is well off peak

numbers, but still

represents a very high

percentage of the

active fleet.

Back to aircraft listing

0

2

4

6

8

10

12

G100 Sold G150 Sold G200 Sold GII Sold GIII Sold

GULFSTREAM – Midsized Aircraft Sold

Several models of

midsized Gulfstream

aircraft have had

pockets of activity

which resulted in a

number of transactions

during a particular

month. However, only

the G-200 has

demonstrated any

consistency in the

number of transactions

for any length of time.


GULFSTREAM – Midsized Aircraft Asking Price

For the most part,

asking prices in the

midsized Gulfstream

market have been flat

to slightly decreasing

over the last 12

months. The G-200

seems to have leveled

off and even showed

a slight uptick earlier

this summer.

$1,000,000

$3,000,000

$5,000,000

$7,000,000

$9,000,000

$11,000,000

$13,000,000

$15,000,000

G100 Asking Price G150 Asking Price G200 Asking Price GII Asking Price GIII Asking Price


0

10

20

30

40

50

60

Available GIV Available GIVSP Available G450 Available GV Available G550

GULFSTREAM – Large Cabin Aircraft Available

Availability of G-IVSP

aircraft for sale has been

steadily shrinking since

February. Over the last

30 days, supply of in

service G-450, G-V & G-

550 aircraft has shrunk

drastically and the supply

of G-IVs is well off peak

numbers. A significantly

large percentage of 450

& 550 supply currently

consists of delivery

positions & lease aircraft.


0

2

4

6

8

10

GIV Sold GIVSP Sold G450 Sold GV Sold G550 Sold

GULFSTREAM – Large Cabin Aircraft Sold

Activity on large cabin

Gulfstream Aircraft has

been sporadic, but

generally good. Prior

to year end there was a

large spike in G-450 &

G-550 sales. Most

recently, there has

been a surge in sales

of straight G-IV’s and

what few remaining G-

V’s are for sale are

getting serious offers.


$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

GIV GIVSP G450 Ave Asking Prices GV Ave Asking Prices G550

GULFSTREAM – Large Cabin Aircraft Asking Price

The G-550 market was

one of the first to

experience a true

increase in pricing this

spring. Though the G-

450, G-IVSP & G-V

markets have taken a bit

longer, all are now

trending towards

increasing asking prices

and lower availability.


0

10

20

30

40

50

60

F20-5 F50 F50EX F2000 F2000EX

DASSAULT FALCONJET – Midsized Aircraft Available

Supply of midsized

Falcon Jet aircraft for

sale over the last year

has been relatively flat.

A few of the models

are off peak figures,

but the drop in supply

has been driven more

by Seller’s removing

their aircraft from the

market rather than

transactions.


0

1

2

3

4

5

6

7

8

F20-5 F50 F50EX F2000 F2000EX

DASSAULT FALCONJET – Midsized Aircraft Sold

Sales of midsized

Falcon Jet aircraft over

the last year have been

spotty. Straight Falcon

50’s have had a couple

of good months this

year while Falcon 20

retrofits and Falcon

2000’s have had only

moderate success.


$1,000,000

$3,000,000

$5,000,000

$7,000,000

$9,000,000

$11,000,000

$13,000,000

$15,000,000

$17,000,000

$19,000,000

F20-5 F50 F50EX F2000 F2000EX

DASSAULT FALCONJET – Midsized Aircraft Asking

Just about all models

of midsized Falcon

Jet aircraft have

continued to

experience price

decreases over the

last 12 months. The

largest drop seems

to be on the straight

Falcon 2000s, with

the average asking

price dropping by

around 25% over the

last year.


0

5

10

15

20

25

30

F900B F900EX F7X

DASSAULT FALCONJET – Large Cabin Aircraft Available

The availability of newer, in service, large cabin aircraft has been coming down all year. However, the number of 7X delivery positions available on the re-sale market has climbed in recent months and the number of older Falcon 900B’s for sale has spiked quite a bit in the last quarter.


0

2

4

6

8

10

F900B F900EX F7X

DASSAULT FALCONJET – Large Cabin Aircraft Sold

The factory delivered a

good number of Falcon

7X aircraft at the

beginning of the year

and again in the

spring. When viewed

as a percentage of the

number of aircraft for

sale, Falcon 900EX and

900B sales have been

fairly slow, with a small

spike in early summer.


$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

F900B F900EX F7X

DASSAULT FALCONJET – Large Cabin Aircraft Asking

Falcon 7X asking prices have remained pretty firm while Falcon 900EX & 900B asking prices have maintained a moderately decreasing trend in 2010.


0

10

20

30

40

50

60

70

Lear 31A Lear 40XR Lear 45XR Lear 60XR

BOMBARDIER – Midsized Aircraft Available

Availability of newer,

midsized Lear jets has

been fairly stable over

the last year.

However, inventory

levels on some of the

older model Lears like

the Lear 31A have

begun to creep back

up since the early

summer.


0

2

4

6

8

10

12

14


BOMBARDIER – Midsized Aircraft Available Sold

Several of the midsized

Learjet models saw a

spike in transactions in

the months of April

and June. The month

of August saw

extremely light trading

on all models of Lear

jets.


$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

$10,000,000

$11,000,000


BOMBARDIER – Midsized Aircraft Available Asking

Asking prices on midsized Lear jets have continued to trend down over the last year. Average prices on models like the Lear 40XR that only have a handful of aircraft for sale are drastically effected by one price change or one new addition to the market.


0

5

10

15

20

25

30

35

40

45

50

CL 601 3A CL 604 CL 605 CL 300 Global Express Global 5000 Global XRS

BOMBARDIER – Large Cabin Aircraft Available

Heavy Iron inventory

levels have generally

been coming down

over the last year

across the board.

However, several

current production

models like the

Global 5000 & XRS

have experienced a

recent increase in

delivery positions for

sale, causing total

availability to spike in

recent months.


0

2

4

6

8

10


BOMBARDIER – Large Cabin Aircraft Sold

A good number of

newer, large cabin,

Bombardier aircraft

were moved in the

months of April & May.

Age of airframe is

more important than

ever as the 605’s

outperform the 604’s,

which continue to

outperform the older

601’s.


$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000


BOMBARDIER – Large Cabin Aircraft Asking

Although the in

production, large cabin

airframes like the

Global 5000 & XRS

have seen some

significant price

increases recently, the

older vintage airframes

like the 601 continue

to suffer declining

values. Until the 605

shows signs of

improvement, I would

not expect the market

on 604’s to stabilize.


10

15

20

25

30

35

40

45

50

55

Premier 1A Beechjet 400A Hawker 400XP

HAWKER BEECH – Small Cabin Aircraft Available

Supply of Beech 400A’s

has been very stable

over the last year while

Premier 1A’s and

Hawker 400XP’s have

experienced some

fluctuations. Current

availability is not far

off from the numbers

reported last fall.


0

2

4

6

8

10

12


HAWKER BEECH – Small Cabin Aircraft Sold

Small Cabin, Hawker

Beech sales tracked

pretty closely with the

seasonality of our

industry over the last

year. A spike in

transactions occurred

toward year end and

again at the end of

spring. with little

activity during the

summer months.


$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000


HAWKER BEECH – Small Cabin Aircraft Asking

Average asking

prices on smaller

cabin, Hawker

Beechcraft models

have generally

continued to be

pushed downward

due to an over-

supply of used

aircraft on the

market and a general

lack of demand.


0

10

20

30

40

50

60

Hawker 800A Hawker 800XP Hawker 850XP Hawker 900XP Hawker 4000

HAWKER BEECH – Midsized Aircraft Available

Hawker 800A & 850XP

inventory levels have

come well off peak

numbers in recent

months. 800XP

availability has actually

increased since the

first of the year and

availability of the

newest Hawker models

including the 900XP

and 4000 remain low.


0

2

4

6

8

10

12


HAWKER BEECH – Midsized Aircraft Sold

Sales on the midsized

Hawker models seem

to have spiked every

other month or so over

the last year. Sales

figures declined as the

summer slow down

took effect in July &

August, but should be

back up when Sept. &

Oct. numbers are in.


$1,000,000

$3,000,000

$5,000,000

$7,000,000

$9,000,000

$11,000,000

$13,000,000

$15,000,000

$17,000,000

$19,000,000


HAWKER BEECH – Midsized Aircraft Asking

Just about all models of midsized, Hawker Beech Aircraft have experienced continued price declines over the last 12 months, with the exception of the 4000 which has been relatively stable, but only had 1 or 2 units for sale over that time.


10

15

20

25

30

35

40

45

50

Mustang CJ1 CJ2 CJ3 Bravo

CESSNA – Small Cabin Aircraft Available

Inventory levels on

all small cabin, Cessna

aircraft that are out of

production have

continued to rise,

while supply of current

production models

have been coming

down since early

spring.


0

5

10

15

20


CESSNA – Small Cabin Aircraft Sold

Trading on CJ1s, 2s,

3s & Bravos has been

light so far in 2010.

Mustangs sales spiked

in March and May

driven primarily by new

aircraft deliveries.

Demand for low time,

newer vintage CJ’s has

picked up significantly

since early September.


$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000


CESSNA – Small Cabin Aircraft Asking

Although asking prices

seem to have leveled

off on small cabin

Cessna aircraft, Sellers

must continue to get

aggressive with

negotiations in order

to motivate buyers to

move forward. Actual

sales prices continue

to be driven down in

today’s market.


10

15

20

25

30

35

40

Encore XLS Sovereign Citation X

CESSNA – Midsized Aircraft Available

Availability of midsized

Citation models saw

a steady decline from

the first of the year

until late spring, when

Encore & XLS

inventories began

climbing a gain.

Supply of Citation X &

Sovereign aircraft are

well off peak numbers,

but both have

increased in recent

months.


0

2

4

6

8

10


CESSNA – Midsized Aircraft Sold

Sovereign sales were

fairly steady in the 2nd

& 3rd quarters, and the

Citation X market was

active during the 2nd

quarter. XLS and

Encore sales have been

sparse so far this year

with little increase in

activity in recent

months.


$1,000,000

$3,000,000

$5,000,000

$7,000,000

$9,000,000

$11,000,000

$13,000,000

$15,000,000


CESSNA – Midsized Aircraft Asking

The recent increase in

supply and relatively

few transactions to

point to on midsized

Citations the last few

months have lead to

continued price

reductions across the

board.


JBA Aviation Quarterly Report, 3rd Quarter 2010

Investor Relations

jet aircraft

supply of aircraft

aircraft owners

desirable aircraft

list of aircraft

midsized gulfstream

turbine aircraft resale

price g200