The Embraer Phenom 100 is part of the Light Jet report.
Nearly exactly three years ago, in October 2008, I was sitting in the back of a Citation CJ1+ headed to the NBAA convention in Orlando, Fla. Lehman Brothers had collapsed two weeks earlier and there was a sentiment of caution and confusion surrounding the financial markets. NBAA 2008 ran from October 4 to 10. On October 3, the Dow Jones Industrial Average opened at 10,325 points. On October 10, it closed at 8,451 points. The largest stock market crash in U.S. history happened during the NBAA show.
Fast forward to today, even after three years of excruciating effort, the general aviation industry has struggled to regain its footing. Despite contributing more than $150 billion to the U.S. economy every year and 1.2 million high-wage, stable jobs, general aviation continues to be one of the popular targets of our current administration. A direct indicator of the industry’s recovery (or lack thereof) is pre-owned aircraft pricing, which ultimately has a direct correlation to demand for factory new aircraft. This market report gives a snap shot of how the pre-owned light jet market has fared since the last report published by AIN at last year’s NBAA convention.
The history of the Eclipse 500 very light jet remains one of the most fascinating to reflect on. In July 2009, Eclipse Aerospace resurrected the Eclipse 500 from bankruptcy. The new company is now supporting the 260 Eclipses in service, and customers feel that Eclipse Aerospace is here to stay. While factory-new Eclipse 500 production has yet to start up, Eclipse Aerospace has certified and retrofitted many new improvements to the original design. As there are somewhere on the order of half-a-dozen different configurations for the Eclipse 500, pricing is varied across the board. For the earliest serial numbers without the heavy extended tip-tank modification or Avio NG avionics, pricing ranges from $600,000 to $800,000. Eclipse Aerospace’s Total Eclipse, which includes all of the upgrades and modifications to the Eclipse, including the Avio Integrated Flight Management System, is being sold by the factory at $2.15 million. Pre-owned aircraft with the majority of the upgrades are trading in the low- to mid-$1 million range.
Hawker Beechcraft Premier I/IA/Hawker 200
With just under 300 Premiers in operation today, the Premier and the Premier IA continue to provide owners with the largest cabin and fastest speed in its class. Thirteen percent of the in-service Premier Is and 17 percent of the IAs are currently for sale. Prices vary from below $2 million for an older Premier I to the mid-$3 million range for a lower-time, younger pre-owned Premier IA. Hawker/Beechcraft’s newest Premier, renamed the Hawker 200, will be available starting in the fourth quarter of 2012. The numerous improvements to the Hawker 200 over the Premier IA should significantly increase Hawker Beechcraft’s competitive strength in this category. With the addition of the Williams FJ44-3AP engines, the Hawker 200 will have an increased maximum altitude of FL450 compared to FL410 on the Premier IA, a range increase of about 200 nm and an increase in maximum cruise speed to 470 knots. Combined with a much-improved “Hawker style” interior, the Hawker 200 stands to be a big win for Hawker Beechcraft.
Cessna Citation Mustang
Cessna’s smallest jet has proven to be one of the most successful models in the company’s history. With what has turned out to be an almost cult-like following by owner/operators, the Mustang provides relatively few barriers to entry for owners considering their first jet. With nearly 400 aircraft produced in just five years, the Mustang continues to provide excellent efficiency and operational simplicity, combined with Cessna’s strong service and support. High pedigree, appropriately priced Mustangs do not sit on the market for long. Current pricing for pre-owned Mustangs ranges from about $2 million for a higher time, low-serial-numbered unit, to the mid $2 million range for a younger machine. Over the past 12 months Cessna has been aggressive with factory incentives to move new aircraft off the production line, which has ultimately put a dent in the pre-owned market velocity and strength. The fact remains that the Cessna name and service creates a great deal of owner loyalty, and the Mustang provides a solid platform for both novice and experienced jet owner/pilots.
Embraer Phenom 100
The light jet market has suffered for many quarters, but the Phenom 100 market may be an indication of what is to come. With prices remaining fairly consistent through most of 2011, the recent momentum in the Phenom 100 market is good news for owners. The Phenom 100 market is experiencing high demand and historically low available pre-owned inventory. Since June the average days on market for the 100 have fallen to fewer than 90 days, seemingly insignificant until compared with the combined average of 270-plus days on market average of six months ago. Embraer has cautiously adjusted its production rates and refrained from discounting new Phenoms, bolstering pre-owned markets. Early model Phenom 100s are trading in the high $2 millions to the low- to mid-$3 millions for a low-time, high-serial-number Phenom 100. Buyers are still looking for bargains, but will pay a premium for a well-maintained, low-time Phenom 100. With the pre-owned Phenom 100 inventory rapidly shrinking over the past quarter, low-time airframes with a clean history and enrolled in programs are highly sought after. This equates to market opportunity for owners of the Phenom 100 that may be looking to upgrade while retaining the most value for their current aircraft. A strong market exists outside the U.S., with the distribution of the fleet showing significant operations in Europe and South America (about 20 and 30 percent of the fleet, respectively).
Embraer Phenom 300
With massive fleet orders from both NetJets and Flight Options, Embraer has positioned the future of the Phenom 300 well. The largest of the single pilot jets in production today, the Phenom 300 has been very warmly received by early adopters.
With roughly 40 Phenom 300s delivered to date and no pre-owned transactions to report, pricing of available Phenom 300s for sale ranges from the high $7 millions to the low $8 millions and new Phenom 300s price out close to $9 million. By this time next year, there should be more data to report with respect to the market price for pre-owned Phenom 300s.
The legacy CE 525 market (1993 to 2000 year models) has yet to truly recover from the perils of 2008, with 60 CitationJets currently for sale, representing 17 percent of the CitationJet fleet. Average pricing for the original CE 525 has steadily inched down to a market-wide average of approximately $1.5 million, providing buyers with the opportunity to own a single-pilot, eight-seat light jet for a significant discount when compared to previous years. The CJ1 market (2000 to 2005), with 29 units currently for sale representing 11 percent of the available fleet, boasts stronger liquidity for owners as compared to the legacy 525. Prices for CJ1s range from the high $1 millions to mid $2 millions. Pricing for the most recent model of the CE 525–the CJ1+ (2005 to 2010)–ranges from the high $2 millions to mid $3 millions. With CJ1+ production halted at the beginning of this year and a possibly new 525 variant in the works, buyers are likely to see continued softening of the CJ1+ market over the coming years, independent of outside economic factors.
Pricing for the CE 525A market (2000 to 2005 models) ranges from the high $2 millions to the mid $3 millions. With just fewer than 40 units for sale representing 15 percent of the available fleet, great buys still remain for those interested in purchasing a 1,500-mile, nine-passenger jet. Liquidity for the CJ2 market is relatively tempered, with only three retail transactions in the CJ2 market over the last quarter. The CJ2+ market (2005 to 2011 models) reveals a different story compared to the legacy CE 525A. Currently only 8 percent of the CJ2+ fleet is available for sale with prices ranging from the low $4 millions for a higher time, lower-serial-number unit to the high $5 millions for a low-time, higher-serial-number unit.
The CJ3 market remains the most dynamic of the Citation markets. Though only 6 percent of the fleet is currently for sale, the majority of on-market CJ3s are coming up for sale because owners are taking deliveries of CJ4s. Also, Cessna is offering sizeable factory incentives for new CJ3s, so it’s a great time to be a CJ3 buyer. CJ3 pricing ranges from mid to high $4 millions for an earlier-serial-number CJ3 to the low $6 millions for a younger bird.
Cessna’s largest single-pilot jet, the CJ4, has made large strides in 2011. As of this writing, there are a few more than 40 CJ4s in operation, with many operators being former CJ3 or CJ2+ operators. As the CJ4 is so new, and so few aircraft are in operation, there have been few retail pre-owned transactions to report. However, pricing on new CJ4s is approximately $9 million, with pre-owned aircraft currently projected to be in the high $7 million to low $8 million range.