Preowned Market Recovering Slowly, Report Indicates

Wednesday, November 9, 2011 - 11:00am

“While the preowned business aircraft market continues to show improvements, all indicators have been slow to recover in the first nine months of 2011,” according to the latest report from industry research firm JetNet. “These figures are, however, much improved compared to the lows recorded over the past two years, as the for-sale inventories have declined and full-sale transactions have improved.” Preowned business jets for sale at the end of September represented 13.8 percent of the in-service fleet, down from 15.1 percent a year ago. Asking prices remained soft during the first nine months of the year, sliding 19.7 percent compared with the same period last year. However, business jet transactions in the first nine months climbed 11 percent from the year-ago period. Meanwhile, used business turboprop inventory dropped to 10.1 percent in September, down 0.6 points from the same time last year. Despite this, average asking prices and sales transactions for preowned turboprops declined 12.9 and 0.9 percent, respectively. The average days on market for jets climbed 18 days to 373 in the first three quarters, while turboprops took 25 fewer days (325) to sell, JetNet said.

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““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”

-David Yermack