The Phenom 300 is the first mid-size jet from Embraer, and while it is technically a derivative of the Embraer’s Phenom 100 (the two aircraft share the same basic fuselage, Pratt & Whitney Engines, the Garmin Prodigy flight deck, and the same airliner design philosophy), the Phenom 300 goes far and above the Phenom 100 as a jet with good speed and great climbing performance, but most importantly with low operating and maintenance costs.
Since the Phenom 300 gained certification in 2008, Embraer has produced 418 aircraft, with 415 of those remaining in the active fleet. Embraer is still producing the 300 today and it is continuously one of the most successful aircraft in the industry (the first certified Phenom 300 was produced in 2010).
Embraer chose the Pratt & Whitney Canada PW-535E turbo fan engines for the Phenom 300. Each engine produces 3,200 pounds of thrust at takeoff and both are controlled by Full Authority Digital Engine Control (FADEC). This system synchronizes the engines, which is an advantage for single pilot aircraft. These engines will allow the Phenom 300 to take off from a 3,700-foot runway at sea level on a normal day.
Embraer decided to equip the aircraft with the new Garmin G1000 cockpit, coined the “Garmin Prodigy,” which has been one of the big draws for single pilots looking to get into aircraft ownership simply because of how easy it is to manage flight with this system. In 2013, Embraer and Garmin took this a step further by offering the G3000-based Prodigy Touch avionics suite and giving pilots the first touch-screen-controlled flight deck.
This aircraft has certainly shown its value in the light to mid-size jet markets and this is due to Embraer’s dedication to lowering the cost of ownership. They accomplished this by offering numerous warranty programs, the most beneficial being Embraer Parts, which is offered for 5 years (or 5,000 flight hours). Additionally, its total variable cost of just over $1,300 per hour is very competitive in the light and mid-size categories. The Carbon Brakes and the Single Point Refueling are also advantages for the Phenom 300 that allow for quicker turnaround times. These two advantages are what lead fractional and charter companies such as Netjets and Flight Options to purchase large orders of the Phenom 300.
The Phenom 300 has been one of the few aircraft over the past five years to hold its value. This is largely due to controlled supply of Embraer production and the struggling Large Cabin aircraft class. Another factor is that these aircraft are not over 10 years old and it is more likely that potential buyers will obtain financing. Embraer has also shown that they are willing to take owners’ existing aircraft in on trades, which allows Embraer the flexibility to move existing aircraft owners into the Phenom 300.
With a decrease in supply, we tend to also see pricing level off. The price range for the available aircraft is between $5,900,000 to $7,600,000.
In 2015 and 2016, we saw 16 and 22 transactions, respectively. This market has seen an increase in trades in 2017 and is currently at 17 transactions year-to-date. This is a good indicator of how strong this market has been over the past three years. The main driver of this increase is the decrease in the percentage of aircraft for sale over the past two quarters. Key factors that affect sale price for this aircraft are engine programs (ESP Gold), avionics upgrades such as Garmin 3000, ADSB-Out, and Wi-Fi. Other factors affecting the value of the aircraft are the condition of the paint and interior, and maintenance status.
Notable Recent Transactions
Below are three of the recent transactions from this market. This will be used to compare recent Vref trends in the graph below.
VREF Trends for the Aircraft
Above is the comparison for the Phenom 300, comparing the retail values from Q3 of 2016 and 2017. This graph shows the drop we have seen over the past year in retail values for this aircraft. Across the 7 years that the aircraft has been in production we have seen between a 6.5% and 8% drop in pricing over the past year. Compared to other markets in this class this is a slight drop. As I mentioned above, this can be accredited to a good job by Embraer of controlling supply of new aircraft, as well as several economic factors affecting sales for the newer large-cabin aircraft that have created great values for the light and mid-sized aircraft. The three data points represented show an interesting trend in this market. All the data points are trading below full retail, with the three averaging at 92% of full retail value, which can be attributed to a lag that we typically see in book values. This lag is typically a quarter behind what is happening in the market. With this is one of the stronger markets, and we typically tell our clients that selling between 92–95% of full VREF retail is getting the most value out of their aircraft.
Unlike other aircraft models that are on the market with high supply and low demand, the Phenom 300 has seen inventory levels drop and demand increase. This can be attributed to many things but the main one mentioned above is Embraer has found a quality product that will hold its value and depreciate less than what is now considered the industry standard. On the sell side, the key to selling these aircraft quickly and in line with market trends is to make sure that the aircraft is up-to-date on maintenance, and well maintained. With Embraer controlling supply of new aircraft, the pre-owned Phenom 300 becomes a hot commodity when owners are looking for a durable, single-pilot light jet.
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