VREF Confirms-TBM Owners are Geniuses!

VREF’s 2016 Market Leader Report Volume #2 out this week has confirmed what most you TBM owners already know - you guys are pretty smart!  You must be because your airplanes have retained more value since new than most other makes and models of turbine airplanes.

According the the report, while some aircraft have lost as much as 75% of their value since new in 2008, TBM 850s have only depreciated 26% since 2008 or have retained 74% of their value!  Compare that to King Air B200 that lost 50% of its value since 2008, or worse, to a Learjet 60XR that lost 74%.

The full report is an update on the aircraft resale market in Q1 2016 which is best summarized by two words: “price sensitive”.  VREF confirms sales activity is good for aggressively priced aircraft with most models being in what most would call a “Buyers” market. TBM owners may be in a better position regarding resale values do to their lower depreciation than many other models.

Read the full report at: https://dl.dropboxusercontent.com/u/110628852/VREF%20Market%20Report_2016Vol2.pdf

Horizon Aviation is a full service aircraft brokerage specializing in the turboprop and light jet markets with strong TBM experience.

For more information contact:

Kurt Mathewson, Horizon Aviation Group, kurt@horizonavgroup.com, 561-284-8995


TBM Quarter 1 Market Update

As an airplane class, the TBM series single engine turboprop class is relatively small so the number of sales transactions is usually small as well.  In the first quarter of 2016 there were 22 total sales of TBM 700/850/900s with the majority (13) being in the 850 model versus only 7 sales for all three 700 versions (A/B/C).  Most of the sales revolved around sellers moving up to the 850 or 900 series.

There are only (3) 900s on the market, two at “make offer” and one asking $3.75m. Asking prices for the 850 model range have remained fairly steady even seeing a 1% increase in the average list prices, indicating that sales numbers are supporting the asking prices.  In the 700 category the prices have slipped nearly 3% as their age and airframe/engine times climb. 

According to VREF, retail value for a 2010 TBM 850 should be around $2.32m which is on track with the average asking price of the aircraft on the market. There are currently (30) 850 models listed for sale. With the newest version, the 930 being delivered now, we do anticipate more 850 owners wanting to trade up to the 900 or 930, potentially pushing prices for the 850s down some.

VREF values for a 2004 700C2 track right with the average listing price of $1.49m for 700C2s on the market at the end of Q1.  There are only (50) 700C2 models on the market for sale.

The news is not as good for 700A/B models.  According to VREF a 1995 700A should be worth $1.12m but the average list price was only $1.05m (-$70K).  Similarly, a 700B shows a VREF value of $1.24m but the average list price was $1.095m (-$145k) indicating that demand is declining for the older models.  There are (12) 700As and (7) 700Bs listed for sale.


10 Reasons to Use an Aircraft Broker

10-  DEFINE THE MISSION: Just because you fly from Miami to LA twice a year doesn't mean you need to buy a plane for that mission.  If most of your trips are regional or under 1000 miles you will save a lot of money by purchasing a plane that fits 90% of of your overall missions.

9-   EVALUATE AIRCRAFT OPTIONS: Once the mission has been identified a broker can provide performance and cost analysis of several types/brands of aircraft to help determine which aircraft best suits your needs.

8-   LOCATE THE BEST AIRCRAFT:  You can look online at a few websites and find advertised aircraft that you can purchase, but knowledgeable brokers follow the market and often specialize in certain types of aircraft.  Brokers work directly with owners as well as other brokers in order to find the best plane for your needs.

7-   FIND OFF-MARKET AIRCRAFT:  Unadvertised or "off-market" airplanes are where good brokers often can find the best deals.  These airplanes are usually well cared for and may be available from an owner who is interested in another aircraft but hasn't put it on the market.  Many deals are made this way.

6-   ANALYZE AVAILABLE ALTERNATIVES:  This is where the rubber meets the road and the broker earns his money by helping the buyer decide which airplane to pursue and in what order.  There are many factors that must be considered besides price and times.  By knowing the type of aircraft thoroughly the broker can advise the buyer and uncover known issues to the aircraft prior to making an offer.

5-   PREPARE CONTRACTS:  Like every industry there are items that are unique to purchasing an aircraft and need to be addressed in offers and contracts.  A broker will handle all of the document preparation and can offer the services of a lawyer if you prefer.  

4-   HANDLE NEGOTIATIONS:  Negotiations are usually best handled at arms length.   Letting your broker handle the negotiations keeps emotions from interfering with getting the best deal available.  While price is always important, there are many other terms that need to be included in negotiations that greatly effect the deal.

3-   MONITOR THE PRE-PURCHASE INSPECTION:  Most deals will include a Pre-Purchase inspection.  This step can make or break any deal. Your broker should be included in all communications with the inspection shop and review all reports and help you understand and evaluate the reports as they can effect the contract guidelines. 

2-   COORDINATE THE CLOSING:  Once the Pre-Purchase Inspection is successfully completed a closing is scheduled.  Your broker will handle all of the details and coordinate getting the myriad of documents required to finalize the sale for you.

1-   SAVE YOU MONEY:  All of the above are important but what you really want the broker to do is to get you the best plane at the best deal possible.  Eighty percent of all business aircraft sales are handled through a broker.  The reason is their knowledge and experience helps buyers get the aircraft they want at a fair price and helps aircraft sellers get the most money for their airplane in the current market.

TBM Dark Oil Issues

Maybe you’ve heard about it, maybe not, but there is an issue with TBM 700/850 engines which some are referring to as “dark oil”.  As a aircraft broker, I’ve encountered several TBM 700 models and even a few 850s that have dark oil notations in the logbooks.  One buyer I worked with chose not to buy a certain plane based on the issue, but did buy another airplane which also had the issue.  The following is a synopsis of the the explanations I’ve gotten in working on two different acquisitions that had to deal with “dark oil”.  It’s not scientific and should not be the basis for you to decide to buy or not buy a TBM but its informational only.

A little history.  The PT6 engine was originally developed 55 years ago. According to Pratt and Whitney’s website over 55,000 PT6s have been built and used in over 140 applications in several variants[1]. PT6s are used in many aircraft including King Airs, Pilatus, Cessna Caravans, Piper Meridians, Air Tractors and Piaggios to name a few.

“My car’s oil gets dark after its been in the engine isn’t it normal for my plane’s oil get dark?”  No.  The oil in turbine/turboprop engines normally stays much cleaner than in internal combustion engines due to the extremely close tolerances and the highly efficient combustion process so the oil normally doesn’t turn as dark as in a car’s engine but it is a known issue in some turboprop engines such as the PT6A-64 engines in the TMB 700s. The oil gets burned or “coked” onto the side of the bearings which eventually flakes off and is pulverized into tiny carbon particles in the oil which darkens the oil.

What causes the dark oil?  According to Pratt and Whitney the problem is too much heat on the bearings inside the engine. The oil gets burned or “coked” onto the side of the bearings which eventually flakes off and is pulverized into tiny carbon particles in the oil which darkens the oil.  

Is this a safety of flight issue?  Generally speaking, no.  The coking does not reduce the lubricating properties of the oil.  However, carbon particles are caught in the oil filter and secondary screen and can accumulate and cause reduced oil pressure and induce the oil system to bypass the oil filter which could allow carbon and other particles in the oil to go through the engine unfiltered and potentially cause damage.  Following the scheduled maintenance procedures seems to prevent buildup of particles to the point of being dangerous. 

How many airplanes have the issue?  No one is sure,  it seems to begin around 800 hours so more 700s have incurred it than 850s just based on their accumulated engine time.  One Maintenance Director I spoke to about this said, “It’s not if but when” a TBM will experience this issue.

Is there a fix?  Pratt and Whitney and Dahr/Socata have been studying the issue are working to come up with a solution.  The primary focus has been on a different oil.  P&W has been testing a different oil which has higher resistance to “coking” than the current oil. There also may be suggest changes to the cooling systems both inside the engine and on the airframe. Stay tuned.

Until then the accepted procedure to manage the condition is to flush the engine oil (it may take multiple flushes) to remove the carbon from the entire engine, change the filter and the secondary screen and then to follow an early oil change procedure and to inspect the filter and the screen for particles and then gradually increase the hours between oil changes back to normal.

[1] (http://www.pw.utc.com/News/Story/20140924-1000/2014/All%20Categories).