Gulfstream G650
Gulfstream G650

Preowned: Gulfstreams Add to the Oversupply of Large-Cabin Jets

Like-new G650s are suddenly on sale.

Gulfstream’s long-range, large-cabin jets, which set the standard for value retention in a size category that long defied the broader market’s slack demand, are now joining the group’s descent. Deutsche Bank recently downgraded the stock of the airframer’s parent company, General Dynamics, because of concerns that swelling inventories of preowned G650/G650ERs—the flagship of the manufacturer’s fleet—will affect sales of new ones.

Figures reported by JetNet and AircraftPost.com chart the market’s downward arc. It’s a critical line to follow if you’re looking for a great buy on a premium large-cabin jet or seeking to exit ownership while recouping as much value as possible from your Gulfstream.

In March last year, six G650/G650ERs were for sale, according to JetNet, and by this March inventory had more than tripled, to 18, or about 11 percent of the in-service fleet. (Experts typically regard 10 percent to be the upper limit of a stable market.) Pricing trends present a more graphic picture. Last summer, nine G650/G650ERs were listed at about $68 million to $75 million, according to AircraftPost.com, while five sold over the prior six months brought $66.5 million to $73 million. By this March, the price range of G650s had dropped to about $59 million to $73 million, AircraftPost reported, while the four sold in the preceding six months fetched $62 million to $65 million.

The latest decline in preowned values is particularly noteworthy given the quality of new inventory. Several of the G650s recently offered for sale are almost new, with only delivery hours on the airframes. “Some G450/G550 owners are electing to put their just-delivered G650s on the market,” explains Rolland Vincent of consultancy Rolland Vincent & Associates, “as they cannot or do not want to accept the pricing they are being offered for their trade-ins.”

If you’d ordered a large-cabin jet from another manufacturer and suddenly gotten cold feet, you might have simply sold your delivery position to another buyer without ever taking possession of the aircraft. But Gulfstream has rigid purchase contracts that preclude customers from selling delivery positions, and canceling an order triggers significant financial penalties, leaving such buyers with little recourse beyond putting their new jet on the market. Whatever the trade-in allowance Gulfstream is offering, G550/G450 values are also under pressure, Vincent says.

Last July, 26 G450s on the market were priced at $15 million to $36.5 million, according to AircraftPost, and the nine sold in the six months prior matched that range of asking prices. By this April, at least 32 G450s, or 10 percent of the fleet, were available, priced from $11 million to $31 million, with six-month prior sales ranging from $11.75 million to $26.5 million. Part of the G450/G550 value decline is due to the forthcoming G500/G600 models, Vincent says; though deliveries won’t begin until near the end of the decade, the new models are already affecting the prices of those they’ll largely replace.

Dennis Rousseau, founder and  president of AircraftPost, sees concerns about long-term G650 values as an overreaction triggered “because it was such a hot commodity for the last two years,” adding that “a lot of these were bought with the intent to resell.” The “global economic downturn” has changed the calculus for some such buyers, he says. “I know a couple of people who ordered early 650s, who had a 550, and [have now] said, ‘Whichever one sells first, that’s the one we’ll get rid of.’”

The current decline in the G650’s fortunes, Rousseau says, is simply symptomatic of the long-range, large-cabin market malaise that’s already hit Bombardier and Dassault Falcon. Consider the Falcon 7X: this April, with 10 percent of the fleet available (27 aircraft), AircraftPost reported that asking prices ranged from $19.35 million to $41.5 million, while those on the block sold for $21.21 million to $32.5 million over the prior six months. Last summer, with 8 percent of the 7X fleet on the market (20 aircraft), listings ranged from $23 million to $47.5 million, while buyers paid $24 million to $37.1 million over the previous six months.

With little to suggest strengthening demand, don’t expect big changes in large-cabin value trends in the near term.


James Wynbrandt is a private pilot and longtime BJT contributor.

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