NAFA member, Tony Kioussis, President of Asset Insight, shares who the movers and shakers were in the September 2018 Used Aircraft Maintenance Analysis.
As we enter Q4 2018, sellers appear to be more focused than ever on moving their aircraft. Which business jets and turboprops were the movers and shakers in September’s used aircraft marketplace?
Asset Insight’s market analysis on September 28, 2018 covering 93 fixed-wing models and 1,553 aircraft listed ‘For Sale’, revealed an Ask Price drop of 5%. By group:
- Large Jet values decreased 1.2% (combined loss of 9.7% during Q3);
- Medium Jets gained 2.2% to finish Q3 up 0.9%;
- Small Jet values lost a nominal 0.2%, but posted a 4.1% pricing gain in Q3;
- Turboprops fell 1.1% to a 12-month low and recorded a Q3 loss of 3.4%.
The total number of used aircraft listed ‘For Sale’ for Asset Insight’s tracked fleet decreased by 2.4% (39 units), as Large, Medium and Small Jet inventories decreased 4.7% (16 units), 4.2% (11 units) and 1.3% (six units), respectively, while Turboprops increased by 1.4% (four units).
Average Maintenance Exposure (an aircraft’s accumulated/embedded maintenance expense) decreased (improved) 4.8%, as the inventory fleet’s upcoming maintenance events are expected to be less expensive.
- Large Jets increased (worsened) 4.9% as higher-quality aircraft transacted;
- Medium Jet Maintenance Exposure remained unchanged as the quality of aircraft transacting was mixed;
- Small Jet Exposure decreased (improved) a dramatic 15.8%;
- Turboprops posted a 10.7% drop to an amount marginally worse than the group’s best (lowest) 12-month figure.
All this led to a Maintenance Exposure to Price (ETP) Ratio decrease (improvement) of 7.2% during September that – at 67.1% - remained virtually unchanged for the quarter.
ETP Ratios Explained
The ETP Ratio calculates an aircraft's Maintenance Exposure as it relates to the Ask Price. This is achieved by dividing an aircraft's Maintenance Exposure (the financial liability accrued with respect to future scheduled maintenance events) by the aircraft's Ask Price. As the ETP Ratio decreases, the asset's value increases (in relation to the aircraft's price).
‘Days on Market’ analysis has shown that when the ETP Ratio is greater than 40%, a listed aircraft’s Days on Market increase (in many cases by more than 30%).
So, for example, aircraft whose ETP Ratio exceeded 40% during Q2 2018 were listed ‘For Sale’ an average 72% longer than aircraft whose Ratio was below 40% (169 days versus 291 days on the market, respectively) while during Q3 2018 aircraft whose ETP Ratio exceeded 40% took nearly 34% longer to sell (280 versus 374 Days on Market).
- Turboprops yet again posted the lowest (best) ETP Ratio at 50.1%, reflecting a 4.4% improvement for the quarter;
- Large Jets followed with 64.2% (but that figure reflected a 7.4% degradation during Q3 and was the group’s highest (worst) ETP Ratio ever recorded);
- With an impressive 18.7% reduction during September, and an 8.3% reduction during Q3, Small Jets posted the group’s best 12-month figure at 68.3%;
- Medium Jets improved 2.5% during September, but with an ETP Ratio of 78% the group worsened by 8.2% during Q3.
Excluding models whose ETP Ratio has remained over 200% during the previous two months (considered outliers), following is a breakdown of which individual models fared the best, and which fared the worst in September 2018.
Read full report here.
The original article was published by AvBuyer on October 16, 2018.
