This month we compare new and used business jets in the $4.0-15.0m price range to assess the value of both new and used Bombardier Learjet 60/60XR series.
Over the following paragraphs, we’ll consider the productivity parameters (payload/range, speed and cabin size) and cover current and future market values. Exclusive to our online content – we’ll also review the Maintenance Equity, as provided by Asset Insight, Inc. for the Learjet 60/60XR. The field in this study includes the Hawker 750 and Gulfstream G150.
The original Learjet 60 was announced in October 1990 as the replacement for the mid-size Model 55C, from which it is derived. A proof of concept airframe flew for the first time on October 1990, while the first Learjet 60 made its maiden flight in June 1991. By mid-1991, Learjet claimed to have sold the first full-year's production to customers across seven countries. Certification and early deliveries followed at the end of 1992.
The Learjet 60 - a mid-size cabin, medium-range business jet - is the largest of the certified Learjet family to date and incorporates new fuel-efficient engines, a wider, stretched fuselage, a glass cockpit and steer-by-wire nose wheel. Thrust reversers and single-point refueling are also standard equipment, and the aircraft features a full galley together with an aft toilet. Production of the Learjet 60 ended in 2007 after 316 aircraft had been built.
The Learjet 60XR, meanwhile, launched in 2005, and offers Learjet 60 shoppers an upgraded cabin, Rockwell Collins Pro Line 21 advanced avionics suite and three disc steel wheel brakes.
Payload & Range
The data contained in Table A is sourced from Conklin & de Decker and B&CA’s May 2014 issue. A potential operator should focus on payload capability. The ‘Available payload with Maximum Fuel’ for the series ranges from 944 lbs (Learjet 60XR) to 1,068 lbs (Learjet 60), which is greater than the Gulfstream G150 (850 pounds). The Hawker 750 at 2,200 lbs has the largest payload capability of the field.
Cabin Cross Sections
According to Conklin & de Decker, the cabin volume of the Learjet 60 series (447 cubic feet) is less than the Hawker 750 (551 cubic feet) and the Gulfstream G150 (521 cubic feet). The differences can essentially be found in the cabin length: the Hawker 750 series offers the greatest length of the study group at 21.30 feet compared to the Learjet 60/60XR at 17.67 feet and 17.70 for the Hawker 750. See (Chart A).
As depicted by Chart B, using Wichita as a starting destination, according to Aircraft Cost Calculator (ACC) the Learjet 60 and 60XR show slightly more range coverage than the Hawker 750 and the Gulfstream G150 that show less range.
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.
The Learjet 60/60XR are powered by two PW305A engines, each offering 4,600 pounds of thrust (lbst). The Hawker 750 offers a pair of Honeywell TFE 731-5BR engines with 4,660 lbst each, slightly greater than the Learjet 60/60XR. The Gulfstream G150, meanwhile, offers a pair of Honeywell TFE 731-40AR engines with 4,420 lbst each.
Cost Per Mile
Using data published in the May 2014 B&CA Planning and Purchasing Handbook and the August 2014 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2014 edition was $6.18 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 60 series to its competition factoring direct costs and with all aircraft flying a 1,000nm mission with an 800 pound (four passengers) payload. The original Learjet 60 shows the cost per nautical mile from $4.29, which is less than the Hawker 750 ($4.49). The Learjet 60XR model has a slightly lower operating cost per mile at $3.35 compared to the Gulfstream G150 at $3.69, and costs the least per mile of the field.
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 60 series shows a high of $1,852 per hour (Learjet 60) to a low of $1,600 (Learjet 60XR) compared to the Hawker 750 at $1,863 and the Gulfstream G150 at $1,561.
Aircraft Comparison Table
Table B contains the average retail prices from Vref for each aircraft. 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.
Both the Learjet 60 and Learjet 60XR have more than 10 percent of their respective fleets currently ‘For Sale’ traditionally representing a seller’s market. Evidently they make an attractive proposition with a combined total of 87 units sold over the past 12 months (approximately 7.25 units monthly).
Maximum Scheduled Maintenance Equity
Exclusive to our online content, the charts below display the Learjet 60 and Learjet 60XR respectively, and depict the Maximum Maintenance Equity that each aircraft has available based on its age.
- Average annual utilization: 395 Flight Hours
- All maintenance is completed when due
Please see charts below for Learjet 60 and Learjet 60XR.
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 commercial 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 2014 model Bombardier Learjet 60XR aircraft in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a Vref New retail value of $7.9m.
Asking Prices vs AFTT, Age & Engine Thrust
Chart E, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the pre-owned Learjet 60/60XR series, Hawker 750 and Gulfstream G150. The current pre-owned market for these aircraft shows a total of 68 aircraft ‘For Sale’ with 28 displaying an asking price, thus we have plotted those 28.
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.
The Demand Equation for these vehicles is Price $m = 9.2–0.639*Qty. This linear equation is very well correlated, with an adjusted R2 of 98.0%, a Pearson’s2 of 98.5% a P-Value of 0.08% and a Standard Error of $0.337m.
The Linear Equation describing Value Equation is Asking Price =-190,600 Years Old+688,100 Cabin Length (Feet)+5054*Range (nm)+57,230,000*Thrust/MTOW-39236513.
We find that the Value Equation for these aircraft is well correlated, with an Adjusted R2 of 92.5%; a Pearson’s2 of 93.6%; and a Standard Error of $0.549m (with P-Values of 2.00E-06, 0.02%, 0.02% and 0.17% and for Years, Cabin Length, Range and Thrust/MTOW, respectively). Put another way, this group of aircraft loses $190,600 in value for each year they age.
Thus, the market for used Learjet 60s, 60XRs, Gulfstream G150s and Hawker 750s respond to at least six features: Years, Cabin Length, Range, Thrust/MTOW, Price and Quantity.
The points in Chart F are centered on the same group of aircraft. Pricing used in the vertical axis is as published in the B&CA 2014 Purchase Planning Handbook and Vref. 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.
The result is a very large number so for the purpose of charting, each result is divided by one billion. The examples plotted are confined to the aircraft in this study. A computed curve fit on this plot would not be very tight, but when all business jets are considered the “r” squared factor would equal a number above 0.9. 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 60 series as shown on the productivity index Chart F is well positioned among the Hawker 750 and Gulfstream G150 business jets.
The Learjet 60 series offers a lower cost per mile. In other areas, the Hawker 750 (higher available payload with full fuel) and the G150 (cabin volume and variable operating cost) nudge the Learjet 60 series. However, considering that a Learjet 60 series aircraft costs approximately $7million less than the G150, operators should weigh up their mission requirements precisely when picking which option is the best for them.
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 performance that might factor in a buying decision, too, however.
The Bombardier Learjet 60 series continues to be very popular in the pre-owned market today. Those operators in the market should find the preceding comparison of value. Our expectations are that the Bombardier Learjet 60 series aircraft, which started delivering in 1993, will continue to do very well in the pre-owned market for the foreseeable future. Meanwhile, the Learjet 85 which is planned to replace the Learjet 60 series has been delayed until 2016.
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