Used planes

[xp1459]

Just being curious, i noticed that new used planes are really close to their market sale price. Isn't used planes usually much cheaper? Like for example, a brand new car will lose 10% of their value once it leaves the dealer lot.

[sw889432]

For smaller planes like a Cessna and whatnot, yes, but it is no where near what a car would depreciate. Aircraft have better maintenance, longer useful life, and can be converted for other purposes.

But according to aircraft acquisition and depreciation disclosures for calculations used on financial statements, Cathay Group discloses a 5% depreciation rate with a 10% residual value, at a useful life of 20 years on average; Easy Jet discloses 4% at a useful life of 23 years. Some basic accounting work should answer your question.


Keep in mind that this is for accounting purposes, it doesn't actually become 0% worth after the useful life, just that it isn't worth anything on paper for tax purposes or accounting purposes, and is only worth the expected resell cost or scrap value.

Also these rates don't include any improvements done to the aircraft, including overhauls and reconfiguration, which may increase the value. Cathay estimates overhauls have a useful life of 10 years.

Let's take a look at the used airplane market at a 777-300ER.
Currently 7.8 years old, and is priced at $219,974,181.75, with a slightly below average hours + cycles.

A brand new 777-300ER is 320 million. 4% of 320 million is 12.8 million. 12.8 million * 7.8 years is 99.4 million. 320-99.4 is 220.6 million, which is pretty darn close to 219.97 million market price.

If you are talking about brand new plane (eg. 0 cycles, with 0 hours) that are only discounted by maybe a few hundred thousand, I don't know. It is a brand new plane, and with 0 cycles it hasn't even left the factory yet, I think of it as selling their place in line in the manufacturing backlog.

[xp1459]

Humm, Didn't know that, thanks for the info.
I think i should by a plane instead of a car. lool