A Data Driven Market Review of the /550, Citation Mustang, Embraer Phenom & TBM 850/900

2015 Light Jet Market Report For Aircraft Owners, Pilots, Prospects & Enthusiasts

Featuring 2013-2015 New and Pre-Owned Sales Data

 Annual Factory Delivery numbers from the Light Jet and Turboprop Market  Functionality & Features Updates  Secondary Market Sales & Trends  2015 Market Outlook  Honda Jet and Cirrus SF50 Jet Certification and Delivery status

Prepared by the Light Jet Specialists at JetStream Aircraft

www.JetStreamAircraft.net  1 (800) 942-7199 2015 LIGHT JET MARKET REPORT

Greetings Aircraft Owners, Pilots, Prospects & Enthusiasts! Join us for an insider look at several key markets in the Business and General Aviation Industry, with a specialized review of the Very Light and Light Jet marketplace. 2015 eagerly awaits the latest FAA Light Jet certification in nearly ten years, plus announcements for avionics and cabin upgrade programs from several manufacturers. We begin with a broad industry recap and zoom in for a detailed look at select overachieving piston and turbine markets. Improved economic growth, an ultra-supportive U.S. Reserve policy, and double-digit S&P gains closed out a banner 2014 financial year. In response to diminished global oil demand and a U.S. Shale boom, benchmark West Texas Intermediate (WTI) crude oil prices dipped to 2009 levels by year end. The effect on both Avgas and Jet-A pricing was substantial and immediate with prices dipping below $3 per gallon. Rejuvenated aircraft lending policies combined with bonus deprecation incentives also drove strong year-end sales. 2014 General Aviation new piston deliveries rose nearly 10%, with a 6.5% rise in overall Business Jet deliveries. The resurgent U.S. economy boosted large cabin jet manufacturers Gulfstream and Bombardier with 20-40% increases for new deliveries in their G450/550/650 and Global 5000 long range jets. Factory new Light Jet deliveries waned amidst an active secondary market with nearly 1,100 Cessna Mustang, Embraer Phenom, and Eclipse 500/550s already delivered in the world marketplace. The U.S. Dollar charged out of the gate in early 2015 and has not looked back since, trading at an 11-year high versus the Euro. Sustained greenback strength will increasingly incentivize overseas owners to offer their aircraft for sale in the burgeoning U.S. market. A robust U.S. economy traditionally drives General and Business Aviation sales volume and growth rates. Given the positive indicators thus far, piston and select jet turbine segments should openly welcome sustained growth not seen since the early 2000’s for the coming 12- 18 months.

About JetStream Aircraft Founder Nate Metzler served in sales and marketing operations at the original factory during FAA certification and customer deliveries. Following the production line shutdown in 2008, a consistent market demand remained for the pre-owned Light Jets. JetStream Aircraft was created as an independent resource for Buyers and Owners and in the pre-owned marketplace, specializing in the Citation Mustang, Embraer Phenom, and Eclipse 500/550 models. Please enjoy our latest market review.

Warm Regards,

Nate Metzler Founder  JetStream Aircraft

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 ECLIPSE 500 & 550 JET 2015 Fleet Size: 278 550 PRODUCTION LINE OPENS achieved a major milestone in 2014 with the return of the Eclipse Jet production line and first 550 model customer deliveries. The refined sibling of the original 500 model received substantial avionics enhancements, plus Anti-Skid Brakes and Auto-Throttle hardware upgrades. Future options for Synthetic Vision, Enhanced (IR) Vision, Radar Altimeter, and ADS-B are on the certification track. The achievement required nearly six years of dedicated work from the Eclipse staff and suppliers since the last 500 model was delivered in 2008. Production rate is metered to market demand, with 12 Eclipse 550 units delivered in 2014. Eclipse 500 Fleet Upgrade Programs Eclipse 500 owners in all configurations received options for upgrading avionics and hardware through three separate factory programs. IFMS, the Safety Enhancement Package (SEP), and the PLUS Package were offered in various promotions over the prior 36 months. The PLUS 2.7 package retailing at $499,950 remains open for 2015, featuring faster processor PFDs/MFD, the latest IFMS software enhancements, Auto-Throttles, and Anti-Skid Brakes. The fleet remains segmented in various avionics versions creating multiple pricing niches ranging between $700,000 and $2.2M USD. For this reason, buyers and owners alike have difficulty in accurately pricing residual and resale values of several configurations. For a full description of capability and features, we provide an Eclipse Avionics Guide for download on our website, or by email request. The graphic below represents the avionics fleet status as of 2015. The Eclipse 500 pre-owned and secondary market 2% 20% 4% (Non-ETT): 6 continues evolving as an 5% amalgam of submarkets and (Avidyne ETT): 11 pricing niches. Used market 7% 6% AVIO NG1.3: 15 transactions have steadily averaged 3 per month for the NG1.5: 19 10% prior three years (2012: 34, NG1.7: 27 2013: 35, 2014: 35), confirming consistent demand 46% IFMS: 129 in evolving economic SEP 2.5: 17 conditions. IFMS and Total Eclipse sales make up the PLUS/TE Plus/550: 54 majority of secondary market transactions. Prospective 2015 Eclipse 500 Fleet By Avionics Version owner uncertainty concerning factory parts availability for NG1.7 and below weakened demand for non-IFMS platforms, and prompted some owners of the legacy Avidyne and AVIO NG versions to upgrade through the factory programs. Notably, market demand around the $1M pricepoint fuels consistent inquires by transitioning piston-owner pilots. However, 2014-2015 entry level pricing for secondhand IFMS versions has not dipped to the $1M range, eliciting a wait-

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 and-see response from these prospective buyers. Within 24-36 months normal depreciation and market movement should transition used IFMS pricing into the $1M range. Eclipse secondary market values are passionately debated, thus we conducted a depreciation comparison to the Cessna Mustang and . In spite of a circuitous company history, upgraded versions of the Eclipse held relative resale equal to, or in some case better than the Mustang and Phenom. Average Aircraft Valuation from Factory Delivery to 2014 Eclipse 500 Phenom 100 Cessna Mustang 2007/08 Factory Delivered Price $1,600,000 $3,750,000 $3,250,000 Avionics Upgrade (IFMS) $350,000 (IFMS) - - 2014 Average Resale $1,325,000 $2,705,000 $2,125,000 % Used vs. Original Value 68% 72% 65%

*resale values are averaged from all available public database sources. Individual aircraft valuations vary upon condition, hours, history, and specific avionics configuration. ECLIPSE JET RESALE MARKET VALUES In previous Market Reports we tracked resale values by a trendline for each avionics version AVIDYNE through TOTAL ECLIPSE. For the 2015 report, we incorporated Market Averaged Sales into data ranges with at least 80% of the recorded sales represented in the orange bands. Sales data recorded outside the 80% majority were recorded in the blue bands. As Eclipse airframes extend beyond 7 years since original factory delivery, resale pricing variance increases with aircraft condition. Mid-market IFMS averaged 500-750 hours Total time, with ESP Coverage and all inspections current. Higher time or non-ESP aircraft values are adjusted accordingly. ECLIPSE JET IFMS RESALE VALUES 2013 - 2015

$1,600,000 $1,550,000 $1,500,000 $1,450,000 $1,400,000 $1,350,000 $1,300,000 $1,250,000 $1,200,000 $1,150,000 $1,100,000 $1,050,000 $1,000,000 1/1/2013 7/1/2013 1/1/2014 7/1/2014 1/1/2015

MARKET AVERAGED Resale Range ORANGE BAND | All Recorded Sales BLUE BAND

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 The TOTAL ECLIPSE program introduced in 2011 produced refurbished and upgraded models with IFMS avionics. The TE features a customizable interior and exterior, plus fully paid ESP Engine Program. TE resale values average $50,000 - $200,000 above the base IFMS average, depending on condition, equipment installed, and S/N pedigree.

The factory currently offers pre-owned TOTAL ECLIPSE jets with a warranty priced at $2.2M USD. We recognize an opportunity to target the Piper Meridian market at this price point. Piper has consistently delivered between 30-40 factory new Meridians each of the last three years for the popular $2.2M turboprop. Swaying just one of five Meridian prospects would bolster the TE demand and resale numbers considerably.

AVIO NG1.5 & 1.7 RESALE TRENDS

The upgraded dual Garmin 400 WAAS versions dubbed AVIO NG1.5 and 1.7 saw considerable market revaluation over the past 24-months. Over 40 1.5/1.7 aircraft remain in the fleet; however the number of resale and private transactions dropped in 2013 – 2014 despite up to 12 different serial numbers advertised for sale. Following the closing of the avionics upgrade program in 2014, the market demand softened for all AVIO NG versions.

Stocked parts availability and factory support is available for all AVIO NG1.5+ versions. Sharing over 98% parts commonality with the IFMS fleet, this version provides great value and mission capability with certified FIKI and a fully coupled Auto-Pilot. Secondary market inquiries from non-pilot owners for this version at or below $1M has notably increased, validating a price point which may hold future resale values.

ECLIPSE JET AVIO NG1.5-1.7 RESALE VALUES 2013 - 2015

$1,500,000 $1,450,000 $1,400,000 $1,350,000 $1,300,000 $1,250,000 $1,200,000 $1,150,000 $1,100,000 $1,050,000 $1,000,000 $950,000 $900,000 $850,000 $800,000 1/1/2013 7/1/2013 1/1/2014 7/1/2014 1/1/2015

MARKET AVERAGED Resale Range ORANGE BAND | All Recorded Sales BLUE BAND

PRE-AVIO NG1.5 RESALE MARKET

Avidyne 1.0 and AVIO NG1.3 used sales have emerged as a specialty sub-market aside from the upgraded fleet. Providing basic utility for under $750,000 and still unmatched 400+ MPH cruise burning 70 gallons-per-hour, these versions are sought after by veteran owner-pilots. Inspection maintenance and parts support is provided, pending supplier availability. For a specific valuation of an AVIDYNE or AVIO serial number, please contact us.

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 TBM 850 & 900 Turboprop 2015 Fleet Size TBM700: 299 | TBM850/900: 370 The Daher TBM 700/850 and TBM 900 factory new Aircraft are a continued major influencer on the Light Jet market, snaring would-be jet buyers for both pre-owned and new Aircraft. Jet manufacturers perhaps underestimated the draw of the redesigned TBM900, delivering in 2014 more factory new models than the Cessna Mustang (9), Embraer Phenom 100 (19), and Eclipse 550 (12) deliveries combined. Company rebranding dropped the -Socata namesake it held for nearly 50 years, plus added a variety of performance enhancements and refinements to the $3.7m USD TBM 900. Brand loyalty is strong for prior TBM 700 and 850 owners, represented by the unusual rise in used TBM sale-by-owner listings trading up for a new 900. Daher utilizes an expansive network of 11 factory sales reps and certified dealers in North America, plus offices in four other continents. The future looks bright for the 900, as Daher logged 64 orders in 2014 for future delivery positions. We examined the TBM product and company changes and spoke with current TBM owners to understand the attraction to this turboprop single that has continually re-invented itself.

TBM 900 Performance Upgrades  Daher released more horsepower from the -66D variant of the venerable PT6A Pratt Whitney engine, increasing short field capabilities with improved and unimproved strips < 2,500’  Winglets and newly designed strakes increased climb and cruise efficiency, plus critical slow speed controllability  Restyled ramp appeal, a consistently mentioned plus from TBM buyers augmented by an aggressive five-blade Hartzell prop. Commissioned Luxury brand designers gave the 900 a sportier mystique with custom interior appointments, redesigned logos, and race team styling (new branding Ad below).  A 4-place club or forward-facing customizable cabin  An expanded 1,700nm range & 330KTS top cruise speed TBM 850 Pre-Owned Market Activity 2014 saw highly active inventory changes and used sales for both the 850 Legacy and G1000 equipped models, with prices averaging $1.7M and $2.5M USD respectively. Many used TBM buyers noted their final purchase decisions came between the TBM 850 and the competitively priced Citation Mustang or Pilatus PC- 12. Nearly 50 pre-owned TBM 850 transactions took place in 2014, marking a very active demand for the resilient turboprop. The Total Eclipse and 550 model compete with buyers at the $1.5m - $2.8 price point, but the TBM range and short-field capabilities provided the tipping point for a turboprop over twin-jet purchase. Eclipse should take steady aim at TBM deposit holders with waived-fee demo flights, and a thorough twin-turbine vs. turboprop safety and owner benefits comparison. A seamless piston-to-turbine transition experience should also be offered for prospects hesitant about obtaining a Multi-Engine rating and operating at flight levels above FL280.

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 2015 Fleet Size: 453 Aircraft MARKET SNAPSHOT The 2014 Citation Mustang sales and demand was a tale of two very different markets; tepid new factory deliveries and a churning pre-owned market. For a third consecutive year factory-new deliveries declined, resulting in less than one delivery per month for the first time in Mustang history. Demand for factory new orders is a reflection of several factors, most notably a robust supply of sub $2.5M Mustangs in the secondary market, and deliveries of the new entry level Citation M2. Forty-six M2s delivered in its inaugural production year, with 2015 deliveries forecasted above 50 units for the popular 1,450+NM revamped 525 model Citation. Will Cessna continue 2015+ limited production of their original stakeholder in the (Very) Light Jet marketplace? For the time being yes, but without any major redesign projects on the Mustang drawing board we expect this model to serve as a narrow entry-level feeder for the M2/CJ line. The secondary market also saw consistent resale prices dip below the $2.0M mark for the first time in the Mustang 8 year history. This undoubtedly fueled consistent used sales throughout 2014, and kept inventory levels comfortably at or below the 10% of total fleet mark. High Total Time and former Part-135 Charter Mustangs were occasionally listed to the $1.7M mark, exerting downward pressure on the Eclipse IFMS and Total Eclipse market values. The avionics uniformity of the 450+ Mustang fleet helped maintain values even for earlier S/N 2007-2008 models. A robust service center network, widely available financing, and healthy shorter listing periods kept used Mustang transactions steadily averaging 5 per month. ECLIPSE 500 VS. MUSTANG MARKET APPEAL The Eclipse Jet still holds key performance advantages over the Mustang with lower Direct Operating Costs and 40-knot higher cruise speeds. Mustang owners gravitate towards the Cessna for its utilitarian mission, club cabin, and tried and true G1000 avionics. Eclipse owner-pilots prefer the nimble and more efficient Eclipse for the front-left-seat flying experience. Auto-Throttles, Anti-Skid Brakes, and the forthcoming Enhanced Vision options provide Eclipse Jet pilots with even more technology and features than the base-equipped Mustangs. A key market influencer for 2015 and beyond resides in how the Mustang secondary market sales influence used Eclipse Jet sales below the $2M mark.

Citation Mustang Market Figures at a Glance

Year Factory Deliveries Pre-Owned Transactions Average Value (USD) Average Days on Market 2012 38 43 $2,255,000 150 2013 20 50 $2,210,000 180 2014 9 60 $2,125,000 130

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 Embraer Phenom 100 2015 Fleet Size: 317 Aircraft MARKET SNAPSHOT The Phenom 100 pre-owned and 2014 factory delivery markets were impacted by similar forces emerging in the Cessna Mustang and Eclipse Jet submarkets. However, two unique market indicators emerged for the Brazilian manufacturer’s entry-level business jet. The pre-owned P100 fleet maintained remarkably low used inventory numbers throughout 2014, often below 5% of the available fleet or under 10 listed units for sale. Foreign registered S/N often outnumbered US N- Registered listings, revealing a strong demand and tight supply in North American markets. Additionally, the asking price variance for earlier 2008-2009 (low-mid $2M) pre-owned units exceeded a $1M spread versus the latter 2012-2013 (low- mid $3M) models. Both the Eclipse and Mustang featured considerably tighter used model pricing. The factory also released their 100E model, with redesigned cabin interior comforts and multi- function spoilers putting the 2014 base price at $4.16M USD. Fully equipped aircraft approached the $4.5M mark, on par with the Cessna M2. Embraer had managed a consistent 29 and 30 new factory deliveries for years 2012 and 2013, respectively. The additional 300+NM range of the M2 undoubtedly took a bite of 2014 Phenom 100 deliveries, totaling just 19 for the year. 50% Bonus depreciation bolstered year-end new orders, a necessary carrot for new factory orders to continue at the same levels for 2015. SECONDARY PHENOM 100 MARKET The 2014 used market remained steadily active with 45 pre-owned 100s trading hands ranging from the low $2s up through the mid $3M mark. A roomy customizable 4-place club cabin, fully enclosed lavatory, and 50+ knot cruise advantage over the Mustang contribute to its consistent market appeal. Pre-SN 100 or high time 1,500+ hour Phenom’s dipped below the $2.5M resale mark last year, exerting downward pressure on the later-model Mustang resale market. The Eclipse Jet and Embraer Phenom 100 are rarely head-to-head competitors in used market buyer decisions, primarily for Aircraft size and pricing considerations at nearly double for the Phenom. It’s worth remarking on the $8M Phenom 300 market success, with over 70 units delivered in 2014 and new orders jumping 25% each of the previous two years. 2012-2014 Embraer Phenom 100 Resale Market Figures Year Factory New Deliveries Pre-Owned Transactions Average Value (USD) Average Days on Market 2012 29 24 $2,870,000 115 2013 30 28 $2,795,000 220 2014 19 45 $2,705,000 190

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 Cirrus SF50 Vision Jet Certification Status: Experimental as of March 2015 CERTIFICATION PROGRAM UPDATE The rekindled Cirrus Jet certification program presses onward for planned FAA Certification and first customer deliveries by the end of 2015. Three years into their development program the single-engine composite jet project was stalled without a single flying test aircraft. A vital cash infusion in 2011 by China Aviation (CAIGA) via their acquisition of Cirrus Aircraft reignited the Vision Jet program, now with three flying SF50 test aircraft. Since March 2014, the V-Jet has logged over 250 flight hours, with new production facilities construction outside the main Duluth, MN Airport. Cirrus now boasts over 500 customer delivery orders, with production beginning on the first type design conforming jet. While many in General Aviation wrote off the Vision Jet chances for success, the resolute determination of CEO Dave Klapmeier and his program staff to bring a V-Tail single engine jet to market is nearing fruition. SF50 BY THE NUMBERS At a base price of $1.96M, the Vision Jet market is aimed squarely at current Cirrus and piston-single owners desiring a seamless transition into a centerline thrust jet. The FJ33 powerplant is projected to burn 90-100GPH at 300KT cruise speeds up to FL280. The 7-place cabin features the same Garmin Perspective Suite as found in the SR20/22 models, plus the CAPS Parachute system. Full fuel required for the 1,000NM range with IFR reserves will allow 400lbs cabin payload. LIGHT JET MARKET IMPACT The Citation Mustang and Eclipse Jet have transitioned hundreds of first-time jet owner-pilots since certification in 2006. The V-Jet contends there is even a larger untapped market for aspiring piston-to-jet pilots, and their SF50 single is a more practical and affordable option. Without the need for additional ratings or RVSM certifications, Cirrus believes they’ll attract jet owners that cannot or do not want to navigate the twin-jet Type Rating process. The SF50 and Eclipse Jet side-by-side performance numbers favor the Eclipse, revealing the same 600NM trip takes 20% longer with a higher fuel burn in the lower and slower Cirrus. Will the Vision Jet meet the evolving travel needs and mission requirements of their owner-pilot customers? Or will owners naturally want to fly higher, farther, faster after a few hundred hours logged at FL250? Expectedly a substantial portion of the V-Jet deposit holders are current SR22 owners capitalizing on the trade- up factory promotions. ‘Let’s take the Cirrus’ is about to take on a whole new meaning. Secondary market Eclipse and Mustang buyers are predominantly prior Cirrus and Meridian owners, and we expect that trend to continue. The secondary Eclipse market demand in 2016 and beyond may be bolstered by V-Jet owners who following 1-2 years of ownership are ready to transition into FL300+ and 360+ knots. A pre-owned Eclipse in the $1M - $1.5M range is an ideal price point for a transitioning V-Jet owner, whereas a jump to the $3M Eclipse 550 may be difficult or unjustifiable for the same mission capability. As with any manufacturer, we await FAA certification, first deliveries, then 100 deliveries before assessing the true utility, value, and appeal of General Aviation’s first certified V-Tail jet.

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 Honda Jet Certification Status: Experimental as of March 2015 PENDING FAA CERTIFICATION The Honda Jet program is arguably the Light Jet with the longest history tracing back to the 1990s initial development of the GE HF120 engine. Announced for production in 2006 at $3.65M USD, and now priced at $4.5M, the composite twin-jet has accumulated over 2,000 flight test hours in four different aircraft. The normally tight- lipped Honda executives hinted at final FAA certification with 6 months at NBAA 2014. A dozen customer jets now stock the production line, with over 100 announced orders.

LIGHT JET MARKET IMPACT Priced tightly with the new Phenom 100E and Citation M2, the sub $5M Honda Jet is aimed for the owner-pilot with a healthy purchase budget, the need for speed, and discerning passengers. A brisk 420 KT cruise speed is best in class, with the distinctive over-wing pylon mounted GE Honda . A touchscreen G3000 avionics suite runs on three 14” Multi-Function-Displays in the new 60/40 display format. As the Honda Jet arrives to the Light Jet market 10 years since inception, we expect it to have minimal impact on the sub $2.5M used market for quite some time. Embraer and Cessna will see impacts to the M2 and Phenom 100 future sales, but the high-tech Honda Jet will serve a niche mission for 1-4 pax under 1,100NM range. The HF120 engine marks the return of General Electric to the business jet market after nearly 60 years. GE engineering in the 1960s converted the J85 engine from the F-5 and T-38 military aircraft to the civilian version used on Bill Lear’s first 20-series Lear Jets. General Electric is also investing over $3 Billion in the next five years into Aviation research and infrastructure projects. It’s very plausible an HF120 engine variant could find its way into the Business Aviation market in the next decade.

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015 The Light Jet Marketplace is a consistently evolving compilation of manufacturing programs, buyer perspectives, owner- operator opinions, and market transactions. For informational purposes, the content presented in this report represents findings based on real market data gleaned from public and member aviation databases, Eclipse Jet Pilots Association EJOPA (www.eclipsejetpilots.org), Citation Jet Pilots CJP (www.citationjetpilots.com), current and former Owner- Operators, and the General Aircraft Manufacturers Association (GAMA). On your behalf, we consistently analyze the market matching buyers and owners with Aircraft since 2005. We welcome your comments and feedback on our latest market report!

For more information on the Aircraft and data presented in this report, please contact us at 1 800 742-7199 [email protected]

Sources Cited: JetNet.com, VRef.com, JetStream Aircraft owner database, Gama.Aero. Photos courtesy of Jessica Ambats. This guide is not intended as the sole resource for any purchase decision. Please consult all available resources and independent valuations when buying or selling an Aircraft.

2015 Market Report  [email protected]  1 800 942-7199 © JetStream Aircraft 2015