Phenom 100 Market Watch

Phenom 100 Market Watch
A REVIEW OF THE PHENOM 100 MARKETPLACE
Developed by Kandi M. Spangler, VP-Sales +1 303.494.6900 •kspangler@jetbrokers.com
End First Half 2014
BIZJET MARKET OVERVIEW
Values Remain Steady Over Last Three Quarters
Overall, the light jet market continues to
show welcome signs of improvement and even
some strengthening in certain market
segments. Over the past six months, inventory
of light jets has decreased by 9.9% while
average asking prices have risen by 3.4%. The
number of transactions per month predictably
spiked in December, but have remained
relatively steady from January through the end
of June. As well, the average number of Days
on Market has also stepped downward over the
past six month, albeit slowly.
We can now see a true trend in these numbers
that point towards an unmistakable conclusion--the market is recovering.
While these trends are a welcome change for
some, it also means that those who are looking
to upgrade have a difficult decision to make.
“When is the right time to upgrade?”
The conundrum is that at any given time, it
may be a great time to sell, but a bad time to
buy, and vice versa. At the end of the day,
your decision to upgrade shouldn't be
dictated by the market as much as it should be
based upon your mission and needs. As they
say, “a high tide raises all boats,” so if you’re
looking to sell high and buy low, you may be
chasing an illusion. Choose the aircraft that is
right for you and your mission and then work
with a reputable broker who will help you
find the best aircraft for the best price. They
can also help you get fair market value of your
current aircraft. It's the best possible scenario
and it works in any market.
ENGINES, AIRFRAME AND AVIONICS COSTS
Maintenance (MX) Report
Pre-Owned Market Highlights
▻ 16 Aircraft Sold in Last 6 Months
▻ 19 Aircraft Currently for Sale (6.2%)
▻ Asking Prices $2.3M --$3.2M
▻ Median # of Days on Market -- 203
Airframe Maintenance Costs Higher than Expected
Embraer recently announced the delivery of their 500th Phenom jet in July, marking 5 1/2 years since the delivery of their first Phenom 100. The
announcement cited 300 of those aircraft being Phenom 100s, with the remaining 200 being Phenom 300s, which entered service a year after the
Phenom 100. While Embraer celebrates this milestone, we can finally assess how true maintenance costs are measuring up against what Embraer
advertised as the aircraft's Direct Operating Cost (DOC) when the aircraft was initially launched.
According to an NBAA presentation made by Embraer in 2009, the company boasted a DOC of $599 per hour for the Phenom 100, which
included $432/hr for fuel (@ $4.25/gal), plus a maintenance labor expense of $32/hr, plus scheduled parts expense of $32/hr, plus $103/hr for
miscellaneous expenses (i.e. landing fees, handling fees, catering, cabin supplies and crew travel expenses). They noted in the presentation that the
cost estimates did not include engine overhaul and hot section costs, nor the cost of the landing gear overhaul. They also cited an average labor rate
of $88.85/hr used for the calculations. When you strip out the cost of fuel and miscellaneous expenses, Embraer was essentially marketing a
maintenance cost of $64/hr based on a utilization of 450 hours per year.
Phenom 100
In our estimation, Embraer knows the true costs of maintenance for the Phenom 100 better than anyone. So, the best way to determine why the
true cost of maintenance is for the airframe (both scheduled and unscheduled) is to look at their published EEC Enhanced rates. Today, Embraer
quotes a monthly rate of $2,611, plus $138 per flight hour for aircraft less than five years old. For aircraft that are 5-10 years old, they quote a
monthly rate of $4,637, plus $240 per flight hour. At the 450 hours per year flight profile used in the 2009 presentation, this equates to $207.63/hr
for aircraft less than five years old and $363.65/hr for aircraft between 5-10 years old. A bit shocking when compared against the $64/hr cited in the
NBAA presentation. In all fairness however, Embraer did exclude unscheduled maintenance cost estimates from the 2009 presentation. But it does
beg the question: were they way off on the cost of scheduled maintenance or are they really seeing unscheduled maintenance account for 70% of
their total maintenance costs?
SUPPLY VS. DEMAND
Market Overview
AIRCRAFT FOR SALE
Aircraft Currently on the Market
Values for the Phenom 100 market have been holding steady
for the past three quarters. Not surprisingly, the average asking
prices has remained steady during the same period as well.
Over the past quarter however, inventory has gone down
sightly and the average number of days on the market have
gone up. Given the current market conditions and trends,
there is roughly a seven month supply of aircraft available.
CURRENT MARKET
There are 19 aircraft currently on the market representing
6.2% of the fleet. Median number of Days on Market rose to
201 and asking prices are between $2.3 and $3.2M.
Model Year
■ 2008
■ 2009
■ 2010
■ 2011
Note: 2012, 2013 or 2014 models currently for sale
Asking Prices are between $2.3M and $3.2M depending
on year, pedigree, and added options.
AIRCRAFT SOLD
Pre-Owned Transactations
January 2014 - June 2014
PAST MARKET
A total of 16 in-service aircraft have sold in the past 6 months
and the average number of days on market for those aircraft
was 142 days.
Roughly half (seven) of
the 16 aircraft sold in
the past six months
were outside the U.S.
Eleven of those 16 were
2009 models while
four were 2010 models
and one was a 2012
model. There were
currently 324 aircraft
in the fleet, 11 of
which are owned by
Embraer awaiting
delivery or sale.
READY TO
SELL?
Call us today!
+1.303.494.6900
About JetBrokers
Founded in 1993, JetBrokers offers
a "No Sale, No Fee" all inclusive
guarantee. We are one of the
world's largest, independent, professional aircraft brokerage firms with
offices in seven locations throughout the US and Europe.
FMI visit: www.jetbrokers.com.
TRENDS
Retail Prices
About Kandi M. Spangler
Phenom 100 Market Specialist
Kandi has over 20 years of experience in business aviation and sales.
She has worked for reputable companies such as NetJets and Jet
Support Services, Inc. (JSSI) and
has a thorough understanding of
aircraft operations, maintenance,
and their associated costs. She is an
active pilot and graduate of Embry
Riddle Aeronautical University. FMI
email kspangler@jetbrokers.com
Note: All values used in the graphs above were obtained through AMSTAT and Vref.