Mike Stones

Parting out is such sweet sorrow

Finding private jets to part out is getting more difficult – a lot more difficult. It is easy to see why. The number of pre-owned business jets for sale at the end of 2021 was 54% lower than a year earlier, according to the Asset Insight AI2 Market Report published last week.

Asset Insight saw record demand across all aircraft groups in the fourth quarter of 2021, based on a survey of 134 fixed-wing models and 884 for-sale aircraft.

“The primary driver is demand from first-time buyers,” Anthony Kioussis, Asset Insight, president & CEO tells Corporate Jet Investor. “When a first-time buyer acquires an aircraft, they have no aircraft to sell, thereby decreasing the available inventory. With first-time buyers at a record high level during 2021, inventory could not help but decrease, especially when many existing aircraft owners concurrently elected to hold off on replacing their aircraft.”

This makes life harder for people looking to part out aircraft. “As the pool of serviceable material decreases the pricing is sliding up,” says Greg Miller, founder, M4 Aviation Group. “We are most definitely feeling the lack of aircraft inventory impacting the ability to purchase assets for disassembly. For an aircraft that was a candidate for teardown in 2019, that same type of aircraft is now being put back in the air. I estimate that we are at 10% the 2019 volume of aircraft being priced at a point that makes sense to purchase for disassembly.”

The irony is that parts and engines are in strong demand “I am currently deeper on engine requests than any time in my 30 years in the engine trading business. With few aircraft being parted out, that has obviously dried up the available pool of serviceable engines,” says Miller.

M4 Aviation typically pays between $1m and $12m for aircraft, specialising in the Challenger 604 with 10 transactions in the past three years. “Per year it is approximately 10 aircraft and 20 to 30 serviceable and core engine transactions, while also managing engine events through shop visits for other aircraft dealers and end operators,” says Miller.

Miller has a long search list. It includes engines installed on the Citation V, Ultra, Bravo, Encore, XL, Lear 60, 800XP, 604, Beechjet and ERJ145. “I am also, like most of my colleagues, with multiple buyers looking for aircraft. It is all about networking and timing to find a plane available right now,” he says.

As Kioussis, of Asset Insight, points out, many owners and operators are simply flying their current aircraft for longer than they would have done pre-Covid. “The desire to sell aircraft for prices that would appeal to part-out facilities is simply not there, either because the existing operator is happy to continue flying the asset or believes they can obtain a better price in the current market,” he says. “We believe increased prices for operable aircraft older than 25 years will be limited to very few models so, at some point, older aircraft owners and part-out facilities are likely to find common ground.”

So, finding sufficient aircraft to part out could remain difficult for at least the next couple of years. Where there’s parting (out), there’s likely to remain an element of sorrow (sparked by lack of supply) for some time yet.

This Hawker 400XP was sold recently by Greg Miller’s M4 Aviation Group.

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