JetSwiss Pilatus PULSE - May 2023

PRE-OWNED PILATUS MARKET: SHIFTING INTO THIRD GEAR

PILATUS PC-12 MARKET OVERVIEW FOR MAY 2023

SHIFTING INTO THIRD GEAR

Like many kind conversationalists, my friends and family often ask, “How’s business?” When it comes to this question (and many others) I can get long-winded. Pair that character trait with reporting on market activity over the past few months and I feel like a broken record. So, I have been working on my response—keeping it short without being rude—especially when Dad calls... ;)

So, here’s my short answer with a longer explanation: business is in 2nd gear and slowly shifting into 3rd.

I say this for a couple of reasons. First, in my lifetime I will likely never see 6th gear again (like our crazy market the past two years), so anything less than this seems quiet. Secondly, guys like me just ‘feel’ things when it comes to the market. Though they are picking up gradually as we write this edition, activity levels (phone calls, email inquiries, web forms, etc.) are certainly not what they were like eight months ago. We have buyers and sellers for aircraft, but nothing compared to the 6th gear levels seen in the past couple of years. For reference, we coin a healthy Pilatus market as approximately 65 to 85 airframes for sale. Also, when you look at the retail websites for aircraft listings, 10 of these listings are fractional sales of some kind, so whatever total “for sale” number is stated anywhere, subtract 10 airframes.

The market has seen some minor adjustments in the last 30 days but compared to January it has shifted rather dramatically:

• 9 PC-12s entered the market in April which is down from 14 in the previous month. (stabilizing)

• 11 PC-12s sold in April which was an increase from 7 the previous month. (transactions are starting to equal new entrants)

• Pricing has dropped on average 2.25% over the previous month and its down 5% since start of the year. (the market is settling into a new normal)

• 48 PC-12s are currently for sale, which is a 50% increase from January. (supply / demand)

What is going on at JetSwiss?

We are currently very active with our acquisition clients, as well as speaking with a handful of additional interested buyers who seek our expertise. The consensus of buyers today is that they feel like it may be their time. In other words, they’ve watched the market go crazy and now that

pricing has simmered a bit, they are feeling better about paying market prices. Prices have dropped anywhere from 1 to 3 percent in the last 30 days depending on which variant you are looking at.

In addition to supporting our existing clients, management clients, etc., we have utilized our time fine-tuning a new feature for our clients called the PVR (Pilatus Value Rating) system. This is a complex mathematical algorithm integrated with market data and aircraft-specific data— designed to provide a ranking of the market. This idea was originally thought of during one of our acquisition projects when the client asked, “What’s the best value on the market today? I know the market is crazy, so cut through the BS and tell me the airplane you would pursue a purchase on and why...” Sure, anyone can subscribe to Vref or Aircraft Blue Book Digest, but these services cannot provide a PVR in any fashion. Our PVR system allows us to ultimately illustrate what our clients are asking us to find—the best aircraft for the best price, with the best diligence, process, and protocols. We are able to quantify the entire market, then adjust various parameters within the system to determine a short list of aircraft. It’s magic!

Lastly, we have been in contact with a few Pilatus owners regarding selling their aircraft. Normal stuff, right? Yes, but in many of these cases, sellers are asking for the value of their Pilatus and then formulating an outright purchase option for JetSwiss to purchase. Wait, what was that? You heard it. Some Pilatus owners do not want the time, hassle, and risk associated with a traditional aircraft brokerage arrangement. Thus, they quantify what it’s worth to have a check in hand for their aircraft. These are smart businesspeople. They fully understand the economics, market, and risk surrounding the sale of their Pilatus. The good news is that, we have a team that we can send to any Pilatus in the world, evaluate it, and then determine if it’s a good fit for a purchase. It takes a couple days at most. I don’t believe there’s another resource out there that can provide this service/option for sellers.

So, if you are looking for a new way to answer the question, “How’s business?” you should consider sticking your toe into the water. You might be surprised by the ROI of selling your Pilatus. Drop us a note. The process is quick and easy!

Fly Safe, Bub

MARKET CHANGES IN THE LAST 30 DAYS BY MODEL

YEAR

0-30 Days on Market

31-60 Days on Market

61-90 Days on Market

4-6 Months on Market

7-12 Months on Market

AIRCRAFT TOTAL TIME VS. ASKING PRICE

$7,000,000

$6,000,000

Asking Price Total Hours

$5,000,000

$4,000,000

$3,000,000

$8,000,000 0 2500 5000 7500 10000 12500 15000

Asking Price By Total Hours For Sale Under Contract

DOUBLED $2,000,000

Similar to the Asking Price vs Model Year chart, this information helps our clients determine “the mileage on the car” for their specific budget.

“Want to own a low time aircraft?” This chart will give you an indication on what you will spend. Note: aircraft under 1,000 hours total time historically yield much higher prices.

This chart reflects the current market for Pilatus PC-12 aircraft that are on the retail market. Want to know how much your Pilatus dollars will buy?

This is a great place to start. As you can see, the aircraft model year plays a key factor in pricing of the aircraft, and thus generates a commensurate trend curve. This data provides a baseline for our aircraft evaluations.

PILATUS PROJECTS

PER YEAR. WE ARE THE WORLD WIDE LEADER OF PILATUS PRE-OWNED SALES.

BANK ON IT

THINGS TO THINK ABOUT WHEN CHOOSING A FINANCE PARTNER

By: Mike Smith & Alaina Joseph, Scope Aircraft Finance

Purchasing an aircraft is undoubtedly one of the largest financial decisions one can make. Given the large acquisition cost, it’s very possible financing through a bank is an important part of that financial decision. When going through the finance process, here are five things to think about:

The History of the Bank

As we’ve seen in recent weeks, economic changes can drastically alter a bank’s financial condition and ability to offer the services they intend to offer. When determining what bank to work with you should understand the bank’s values and how they make decisions. Is the bank focused on long term success for both customers and shareholders? Or is the bank focused on short term gains? Another point to consider is how long the bank has been in business. Experience through economic cycles is usually indicative of a bank with a strong foundation. That strong foundation coupled with a consistent, disciplined approach to decision making should be indicative of the bank’s long term health and viability.

The Aircraft Lending Group’s Experience in Market

While the history and financial health of the bank you work with are important, the history of the aircraft lending group matters, too. Understanding whether the bank has a full team dedicated to aircraft lending to finance your aircraft is important. Longevity in the industry and experience with the type of aircraft you are purchasing demonstrates a deeper understanding of the unique world of aircraft lending. Don’t be afraid to ask how long the group has been in business. Experience matters.

The Underwriting Process

In the office, we’ve talked about the concept that, in life, people care about two things: their health and their money. Potentially, they might care more about their money than their health. Regardless, one’s financial condition is an incredibly personal thing. When you

apply for an aircraft loan, you will share a lot of that personal financial picture so having trust in the team that will be working through this process with you is important. To develop that trust, it might help to have a good understanding of the bank’s underwriting and approval process.

Who will do the underwriting? Who approves the loan and how long will that take? It’s your finances, and you should have understanding and comfort with this important and vulnerable process.

Who will you contact going forward?

Once the loan closes your bank will be working with you through the life of the loan, and hopefully many more to come. But the question is: who will you call if you need anything? Your aircraft loan is important and you should work with a bank that respects that and provides easy ways to connect with them now and in the future.

Customer Focus

A bank should view your aircraft loan as more than just a “deal”. As we’ve established so far, your aircraft loan is incredibly personal. It’s not just a deal, it’s a big deal. You and the bank are entering into a long-term relationship which merely starts at the closing table. The question becomes: does your bank look at the ongoing relationship the same way you do?

Financing an aircraft doesn’t need to be a challenging, cumbersome experience. Your bank should enhance your purchase and ownership experience, not detract from it. Remember, there are many great aircraft lenders in the industry. As you embark on this journey of integrating financing into your purchase, consider the 5 areas discussed in this article, and if you do, you’ll find a bank worthy of sharing in your ownership journey with you. And that’s the only way to fly.

Mike Smith

O: (614) 228-5144

C: (330) 221-1359

mjsmith@scopeair.com