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General Market Comments - Brighter Horizons?

There has been some positive news recently, so it’s starting to feel like the dive into the abyss may have finally reached max depth for the helicopter market.   Helicopter transactions are still limited, but buyer activity has picked up over this last quarter.  Resale values have leveled off and reported transactions this quarter are at or above published Blue Book values an indication that things may be turning around.  There are still plenty of older aircraft remaining on the market, and they will likely sell at below average values.  With so many bargains out there now is the time to buy.


 
In addition to leveling values and increased activity in the resale market, tenders coming out are bringing some hope for many of the aircraft parked during the downturn.  Efforts to fill new contract obligations has potential to increase new helicopter orders as well. 


 
While news of EASA recently lifting the grounding of the H225 and AS332L2 aircraft is welcome news for Airbus, it doesn’t come without some trepidation.  AIBN has yet to release their final report into the investigation which is making most operators hesitant to attempt putting the aircraft back into service.  EASA’s lifting is at least a positive move in the right direction for Airbus.   


 
It is a pleasure to say that during this quarter’s pricing meeting we have only made adjustments to four helicopters in The Official Helicopter Blue Book ®. The AS365N2, AS365N3, EC145T1, and the S61N.  We have also added resale pricing pages for the Boeing CH47Dand the Sikorsky UH-60A.

We’re sure everyone is aware of the big events in recent months impacting the helicopter market: the Airbus H225 crash and grounding of the H225 and AS-332L2 Super Pumas, and CHC’s swiftly-following bankruptcy announcement.  Together they spur many complicated questions about the future of the Super Pumas and the resale market in general, especially for offshore oil support helicopters. 
 
Since the grounding of the Super Pumas, demand for the S-92A and AW139s has increased noticeably.  Operators hesitant to purchase aircraft with the current state of the oil and gas industry are turning to lessors.  This demand for alternate aircraft has allowed lessors to proactively find new homes for aircraft that were originally slotted for return in the CHC bankruptcy process.  With at least 98 of CHC’s fleet, and possibly up to 155, on the chopping block, this is a potential bright spot that may result in a less chaotic and overcrowded market as the CHC court-approved assets are returned or abandoned. 
 
For now, HeliValue$ has made the decision to switch off the Blue Book resale pricing pages for the H225 and AS-332L2.  We have been working closely with the OEM, lessors, operators, financial institutions, and brokers to gather as much information as possible to help us determine the best way to handle the questions regarding the current values and the future of this model. At this moment, there is no resale value, since there are no resale buyers. 
 
We anticipate some resolution to the current Super Puma market uncertainty once the AIBN determines the cause of the accident and Airbus determines the repair that may be needed.  Meanwhile, there is plenty of speculation, both around the world and here inside HeliValue$, but until the investigation has been completed the future is too uncertain to draw a reliable conclusion. 
 
The rest of the market has been fairly quiet since our last update.  There continues to be a glut of aircraft available.  This is especially true in the single light turbine market.  There has been some transaction activity in the single light turbine market and in some medium twins operating in EMS or VIP roles. 
 
On the bright side, if you’re ready to invest in the helicopter market, today is an awesome day to become a buyer.  You have your choice of the best helicopters in the world at the lowest prices of all time.  Allow yourself a large risk margin and a 20-year time frame, because we’re not at the bottom of the barrel yet.  But the effervescent Clark McGinn (of Waypoint Leasing) has the right idea: the helicopter market is highly cyclical and will rebound, even if Sharon is predicting it won’t be until March 11, 2018, at 10:17 AM.  We might not see $100/bbl oil again before she retires (this milestone seems to come around every 30 years or so, in inflation-adjusted currency, and she’s been “privileged” to see two of these milestones already), but there are still no viable alternatives to helicopter transport for offshore oil support, patient arrivals direct to a hospital, or pinpoint fire suppression. None of these jobs are UAV-compatible, nor is there any better way to accomplish them than a helicopter. 


For those following the oil and gas market here are some reports that may be of interest.

The US Energy Information Administration August Short Term Energy Outlook
The International Energy Agency August Oil Market Report

HeliValue$, Inc. held its third quarter Blue Book pricing review on October 3, 2016.  Resale pricing adjustments were made for the models listed below.  To view pricing adjustments, login to your account and visit the models' resale trends page.
 
Airbus -  AS365N2, AS365N3, EC145T1
Sikorsky S-61N

New pages added to the Blue Book:
Sikorsky UH-60A
Boeing CH-47D
 
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Resale pricing adjustments are based on actual sales transactions and current market conditions such as overall trends in asking prices, increase or decrease in supply, demand, and sales volume. We obtain sales pricing data from owners and operators, lenders and lessors, brokers and equipment manufacturers worldwide.
 
While we do review all models each quarter, frequently traded models are updated as soon as they begin to show variation from the previously published values.  Stay up-to-date on resale pricing changes by purchasing an annual subscription to The Official Helicopter Blue Book®.

HeliValue$, Inc. held its third quarter Blue Book pricing review on October 15, 2015.  Resale pricing adjustments were made for the models listed below.  To view pricing adjustments, login to your account and visit the models' resale trends page. 

  • Agusta - A109C, A109E, AW109SP,AW119K,AW119Ke
  • Airbus -  AS332L, AS332L-1, AS332L-2, AS350B2, AS350B3, AS365N1, AS365N2, AS365N3, EC155B, EC155B1, EC225LP
  • Bell - 206L-1,206L-3,212,412EP,429,430
  • MD - 600N
  • Sikorsky - S76C++

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Resale pricing adjustments are based on actual sales transactions and current market conditions such as overall trends in asking prices, increase or decrease in supply, demand, and sales volume. We obtain sales pricing data from owners and operators, lenders and lessors, brokers and equipment manufacturers worldwide.  With the information gathered from many different resources, we review each model covered in The Official Helicopter Blue Book®

While we do review all models each quarter, frequently traded models are updated as soon as they begin to show variation from the previously published values.  Stay up-to-date on resale pricing changes by purchasing an annual subscription to The Official Helicopter Blue Book® www.helivalues.com

 

content500General Market Comments

In general, most of the reports HeliValue$ has received indicate a slow sales quarter.  Low oil prices continue to have an impact, predominantly on the heavy class of helicopters such as the EC225 and the S-92A. There have been reports of some operators parking the larger aircraft waiting for oil prices to recover.  While there has been an overall slowdown in the offshore market, the majority of the impact is on the exploration side of the industry. 
 
The medium class helicopters have also been affected by oil prices, especially the older aircraft.  Inventory of medium and light twin turbine helicopters has remained steady but still slightly bloated.  Both classes suffer from a lack of interested buyers mostly because there is limited or no secondary market for most of these aircraft.  This is particularly true for the older, high airframe time aircraft.
 
Light single turbine aircraft such as the AS350 series of helicopters have seen some increased sales activity in the third quarter leveling out the resale market inventory.  Older models of this class are still moving off the market much slower than newer models. Asking prices and sales prices continue to fall particularly for the older aircraft.    
 
The light piston aircraft inventory has slightly decreased through the third quarter, and sales pricing remains steady.
 
While there have been some sales, the corporate/VIP market over the past two years for all used helicopters has almost completely stopped trading.  This is the main cause of the increased resale market inventory, especially in the light single and twin turbine markets.  

 
We are interested in any recent sales transactions you would like to report. Every time you buy, sell, lease, finance, or trade a helicopter, and report this information to us, you help update The Official Helicopter Blue Book®. Sales transactions can be reported by emailing [email protected].  All information received is held in the strictest confidence and is only used for our internal review.  The next pricing review is scheduled for January 6, 2016.

Evaluating a Report for USPAP Compliance

 

 

New Online Seminar!

Evaluating a Report for USPAP Compliance 

A Special Offering for Lenders and Other Non-Appraisers

Lending professionals and other non-appraisers will gain a better understanding of the Uniform Standards of Professional Appraisal Practice (USPAP) and its applicability to the lending process through this online seminar created by The Appraisal Foundation in partnership with McKissock.  The seminar provides insight about appraisers’ USPAP-related obligations in an assignment and arms the underwriter with knowledge of how to best evaluate an appraisal report for USPAP compliance. 

This program is not intended for appraisers or to provide training for those performing appraisal review (as defined in USPAP) assignments.

Register for the seminar here.

Feel free to pass this along to your colleagues in the lending community!

Questions?  Please contact Paula Seidel at [email protected].

HeliValue$, Inc. held its second quarter Blue Book resale pricing review on July 20, 2015.  The models affected are listed below.  If you are a current subscriber, please login to your account and visit the resale trends page for each model to view the adjustments.

 

Agusta AW109E, AW109SP, AW139.
Airbus AS350B2, AS365N2, EC225LP.
Bell 206L-3, 214B, 407GX, 427, 429, 430.
Kaman K-1200.
Robinson R22 Beta II, R66.
Sikorsky S92A

 

General Market Comments
Light singles like the Bell 206L-4 and 407 are a seeing a little boost in the short range offshore market.  With the slowing of new deep water offshore exploration contracts, we are seeing some of the mediums (AW139 & B412EP) and the heavies (S92 & EC225LP) being parked until oil prices recover.  Older aircraft such as the Airbus AS332L, AS332L1 and L2, Sikorsky 61N, and the Bell 212 are being replaced with newer aircraft as they become available.  These older aircraft are being moved to an almost nonexistent secondary marketplace.  The Airbus AS350 series and older Bell 407 models continue to have a depressed market.  We have seen some AS332, AS350 series, and AS355 series being parted out due to very low demand and declining resale prices.  The used corporate/VIP market continues to be very weak.

 

Resale pricing adjustments are based on actual sales transactions and current market conditions such as overall trends in asking prices and increase or decreases in supply, demand, and sales volume. We obtain sales pricing data from owners and operators, lenders and lessors, brokers and equipment manufacturers worldwide.  With the information gathered from many different resources, we review each model covered in The Official Helicopter Blue Book®. 

 

While we do review all models each quarter, frequently traded models are updated as soon as they begin to show variation from the previously published values.  Stay up-to-date on resale pricing changes by purchasing an annual subscription to The Official Helicopter Blue Book®.  


 
We are interested in any recent sales transactions you would like to report. Every time you buy, sell, lease, finance, or trade a helicopter, and report this information to us, you help update The Official Helicopter Blue Book®. Sales transactions can be reported by emailing [email protected]. All information received is held in the strictest confidence and is only used for our internal review.  The next pricing review is scheduled for October 5, 2015.

Carol Busch, AM, of HeliValue$, Inc., has been elected Secretary of the Wisconsin Chapter of the American Society of Appraisers. This announcement comes just two months after the announcement of HeliValue$' President Sharon Desfor's elected position of International Secretary/Treasurer.

 

Sharon Desfor, HeliValue$' President and ASA's International Secretary/Treasurer, chuckled as she added, "I didn't even know that Carol was running for office, and now we have two ASA Secretaries in one company. I sincerely applaud Carol for her volunteerism and for putting her efforts into such a valuable organization as ASA."

 

Carol Busch, AM, has been with HeliValue$ for twenty-eight years holding several important positions. Most notable may have been her term as editor of The Official Helicopter Blue Book® from 1993 to 2014. Over the years, Carol has also served as HeliValue$ website manager, public relations manager, events manager, client services, and AR/AP. She now holds the position of Associate Appraiser with over 700 helicopter appraisals completed since April 2013. Carol obtained her American Society of Appraisers accreditation in June 2013 and is on track to receive her senior accreditation status in June 2016. She will be a fourth addition to the HeliValue$ ASA senior accrediated staff.  Carol also recently spoke at the 2015 NAFA conference presenting "Will Oil Prices Really Affect the Helicopter Market?"

 

Carol flashed her trademark grin when she heard the news, and told us, "I'm excited to be a part of the Wisconsin Chapter and promoting ASA's high standards."

 

About American Society of Appraisers

The American Society of Appraisers is a world renowned and respected international organization devoted to the appraisal profession. ASA is the oldest and only major appraisal organization designating members in all appraisal specialties. www.appraiser.org

 

HeliValue$ will hold its second quarter Blue Book resale pricing review on July 20.  Resale pricing adjustments are based on actual sales transactions and current market conditions such as overall trends in asking prices and increase or decreases in supply, demand, and sales volume. We obtain sales pricing data from owners and operators, lenders and lessors, brokers and equipment manufacturers worldwide. With the information gathered from many different resources, we review each model covered in The Official Helicopter Blue Book®. While we do review all models each quarter, frequently traded models are updated as soon as they begin to show variation from the previously published page. Stay up-to-date on resale pricing changes by subscribing to The Official Helicopter Blue Book® www.helivalues.com.

 

The Official Helicopter Blue Book®. Sales transactions can be reported by emailing Lindsay Moore or via our online form here.  All information received is held in the strictest confidence and is only used for our internal review.

 


 

Congratulations! Sharon Desfor ASA International Secretary/Treasurer - Elect

 

Sharon moves from MTS Governor to her newly elected position of International Secretary/Treasurer. Sharon will focus on promoting communication and transparency between members and leadership, members' needs whether those are direct benefits or government lobbying, and making ASA relevant on a global basis.

 

"Sharon has a strong commitment to the education of all appraisal professionals.  We are excited that she will have the opportunity to make the ASA even better." - Jason Kmiecik, VP of Operations, HeliValue$, Inc.

www.appaiser.org

Appraising the Appraiser

As originally appeared in Business Aviation Advisor, May/June 2015 (www.bizavadvisor.com)

Finding the Right Appraiser is as Easy as ASA

After the savings and loan crisis in the 1980s, and again in 2008, the banking industry responded with new rules and additional safeguards for better risk management.

 

One of the most significant changes involves aircraft appraisals.

 

Prior to 2008, a simple market evaluation by a resale broker, often with just a quick look at the current edition of the Aircraft Blue Book, was sufficient to secure as much as a 90% loan-to-value ratio for a preowned aircraft. That is no longer so.

 

Today, most banks, leasing companies, and insurance underwriters require that all loan collateral, including business jets, be valued by a qualified, certified appraiser before financing is approved. Those appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), which was created in 1989 by the Appraisal Foundation, and is the generally accepted standard in Canada and Mexico as well as the U.S.

 

Two organizations provide such appraiser certification: the International Society of Transport Aircraft Trading (ISTAT), which focuses primarily on commercial airliners; and the American Society of Appraisers (ASA), which teaches, tests, and confers credentials to its members, who conduct professional appraisals for business and personal property valuation. The ASA's Machinery and Technical Specialties division offers the only program to train and certify business aircraft appraisers.

 

Appraisers earn that Aircraft Specialty accreditation by completing a rigorous curriculum and peer evaluation. ASA-accredited appraisers must adhere to the professional standards set forth by ASA's Code of Ethics and Principles of Appraisal Practice, and well as USPAP (in North America), or the International Valuation Standard elsewhere in the world. The two levels of ASA certification, Accredited Member and Accredited Senior Appraiser, are based on the number of years of appraisal experience, with continuing education courses required to hold either accreditation.

 

The recent rebound in business jet transaction activity has increased the demand for certified appraisals. To meet that need, two established aviation organizations, Jet Support Services, Inc. (JSSI) (www.jetsupport.com) and Embry-Riddle Aeronautical University (ERAU) (www.erau.edu) co-sponsored and co-hosted two ASA accreditation courses earlier this year, one at ERAU's campus in Daytona Beach, FL, and the other at JSSI's European headquarters in Farnborough, UK, with more courses planned for this fall.

 

What does this mean for you, the aircraft owner?

 

If you are interested in monitoring the value of your aircraft, whether for financing, refinancing, or sale; or to verify hull value for insurance coverage, you will need to have your aircraft appraised by an ASA-certified appraiser. This will ensure that you have the most accurate and lender-acceptable data.

 

On average, expect the appraisal to take about one week, with the physical inspection process usually one full day onsite, and the rest reviewing records. The appraiser will conduct a systematic inspection of the interior and the exterior of the aircraft, including: engine, airframe, avionics, instrumentation, and other systems; as well as provide a methodical review of your aircraft's flight and maintenance log books, FAA registration, title, and owner's documentation. Most business jet appraisers avoid "desktop only" appraisals because the inspection and review of the records is extremely important.

 

In 2015, the average cost for a full appraisal and inspection – required by most lenders – is about $5,000, perhaps up to $7,500, plus expenses. Be aware, however, that a standard appraisal is not the same as a pre-buy inspection for purchase, which can run between $10,000-$50,000 depending on the size and scope of the work.

 

Rules for lending have changed dramatically in the past six years. If you have not been in the market recently, know that a proper appraisal will ensure that you secure the right equipment at the right price, while meeting your lender's requirements.

 

For more information about and to find an accredited Appraiser go to www.appraisers.org or call 800-272-8258. BAA