Over the past 3+ weeks, many in the Cirrus community have been understandably concerned (or at least curious) about the effects of this pandemic on the value of their airplanes, and activity in the Cirrus market as a whole. Much like with an airplane accident, early speculation tends to be unfocused and inaccurate, and the COVID situation seems no different. As much as we would like to rely on our instincts and experience to provide meaningful answers, there are simply too many unknowns to be able to make credible predictions at this point in time.
But with that in mind, we thought it might be helpful to share some facts about how Aerista’s Cirrus business has fared since this crisis broke in mid-March. As a high-volume Cirrus broker, Aerista should be a decent proxy for the market as a whole, and this is how it’s played out for us:
On the morning of Monday, March 16, Aerista had 17 Cirrus airplanes in our closing pipeline, including one Vision Jet. Since that time…
- 7 transactions closed (including the jet) and 3 are in the final stages of escrow
- 5 purchases were cancelled/delayed indefinitely, citing COVID-19 concerns
- deals fell out due to airplane deficiencies
- Summary: 30% of deals in process have been lost to COVID-19 concerns
To be clear, we consider this to be good news. During the initial wave of panic and uncertainty, having less than 1/3 of our deals cancel due to COVID feels like a win.
Also, during this same time period, we’ve entered into new contracts on three additional airplanes. It is interesting and encouraging to note that these are not “fire sale” deals. The average selling price of these three airplanes was just 2.2% below the rolling 6-month historical average pricing within their respective segments. So, as expected, pricing in this small sample is lower than pre-COVID levels, but only marginally so.
Looking ahead, new sales activity has certainly slowed down, with inquiry levels from prospective buyers down 15-20% from this time last year. And for the deals that are coming together, the basic infrastructure that we have always taken for granted – commercial travel, service centers, CFIs, escrow, FAA, etc. – are all compromised, and are working in a significantly reduced capacity. Patience and creativity are more important than ever!
The Cirrus market has taken a significant punch in the gut since the COVID outbreak began, but it is by no means dead. For every naysayer and doomsday prepper, there is an optimist and an aviator who can’t wait to get in the air in a new Cirrus!
Thus far we’ve seen a bigger impact to volume than to pricing. As the dust settles and buyers start to re-engage the market, we’ll start to see a clearer picture of the near-term pricing impact of COVID.
From a buyer’s perspective there are definitely values to be had right now, but those who are waiting for the bottom to drop out are going to have to wait at least a little longer.
As dedicated Cirrus brokers, it has always been our job to bring buyers and sellers together, and we intend to continue doing that as best we can for our clients. We’ve been working on some innovative ways to try to jump start additional Cirrus buying activity in these uncertain times, so stay tuned for some exciting news soon to come in the Marketplace forum.
As always, thank you for being our clients and friends. We’re all in this together, and happy to help in any way we can.