In this month’s Aircraft Comparative Analysis, Mike Chase provides information on two popular business jets for the purpose of valuing the Learjet 45XR. A 2012 model Learjet 45XR has a list price of $7m.
Over the following paragraphs, we’ll consider productivity parameters (payload/range, speed and cabin size) and cover current and future market values for Bombardier’s Learjet 45XR. The field in this study includes Textron/Cessna Citation XLS business jet.
The Learjet 45 was an all-new business aircraft that was manufactured between 1997 and 2007. It featured advanced Honeywell Primus 1000 avionics systems and lower maintenance costs via longer inspection intervals. This aircraft is RVSM ready from the factory.
The Learjet 45XR is an enhanced performance version of the Learjet 45 introduced in 2003. It offers higher takeoff weights, faster cruise speeds and faster time-to-climb rates as compared to the original model. The Honeywell TFE 731-20BR-powered Learjet 45XR is also designed to provide better hot and high performance, increased range and increased payload.
A Learjet 45XR upgrade package is available to Learjet 45 operators through engine and airframe service bulletins. Production of the Learjet 45XR ended in 2012, and since 1997 there were 454 total Learjet 45/45XR aircraft delivered to the marketplace.
There are 196 wholly-owned Learjet 45XR aircraft currently in operation, three in shared ownership and eight in fractional ownership, making a total of 207 units worldwide. Approximately one-seventh (14.5%) of the in-operation fleet is leased, according to JETNET. By continent, North America is home to the largest fleet percentage (77%), followed by South America (11%), accounting for a combined total of 88% of the world’s Learjet 45XRs.
Payload & Range
The data contained in Table A are published in the B&CA, May 2015 issue, but are also sourced from Conklin & de Decker. As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. The Learjet 45XR’s ‘Available Payload with Maximum Fuel’ at 1,563 pounds is greater than the Citation XLS at 860 pounds of payload capability.
In addition, Table A shows the fuel usage by each aircraft in this field of study. The Learjet 45XR at 204 gallons per hour (GPH) burns 5.1% less fuel (11 gallons) than the Citation XLS (215 GPH), according to data sourced from Aircraft Cost Calculator.
According to Conklin & de Decker, the Learjet 45XR cabin volume is 415 cu ft (length - 19.75 ft) and the Citation XLS has slightly more cabin volume at 422 cu ft. However, the cabin length of the Citation XLS (18.5 ft) is slightly shorter than the Learjet 45XR. Note from Chart A (courtesy of UPCAST JETBOOK) that the Learjet 45XR offers less cabin height and width than the Citation XLS.
As depicted by Chart B and using Witchita, Kansas as the origin point, the Learjet 45XR shows greater range coverage than the Citation XLS, reaching most of the lower 48 states and Mexico non-stop as sourced from Aircraft Cost Calculator (ACC).
Note: For jets and turboprops, ‘Seats-Full Range’ represents the maximum IFR range of the aircraft at Long-Range Cruise with all passenger seats occupied. ACC assumes NBAA IFR fuel reserve calculation for a 200nm alternate. The lines depicted do not include winds aloft or any other weather-related obstacles.
As mentioned previously, the Learjet 45XR is powered by two Honeywell TFE 731-20BR engines with a thrust rating of 3,500 pounds each. The Citation XLS is powered by two Pratt & Whitney Canada PW545B engines each offering a thrust rating of 3,991 pounds.
Cost Per Mile
Using data published in the May 2015 B&CA Planning and Purchasing Handbook and the August 2015 B&CA Operations Planning Guide, we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2015 edition was $5.25 per gallon at press time, so for the sake of comparison we’ll chart the numbers as published.
Note: Fuel price used from this source does not represent an average price for the year.
Chart C details ‘Cost per Mile’ and compares the Learjet 45XR to its competition, factoring direct costs and with each aircraft flying a 1,000nm mission with an 800 pound (four passengers) payload. The Learjet 45XR shows the lower cost per nautical mile at $3.08, 23% less compared to the Citation XLS at $4.00.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart D is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Learjet 45XR computes at $1,448, which is 15.7% less than the Citation XLS at $1,717.
Aircraft Comparison Table
Table B contains the pre-owned prices from Vref Pricing Guide for each aircraft (2008 model). The average speed, cabin volume and maximum payload values are from Conklin & de Decker, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET.
The Learjet 45XR has 10.7% of its fleet currently ‘For Sale’ while the Citation XLS has a lesser percentage ‘For Sale’ at 6.4%. However, the average number of used transactions per month for the Learjet 45XR is less than the Citation XLS at two and four respectively.
Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table C).
In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS.
There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven year recovery period or under ADS using a twelve year recovery period.
Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a six year recovery period. There are certain uses of the aircraft, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year.
Table D depicts an example of using the MACRS schedule for a 2012 model Learjet 45XR in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a used retail value of $7 million, per Vref Pricing guide.
Asking Prices vs Age, Quantity and Engines
Chart E, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the new and pre-owned Learjet 45XR including the Citation XLS/XLS+. The current pre-owned market for the Learjet 45XR aircraft shows a total of 24 aircraft ‘For Sale’ with five displaying an asking price, thus we have plotted those five.
We also added other pre-owned business jets of similar ilk, with asking prices ranging from $2-9m. The equation that we derived from these asking prices and other criteria used should enable sellers and buyers to compare, and perhaps adjust their offerings, if necessary.
Demand and Value are on opposite sides of the same Price axis. Thus, the market for used Learjet 45XRs responds to at least four features: Years, Range, Quantity and Price.
The points in Chart F are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors:
1. Range with full payload and available fuel;
2. The long range cruise speed flown to achieve that range;
3. The cabin volume available for passengers and amenities.
Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size.
After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Learjet 45XR displays a high level of productivity.
Popular attributes of the Learjet 45XR are range, lower hourly and variable costs plus a significantly higher payload capability compared to the other aircraft in our analysis. Operators should weigh their mission requirements precisely when picking the option that is the best for them.
Finally, and exclusive to our online content, Chart G displays the Learjet 45XR and depicts the Maximum Maintenance Equity available based on its age (as sourced from Asset Insight Inc). Note: The Maximum Maintenance Equity figure was achieved the day the aircraft came off the production line – since it had not accumulated any utilization toward any maintenance events.
Also note that the percent of the Maximum Maintenance Equity that an average aircraft will have available, based on its age, assumes average annual utilization of 410 flight hours, and that all maintenance is completed when due.
Within the preceding paragraphs we have touched upon several of the attributes that business aircraft operators value. There are other qualities such as airport performance, terminal area performance, and time to climb that might factor in a buying decision, however.
The Learjet 45XR continues to be popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Learjet 45XR, which started delivering in 2003 and ended production in 2012, will continue to do very well in the pre-owned markets for the foreseeable future.
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