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Asset Insight Publishes 2014 Annual Asset Quality Market Report

2014 Year End Report Indicates Quality of Available Aircraft Remains Excellent and Sales Activity of Higher Quality Assets is Robust

January 27, 2015 - AMISSVILE, Virginia, USA. Asset Insight, Inc. today published its 2014 Annual Year End issue of the Asset Insight Index Market Report (AI2 Market Report). Across the fleet of aircraft available for sale as of December 30, 2014, sales improved year-over-year, with trades throughout the year clearly favoring higher quality assets - those in the best maintenance condition - all other things being equal.

Using Asset Insight's proprietary Asset Grading System ProcessTM (AGSP) to analyze the average maintenance condition of jet and turboprop aircraft listed for sale as of December 30, 2014 (Source: AMSTAT), the AI2 Market Report analyzes the Maintenance Rating (ATC Score), Financial Rating (ATFC Score), the Asset Exposure Value (ATFE Value) and the Asset Exposure to Asking Price Ratio (ETP Ratio). The AGSP is based on patented algorithms analyzing current age, flight hours and cycles on an aircraft's systems and major sectors - airframe, engine(s), propeller(s), APU, paint, and passenger interior - as well as the typical cost to repair or replace parts with no defined life.

The 2014 Year End Report analysis indicates that seller willingness to accept lower prices has improved overall jet aircraft sales figures. Turboprops have seen fewer trades in 2014 than 2013 due, in part, to heavily depressed pricing and seller unwillingness to accept even lower offers. On the other hand, one cannot fault buyers for seeking to take asset maintenance exposure into account, and we expect this inability to find middle ground to continue impacting trades. "Buyers are clearly seeking out aircraft of higher asset quality," stated Tony Kioussis, president of Asset Insight. "The Market is unmistakably telling sellers not to expect worthwhile offers if their aircraft's maintenance condition is below the market average."

When looking at the market segments separately, it is notable that Large Jets have experienced good market activity and stronger Ask Prices due to outstanding asset quality and, at a Maintenance Exposure to Ask Price Ratio (the ETP Ratio) of 31.7%, is the only group below the 40% excessive exposure baseline. A closer look at the ETP Ratio for each market segment follows:

  • Large Jets - were the only group to show improvement in the year-over-year average, and the only group to end the year below the 40% excessive exposure baseline.
  • Medium Jets - managed to break the 40% baseline only once throughout 2014, and finished the year in third position.
  • Small Jets - again recorded the worst ETP Ratio among the four groups, and posted the worst ETP Ratio on record in December 2014.
  • Turboprops - averaged below the 40% excessive exposure baseline in 2014 to rank second among the four groups.

 

While the Year End ETP Ratio for the overall market remained over the 40% level, from a Maintenance and Financial Rating perspective, we are ending 2014 with better overall figures than we ended 2013. While aircraft maintenance condition played an active role, falling Ask Prices for the available "for sale" fleet had a much greater impact on the Ratio. All indications point to a continuation in the trend of year-over-year asset quality increases in 2015.

2014 Final Monthly Report: December 2014 v. November 2014

The final 2014 Monthly AI2 Market Report is also included in the Year End Report. Ask Prices for each market segment were notable in their own way, while asset quality for the overall market and each individual segment remained quite good.

  • Large Jets - average Ask Prices closed 2015 at the highest point in 11 months and asset quality remains outstanding.
  • Medium Jets - at a twelve month peak Ask Price with excellent asset quality in aircraft available for sale, benefiting both buyers and sellers.
  • Small Jet - Ask Prices continued to fall hitting a 12 month low, while asset quality of the fleet available for sale remains very good.
  • Turboprops - a less than stellar 2014 but are starting the new-year offering good asset quality at an average price point that should allow buyers and sellers to structure mutually-beneficial transactions.

 

Please note that for 2015, the AI2 Market Report will be issued on a quarterly basis, as opposed to the previous monthly cycle. Each year, the Annual Report will continue to be issued in January recapping the entire previous year.

A Valuable Offering of Asset Insight Products

AI2 Market Report - For a Specific Aircraft (by Serial Number): Asset Insight can apply their AGSP to specific aircraft for clients, by serial number, to determine the Asset Insight Index (AI2) and objectively score the specific aircraft's Maintenance Rating (ATC Score), Financial Rating (ATFC Score), and Maintenance Equity Asset Technical Financial Exposure Value (ATFE Value). The Process provides a report based on a standardized scale that enables buyers, sellers, financiers and other interested parties to:

  • Objectively analyze and grade an aircraft's maintenance condition relative to the manufacturer's approved maintenance program.
  • Compare any aircraft's maintenance condition to another aircraft listed for sale to justify an asking or offering price for an aircraft.

 

The Aircraft Graybook: Asset Insight also publishes the Aircraft Graybook -- Asset Quality Evaluator. The Aircraft Graybook TM is a tool that allows a user to evaluate the "asset quality" of business aircraft by date of manufacturer and average annual utilization. This information will provide aircraft buyers and sellers with the Baseline Asset Insight Index that allows for a higher-definition picture of the true value of an aircraft by virtue of its maintenance condition, as they maneuver through the aircraft buying and selling process. The Aircraft GraybookTM is available free-of-charge on the Asset Insight website for a limited time.

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About Asset Insight: Asset Insight, Inc. (www.assetinsightinc.com) provides aircraft asset evaluation and financial optimization services. The company's "Asset Grading System Standard" (Patent Pending), and related analyses, provides the ability to translate the asset's technical condition into easy-to-understand, actionable financial information. Asset Insight is independent of any manufacturer, appraisal firm, financial services firm, or technical services facility, enabling it to provide an unbiased view of an asset's condition with respect to its technical status and related financial exposure. The company, founded in 2012, is headquartered in Amissville, Virginia (southwest of Washington, DC) and is managed by business, technical and financial professionals with significant experience in aviation asset management.