NAFA member, Tony Kioussis, President and CEO of Asset Insight, LLC, shares the February 2021 Used Aircraft Maintenance & Marketability Analysis.
Continuing a trend dating back to July 2020, Asset Insight’s tracked inventory fleet posted another reduction in February, although the decrease was much smaller than in recent months. Which business aircraft were impacted the most? Tony Kioussis explores.
Asset Insight’s February 28, 2021 market analysis covering 134 fixed-wing models, and 1,737 aircraft listed for sale revealed an eighth consecutive monthly contraction (0.5%) of the tracked fleet for sale.
A decrease in market transactions had a nominally positive effect on the Quality Rating, improving it to 5.354 from January’s 5.348, keeping the for sale fleet within the ‘Excellent’ range for the thirteenth consecutive month (based on Asset Insight’s scale of -2.5 to 10).
February’s Aircraft Value Trends
The tracked fleet’s average Ask Price increased 1.4% in February, following three consecutive monthly declines. By category, however, the results were mixed:
- Large Jet average Ask Prices fell another 1.4% to post the group’s second consecutive 12-month low figure.
- Mid-Size Jet prices rose 1.8%, following January’s 12-month low.
- Light Jet ask prices decreased 2.2% to post a second consecutive 12-month low.
- Turboprop ask prices increased 1.6% to better the group’s 12-month average.
February’s Fleet for Sale Trends
Following seven consecutive monthly decreases in availability, Asset Insight’s tracked fleet posted another 0.5% reduction (nine units) during February, with only 8.3% of the active fleet being listed for sale.
- Large Jets: Inventory increased a nominal 0.5% (two units), and 7.1% of the active fleet is listed for sale.
- Mid-Size Jets: A single unit decrease equated to a 0.2% reduction in our tracked Mid-Size Jet fleet. Currently, 10.0% of the active fleet is available for purchase.
- Light Jets: Inventory decreased 2.2% (12 units), representing the group’s eighth consecutive monthly decline. Light Jet fleet availability now stands at 8.7%.
- Turboprop: This group saw its first increase (0.5% or two units), following six consecutive monthly decreases. Still, only 6.3% of the active Turboprop fleet is available for sale.
February’s Maintenance Exposure Trends
Following the Quality Rating’s path, Maintenance Exposure, an aircraft accumulated/embedded maintenance expense, improved (decreased) by another 0.2% in February. This shows that upcoming maintenance events for the listed fleet will be slightly less expensive.
All four groups improved/decreased, and individual figures were as follows…
- Large Jets: Improved/decreased 1.3% to a figure only slightly worse than the 12-month average.
- Mid-Size Jets: Improved/decreased 1.2% to post the group’s lowest (best) figure of the past twelve months.
- Light Jets: Improved/decreased 0.8% to a figure that remained above (worse than) the 12-month average.
- Turboprops: Improved/decreased 0.3% to post the group’s fifth consecutive 12-month low/best figure.
February’s ETP Ratio Trend
The overall tracked inventory’s ETP Ratio increased/worsened to 73.5%, a figure just shy of the 12-month high (worst) value.
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 the Market increases, in many cases by more than 30%.
During Q4 2020, aircraft whose ETP Ratio was 40% or greater were listed for sale 64% longer than assets with an ETP Ratio below 40% (277 days versus 454 days). How did each group fare during February?
- Turboprops: For the fifteenth consecutive month, Turboprops registered the best/lowest ETP Ratio. February’s 39.8% was equal to January’s Ratio, placing Turboprops below the 40% excessive Maintenance Exposure point for the third consecutive month.
- Large Jets: Maintaining second position, Large Jets had a Ratio of 66.6% - but that figure exceeded the group’s 12-month average.
- Mid-Size Jets: Posting a second consecutive monthly improvement (decrease) Mid-Size Jets posted a Ratio of 69.3%, just above the group’s 12-month low/best.
- Light Jets: Establishing another record-high (worst ever) figure of 108.0%, while this will not help most Light Jet sellers, February’s ETP Ratio is only mildly surprising given the age of assets comprising this group’s inventory at present.
Excluding models whose ETP Ratio was over 200% during one of the previous two months (considered outliers), following is a breakdown of the business jet and turboprop models that fared the best and worst during February 2021.
This article was originally published by AvBuyer on March 18, 2021.
