ISTS0309

MAY/JUNE 2009

速 TThe he official ciiall publication of the IInternational ntternati tional Soci Society iety t off TTransportt Aircraft A Aiircraft Trading

A Standard of Excellence Also Inside:

Post-Conference Wrap Up | Market Challenges | and more

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® Jetrader is a bi-monthly publication of the International Society of Transport Aircraft Trading (ISTAT). ISTAT was founded in 1983 to act as a forum and to promote improved communications among those involved in aviation and supporting industries, who operate, manufacture, maintain, sell, purchase, finance, lease, appraise, insure or otherwise engage in activities related to transport category aircraft.

Jetrader is published for: International Society of Transport Aircraft Trading 401 N. Michigan Ave., Suite 2400 Chicago, IL 60611 USA Tel: 312.321.5169 Fax: 312.673.6579 www.ISTAT.org E-mail: istat@ISTAT.org ISTAT BOARD OF DIRECTORS OFFICERS John W. Vitale President Michael Platt Immediate Past President Gregory A. May Vice President Marc Allinson Vice President/Treasurer Peter Huijbers Vice President/Secretary DIRECTORS Fred Klein Sigthor Einarsson Will Hudson Daniel J. Pietrzak Jep Thornton Mike Skinner

Anthony Diaz Jay W. Hancock Joseph W. Ozimek Mark Pearman-Wright David P. Sutton

ISTAT INTERNATIONAL APPRAISERS’ PROGRAM BOARD OF GOVERNORS Fred J. Klein Chairman | Senior Appraiser Robert F. Agnew Senior Appraiser Ken de Jaeger Senior Appraiser William Bath Appraiser Fellow/Administrative Director, ISTAT International Appraisers’ Program Steve Boecker Albert A. Nigro Tony Whitty

Douglas Emerson Jeffrey Tenen

ISTAT FOUNDATION David P. Sutton John W. Vitale Michael Platt Stephen T. Rimmer Marc Allinson

Chairman ISTAT President ISTAT Past President Vice Chairman Vice President/Treasurer

TRUSTEES Jon Batchelor Klaus Heinemann Dana J. Lockhart Chris Partridge David Treitel

Dean Gerber Thomas W. Heimsoth Roland H. Moore, Esq. Ken Perich Warren Willits

from the president

John W. Vitale, President International Society of Transport Aircraft Trading

As I sit down to write this installment of From the President, I’m still abuzz from our meeting in Scottsdale, and I have yet to dig out from under the pile of e-mails in my inbox. Thanks again to our conference cochairmen, Joe Ozimek and Sigthor Einarsson, who—together with the hard work of the conference committee and the ISTAT team—pulled off another event worthy of the premier status that this meeting has attained. I was shocked and greatly impressed by the turnout.

Despite perhaps the worst downturn our industry has ever faced, our members came together at the conference to make this event a huge success. I am proud to be a member of this fi ne organization!

A special thank you goes out to our sponsors, without whom this event would not be possible. I know how tight budgets have become, and I appreciate the fact that our sponsors continue to recognize that we are a not-for-profit organization, yet we offer a great value in assembling the aircraft trading and fi nancing industry in one place at one time.

I must once again express my sincere gratitude to Mike Platt for his service as ISTAT president. He worked tirelessly for the association, and he will continue to do so as he remains on the board of directors. Tom Heimsoth has completed his term on the board, as have Connie Laudenschlager and Fred Bearden. They both worked very hard for our society, and their energy and contributions will be missed. I look forward to continuing to work with Mark Pearman-Wright (re-elected to the board) while welcoming our newest addition, Mike Skinner, as well as the new ISTAT Foundation Board of Trustees Chairman Dave Sutton and Fred Klein, the new Chairman of the ISTAT International Appraisers’ Program Board of Governors.

Looking ahead, we’ll meet again in Paris on the occasion of Paris Airshow 2009. Our reception will be held again at Pre-Catelan on Monday evening, June 15. I hope to see you all there.

So, meet me in Paris!

INTERNATIONAL SOCIETY OF TRANSPORT AIRCRAFT TRADING Ron Pietrzak Executive Director Ben Barclay Project Coordinator Dana Henninger Member Services Tracy Schorle Marketing and Communication Services

Jetrader 3

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® MAY/JUNE 2009

CONTENTS FEATURES

8

12 8

13

So Long, Scottsdale A post-conference wrap up from ISTAT’s 26th Annual Conference

Tough Talk A frank look at aviation from Robert Crandall, former CEO of American Airlines

A Forward View Boeing’s take on today’s market challenge

20

IN EVERY ISSUE 13

12

3 7 15 17 19 22

A Message from the President Calendar/News Aircraft Appraisals From the ISTAT Foundation Aviation History Advertising Indices

Jetrader wants YOU to be in a future issue of the magazine. To contribute, please e-mail Tracy Schorle at tschorle@istat.org.

Jetrader 5

The future of the airline industry lies in the challenge of balancing profitability with environmental impact. The CSeries has risen to that challenge: the greenest single-aisle aircraft in its class, it emits 20% less CO 2 and 50% less NO x, flies 4 times quieter, and delivers dramatic energy savings—a 20% fuel burn advantage. Designed with vision and conviction, the CSeries combines low operating costs and an unmatched environmental scorecard.

Proof that there’s no time like the present to take care of the future.

NOW IS THE FUTURE

The CSeries aircraft is in the conceptual design phase and is subject to changes in family strategy, branding, capacity, performance, design and/or systems. All specifications and data are approximate, may change without notice and are subject to certain operating rules, assumptions and other conditions. The actual aircraft and configuration may differ from the image shown. Bombardier, CSeries are registered trademark(s) or trademark(s) of Bombardier Inc. or its subsidiaries.

NEW PLANET NEW PLANE

ISTAT calendar International Paris Air Show - ISTAT Reception June 15, 2009 Le Pré Catelan Paris, France

16th European Conference October 11-13, 2009 Valamar Lacroma Resort and Spa Dubrovnik, Croatia

ISTAT 27th Annual Conference March 14-16, 2010 Hilton Bonnet Creek Orlando, FL

ISTAT news Conference Update Even in an economy facing myriad challenges, nearly 1,000 ISTAT members and accompanied guests made the trip to Scottsdale, Ariz., in March to attend the 26th Annual Conference. A recap of the conference events can be seen beginning on p. 8. Also, members can log on to www.ISTAT.org for more information, including session proceedings. Be sure to make plans to attend the 16th European Conference in Dubrovnik in October.

Thank You, Foundation Sponsors The ISTAT Foundation would like to extend a heartfelt thanks to AerCap, British Airways and Roland Moore, Esq., for their assisstance in helping the Foundation Scholarship winners attend the 26th Annual Conference.

New Leadership As was announced at the 26th Annual Conference in March, leadership at ISTAT has changed. Be sure to look at the revised list on p. 3, and don’t miss new ISTAT President John Vitale’s welcome message on the same page. Also, former ISTAT Trustee David Sutton is stepping into his new role as ISTAT Foundation Chairman—his welcome message can be read on p. 17. ISTAT and Jetrader would like to extend a huge thank you to Immediate Past President Michael Platt and Immediate Past Foundation Chairman Stephen Rimmer for their dedication, service and leadership in the association.

Don’t Forget Paris Be sure to mark your calendars for the ISTAT reception at the upcoming International Paris Air Show. Held every two years, this airshow is the summer’s can’t-miss event for the aviation industry. Once again, ISTAT will be on hand to host a get together for members on June 15 at the Le Pré Catelan from 6-10 p.m. RSVP now at www.ISTAT.org.

ISTAT Sponsorship Opportunities ISTAT has many fantastic conference and receptions planned for 2009 and beyond. These are all a great way to get to know your fellow association members and make valuable connections while getting up to speed with the latest news in the industry. But, these events are not possible without the support of our loyal sponsors and supporters. For information on sponsoring any of our upcoming events or ongoing efforts, please contact the following people: Annual Conference—Jep Thornton, jthornton@automatic.cc, and Fred Klein, avspecgroup@aol.com European Conference—Sarah Stauffer, sstauffer@istat.org Paris Air Show—Dan Pietrzak, dan.pietrzak@nwa.com ISTAT Foundation—Dana Henninger, dhenninger@istat.org ISTAT Foundation Golf Tournament—Jep Thornton and Fred Klein

Be sure to visit the interactive Jetrader on the Web at www.ISTAT.org.

Published by: Naylor, LLC, 5950 NW First Place, Gainesville, FL 32607, Phone: 352.332.1252, Toll-Free: 800.369.6220, Fax: 352.332.3331, www.naylor.com Publisher: Jill Andreu, Editor: Carter Davis, Project Manager: Ray Goodwin, Advertising Sales Manager: Jim Dielschneider, Sales Representatives: Todd Evans, Shaun Greyling, Rick Sauers, Josh Tallent, Marketing Associate: Heather Zimmerman, Layout and Design: Catharine Snell, Advertising Art: Dana Marleau ©2009 Naylor, LLC. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher.

All articles submitted for publication in Jetrader are the property of the authors. ISTAT and Jetrader make no claims regarding the accuracy of the facts and figures printed in any of the articles. The responsibility for accurate research and for securing copyright permission for any information printed in Jetrader is the duty of the author. To contribute to future issues of Jetrader, please e-mail Tracy Schorle at tschorle@istat.org.

PUBLISHED MAY 2009/IST-S0309/8709 Jetrader is published bi-monthly by the International Society of Transport Aircraft Trading, 401 N. Michigan Ave. Suite 2400, Chicago, IL 60611.

The name Jetrader is held under copyright, as granted by the United States Patent and Trademark Office, registration no. 3511680.

Jetrader 7

he 26th Annual Conference, held this past March in Scottsdale, Ariz., was once again a prime opportunity for ISTAT members to come together in the name of networking, continuing education and camaraderie. In spite of the difficult economy, 1,000 members attended the conference. Many deals were made, ideas were conceived and friendships rekindled, and as a result, the conference has maintained its status and become one of the must-attend events in the industry.

If you missed this conference, or if you attended and made the deal of a century, be sure to make plans to attend the 16th European Conference in Dubrovnik, Croatia on October 11-13.

On this page: 1. Conference attendees, seated in front of the backdrop of conference sponsors, packed into the Kierland Grand Ballroom for the numerous education sessions.

2. Alec Matt, RBS Aviation Capital (L) and Thomas Hiniker, Airfund Corp., take a moment at one of the many coffee breaks to chat.

3. ISTAT members take a moment to exchange business cards during lunch.

4. [L-R] Christer Ek, Scandinavian Airlines Systems, Masao Yamagami, Mitsubishi Aircraft Corp, and Satoru Ohki, ITOCHU AirLease, enjoy an evening reception.

12 34

8 The official publication of the International Society of Transport Aircraft Trading

56

On this page: 5. The financiers panel was especially topical considering the challenges facing the economy.

6. [L-R] Michael Platt, ISTAT past president, Steve Udvar-Hazy, International Lease Finance Corporation, Herb Kelleher, Southwest Airlines, and Robert Crandall, ex-American Airlines, POGO and ISTAT Award recipient.

7. The 2009 ISTAT Foundation Scholarship winners with scholarship committee members, Vito LaForgia, Roland Moore and David Sutton.

8. The appraisers panel [L-R]: Robert Agnew, Morten Beyer & Agnew, Phil Seymour, IBA Group, Doug Kelly, AVITAS, and Fred Klein, Aviation Specialists Group.

9

9. “We need a real game changer,” when moving to a C-Series aircraft.

“We need to really focus on the flying public.” – Gary Scott, Bombardier 10. “The lifetime of an aircraft is longer than the lifetime of an economic downturn.” – Mark Pearman-Wright, Airbus 11. “We’re seeing a lot of activity from airlines [that] want to get in place when the economy makes a recovery.” – Drew McGill, Boeing 12. Dave Hess, Pratt & Whitney, delivered an update on engine technology for the next generation.

78 10 11

12

Log on to www.ISTAT.org for more conference photos and education session proceedings.

Jetrader 9

13 14 15 16

17 18 On this page: 13. [L-R] Wolfgang Driese, DVB Bank, Bertrand Grabowski, DVB Bank, Jim King, Alize Worldwide Limited, and guests mingle at the conference-opening reception.

14. [L-R] Brian Salvatori, AAR Aircraft Turbine Center, Robert Nichols, Aersale, and Michael Hanrahan, Flight Director Inc., take a moment to enjoy themselves at the conference-opening reception.

15. Conference attendees gathered in the Trailblazers Terrace for a quick bite to eat and yet another chance to make industry contacts.

16. Alexander Kochetkov, Avia Asset Management, asks a question of one of the conference’s speakers.

17. [L-R] Michael Platt, ISTAT past president, Steve Rimmer, Guggenheim Aviation Partners and Tom Heimsoth, Willow Aviation.

18. Conference attendees packed into the Kierland Grand Ballroom one final time for the conference-closing President’s Gala Dinner.

19. Golf Tournament Gross Winners: [L-R] Adam Davidson, Q Aviation Management, Jack Arehart, AAR Corporation, Sonny Stern, MTU Maintenance, and Steve Costley, SpeedNews.

20. Despite a bleak outlook, Adam Pilarski, Ph.D., AVITAS, offered a ray of sunshine: “The long-term future of aviation is still solid.”

21. Golf Tournament Net Winners: [L-R] Chris Jessup, AAR Aircraft Services, Phil Nassar, Phaze Two Aviation Consulting, Dave Petterson, Leading Edge Aviation Services, and Warren Ledger, Airbus.

19

10 The official publication of the International Society of Transport Aircraft Trading

20 21

ISTAT would like to thank all of the sponsors for their support of and participation in the 26th Annual Conference.

INTERNATIONAL Aviation Services PROTECTING YOUR AIRCRAFT’S VALUE Around the World Around the Clock

Aviation Consulting Asset and Lease Management automatic.cc

Technical Services Main Office Memphis, TN USA +1 (901) 405-1353

ISTAT Foundation Golf Tournament Sponsors

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Jetrader 11 AM 2/14/08 7:46:59

Tough Talk

I

This year, ISTAT honored Robert L. Crandall—chairman and CEO of American Airlines from 1985-1998 and current chairman and CEO of POGO—by bestowing the ISTAT Award upon him at the 26th Annual Conference. His speech, highlights of which are reprinted here, offered an honest look at the current state of the industry, while also giving several suggestions for improvement.

t would be nice if this were taking place in more settled economic times. Unhappily, as we all know, our country is in either a recession or a depression—depending on your point of view—and the prospects for near-term improvement seem less than promising. The new administration is struggling to revive the economy while grappling with a daunting array of problems including underfunded social security and Medicare systems, a dysfunctional finance and banking system, an underperforming health care system, a deteriorating national infrastructure, a failing educational system, burgeoning national debt, a dysfunctional political system and many others.

Not surprisingly, the depth and range of our problems has generated a widely diverse set of proposed solutions and intense debate about the propriety, efficacy and long-term implications of the government’s proposals.

In this debate, it’s easy for policy makers to overlook the implications of not addressing some of the problems that seem less immediate than others. One that is getting no particular attention and deserves more is the steadily deteriorating state of our commercial aviation system.

It’s hard to know why that problem seems to attract so little attention. Maybe it’s because people are used to awful headlines about the airlines. On the day I walked into American Airlines in April 1973, Don Lloyd-Jones, then the V.P. of operations for the airline, met me in the hall and asked if I knew what a mess I was getting into.

Having come from TWA, I did—and in the years since, the industry has lurched from crisis to crisis, occasionally enjoying a few years of profitability, but never finding a basis on which to run anything resembling a normal commercial enterprise.

What other industry in America has lost $30-billion-plus during its lifetime and routinely fails to earn its cost of capital? And what other business is beset, daily, by hundreds of newspaper and television tales of labor conflict, consumer discontent and continuing financial losses?

It’s hard to believe that a business as complex, exciting, interesting, diverse and important to society can be in such a sad state.

The long-term implications of an inadequate transportation system are profound; travel and tourism provide more than one million jobs in many industries in every

12 The official publication of the International Society of Transport Aircraft Trading

part of America and generates more than $1 trillion of economic value. Transport is essential to the flow of goods, as well as people, and the ability to move around the country is easily as essential to sustaining commerce as the availability of credit.

In my view, reversing the long decline of our aviation system will require public policies designed to improve the financial and operating results of U.S. airlines, with the objective of restoring both our international competitiveness and the vigor of the U.S. domestic network.

As many of you know, I have long believed that airlines cannot—and will not—operate successfully if treated like just another business. I think transportation services are very much like utility services, and need the helping hand of government. If we want better results, policy makers should be considering things like: • Promptly providing the funding needed for the earliest possible installation of a new, GPS-based airtraffic control network • Creating a private-sector airspace management organization • Imposing flight frequency limitations at overscheduled airports to improve the industry’s on-time performance • Revising FAA regulations to prevent U.S. carriers from accomplishing maintenance in offshore facilities • Modifying U.S. labor laws to overcome the industry’s chronically adversarial labor/management relation • Revoking aviation alliances, which limit the competitive opportunities available to U.S. carriers or provide disproportionate advantages to foreign carriers I am aware that these suggestions are too regulatory for many tastes and are also regarded as incompatible with the widely sought ideal of the lowest possible price for every consumer.

Nonetheless, since existing public policy has produced little for any of us to be pleased about, I thought I should take the opportunity to offer some alternative to the apparent alternative of still less service and more and more service fees.

Thanks again for your recognition.

Let’s all pray for better times ahead.

All photos courtesy of Boeing

A Forward View

Jeff VerWey, director of integrated product strategy for Boeing Commercial Airplanes

Jetrader recently asked Jeff VerWey, director of integrated product strategy for Boeing Commercial Airplanes, to look beyond today’s market challenges at the manufacturer’s longer-term product direction. Here are his thoughts.

J: What’s Boeing’s current thinking in regard to its commercial product strategy?

Jeff VerWey: Right now we’re looking at opportunities to take technology incorporated into the 787 and leverage it into derivatives of our current products or ultimately into new products. Uncertainty in the marketplace and concern about rising fuel prices

has created real tension. It’s a difficult time to see beyond the current business environment, and customers are understandably asking for improvements to alleviate their costs. We’re looking at a broad range of alternatives and want to be in a position to better understand what our choices are.

J: What is Boeing’s general approach to the development of new technology?

JV: If there’s one constant method that we follow, it’s that we want to continue to be at the forefront of technology, particularly with respect to materials, including composites, as well as systems and aerodynamics.

We’re carefully monitoring what’s going on with the engine manufacturers. They have new technologies that have to be matured, but these hold the promise of presenting us with an almost unprecedented opportunity to bring value to the marketplace.

J: What aspects of engine technology do you see as most promising?

JV: Each engine manufacturer has a somewhat different plan. The company that’s made the earliest move is Pratt and Whitney with its geared turbofan technology. They have finished demonstrations of an engine prototype that has flown on their own flying test bed, as well as the Airbus A340-600. From all indications, they are making impressive progress with their engine development plan. Certainly GE, in association with Snecma and Rolls-Royce, are not standing still. CFM has talked about its Leap-X technology for 2016, and Rolls-Royce promotes advanced turbofan engine architecture, but they’re also pursuing a serious study of open-rotor engines that may be very fuel efficient.

Jetrader 13

Under a 2008 NASA contract award, a Boeing-led team is studying advanced vehicle and propulsion concepts for airplanes in 2030 and beyond, including a supersonic passenger airplane as well as a strut-based wing subsonic transport with “ultra green” environmental characteristics (shown above). Photo courtesy of Boeing.

J: What are Boeing’s key considerations in terms of future airframe design and engine technology?

JV: Everything we’ve heard from customers over the past 12 months is about fuel efficiency. From a value standpoint, we could develop airplanes that have lower maintenance needs or fly further, faster or higher, or that are more comfortable for passengers. But what we’re told is to focus right now on fuel efficiency as number one.

Ultimately, we’ll come back to the point where we bring in other factors.

J: Apart from fuel efficiency, what else is on your customers’ wish lists?

JV: Operational economics are critical. We talk about anticipating future noise or emissions requirements. Environmental considerations are extremely important. We spend a lot of time on the passenger experience and the cabins of the future—seats, overhead bins, lighting, galleys. In the flight deck, we have to minimize the cost to transition flight crews from today’s aircraft to the next generation.

J: How do you use the resource of Boeing’s ConceptCenter, and what capabilities does it offer?

JV: We started the ConceptCenter eight years ago to explore payload opportunities that we anticipated customers would have to deal with today—cabin architecture, for example. Would it be possible to quickly change an airplane interior from, say, business class to economy class? How could we build a galley in a more modular way and yet allow for customization? They’ve been given some of the most difficult industry challenges and have come back with an airplane interior that’s unlike anything we’ve delivered before. The same goes for the research performed on windows, cabin humidity and pressurization. The ConceptCenter provides the foundation from which creative solutions can find there way to our products.

That will become more evident as the 787 comes online.

J: Is there any update on a potential single-aisle replacement for the 737?

JV: We launched an intensive effort about four years ago to look at what it would take to replace the 737 Next Generation. It was a pretty humbling experience, because it reminded us of just how good the 737 is. The thought that we could take 787 composite materials, scale them down and quickly bring an airplane to market that was 10 to 20 percent better than the 737 was dashed pretty quickly. For a whole host of reasons, looking at a replacement is still the right objective. But it’s going to take a next generation of technology to make it possible, and we think that’s not likely to happen until the latter half of next decade.

J: What are some of the “enabling technologies” that Boeing often talks about?

JV: It will take a combination of wide ranging technologies— and not one breakthrough—to create innovation. Certainly engines, aerodynamics, materials and systems provide the technology cornerstones, but there are literally hundreds of technology studies underway. More than ever, successful technologies will have to provide multiple benefits. Lighter weight materials that improve fuel efficiency, require less airline maintenance and are easier to manufacture are a clear example.

J: Are there other promising technologies next in line?

JV: State-of-the-art aerodynamics is pretty advanced, but there could be further improvements in that area. Another one that saw great change on the 787 is systems architecture, where we went to more electric systems and eliminated pneumatics. We have just scratched the surface of airframe and systems health management and maintenance prognostics. With all of these technologies, the challenge is to clearly demonstrate the value they bring to our customers.

J: What about the idea of a blended-wing body? Does Boeing foresee that kind of aerodynamic technology direction?

JV: We’ve taken a hard look at blended-wing bodies over the years. They present as many new challenges as they attempt to solve. Fundamental technology questions remain about cabin pressurization, passenger ride quality and aircraft stability and control. It’s not clear what passengers think about flying in a vehicle that has fewer windows. Questions like these are not showstoppers, but they need to be understood and a distinct advantage would have to exist before this configuration is seriously considered for commercial transports.

J: What is Boeing’s current view on alternative fuels? Are you at all excited about the idea?

JV: Alternative fuels are a good example of listening to customers’ concerns and trying to respond and it’s very exciting. In one year, with the help of industry partners, we have gone from demonstrating a proof-of-concept biofuel to multiple flight tests with sustainable biofuels from various plant feed stocks that have low-life-cycle CO2 emissions and perform as well as petroleum-based jet fuel. Today, we’re trying to help develop fuel specs that producers can actually manufacture. We will move next to understand the scope of production capabilities that will be required to enable future widespread use.

J: Any final thoughts?

JV: Our products are pretty well positioned today .We have a sizeable production backlog, our fleet is performing well in service, and our current focus is clearly program execution.

Meanwhile, we’re looking at as wide a variety of potential future products as we’ve ever studied. While we don’t anticipate making immediate decisions, customers’ expectations are high, and challenges are huge. We continue to view our options in the context of customer needs, the evolving marketplace in the face of economic uncertainty and our commitment to continue to deliver industry-leading products. That perspective has served us well in the past and I have no doubt it will do so in the future.

Thanks to Boeing for supplying editorial material for this article.

14 The official publication of the International Society of Transport Aircraft Trading

appraisal

Bombardier DHC-8-Q4000 John Keitz President, BK Associates, Inc. Tel: 516-365-6272 john.keitz@bkassociates.com

Background

Current Fleet and Backlog by Region as of March 2009

The DHC-8-Q400 is the latest model in a family of turboprop commuter aircraft from Bombardier, Inc. deHavilland Aircraft of Canada, Ltd. was established in 1928. Although it was purchased by Bombardier in 1992, the early models in the family were introduced under the deHavilland name; thus, the “DHC” designation.

It was certified in June 1999 and entered service in February 2000. It has two PW150 series engines and an extended fuselage allowing seating for 70-78 passengers. The “Q” designation— Q100, Q200, etc.—for “quiet” denotes a cabin sound suppression system.

No. of Operators

Region Africa/Middle East Asia/Pacific Europe Latin America/Caribbean North America Undisclosed Total

4 5 13 1 6 0 29

InFirm Total Percentage Service Orders

6 46 107 0 72 2 233

12 11 43 4 38 6 114

18 57 150 4 110 8 347

5 17 43 1 32 2 100

Current and Future Market Outlook Considering the current state of the global economy and its impact on the aircraft market, the Q400 is doing remarkably well. None are listed as being available for sale. The order backlog of 114 aircraft extends to 2013, some 80 of these orders were only placed in the past year and some 60 were delivered in the past year. The first available delivery slot is several years out. There are 10 ex-SAS aircraft in storage but we understand they have already been dealt and are awaiting delivery.

About one year ago three landing gear collapse accidents led SAS to cease operating the Q400 and returned the aircraft to lessors. Although the final accident reports are not out, there is evidence that the gear collapse was not the result of aircraft design; in fact, SAS has ordered 14 more for its affiliate airline.

Increased fuel costs and the volatility of is price plus the improved cabin noise and vibration suppression system have rejuvenated the market for turboprops, in general, and the Q400 in particular. According to USDOT data (from U.S. airlines only), direct operating cost, which is largely influenced by fuel cost, is $22.80 per block hour per seat.

Basic Specs Wing Span: 93.25 ft.

Length: 107.75 ft.

Maximum Takeoff Weight: 64,500 lbs Maximum Landing Weight: 61,750 lbs Maximum Zero Fuel Weight: 57,000 lbs Operating Weight Empty: 37,887 lbs Fuel Capacity: 11,500 U.S. lbs Passenger Configuration: Up to 78 All Economy Seats Range With 70 Passengers: 1,360 n.mi.

Base Value

Yr. Of Mfgr.

CMV 2009

in $ Millions (2.5% infl ation)

2001

10.65

2003 2005

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

10.65

9.95

9.15

8.65

8.20

7.95

7.55

7.30

7.05

6.70

5.80

12.90

12.90

12.00

11.00

10.25

9.55

9.20

8.80

8.55

8.25

7.95

7.05

15.15

15.15

14.10

12.90

11.80

10.85

10.40

10.00

9.80

9.40

9.20

8.30

2009

2007

17.40

17.40

16.20

14.70

13.35

12.20

11.65

11.20

11.05

10.65

10.45

9.50

2009

19.60

19.60

18.25

16.55

14.95

13.50

12.90

12.45

12.30

11.80

11.65

10.80

The aircraft values stated herein are the product and property of independent third-party sources, and ISTAT neither approves nor endorses the information contained herein or the use thereof for any purpose whatsoever. Information current as of 3/16/09.

Jetrader 15

appraisal

Boeing 737-300 Fred Klein President, Aviation Specialists Group, Inc. Tel: 703-736-9700 avspecgroup@aol.com

Background

Engines – % of fleet aircraft

The -300 is a 10-foot stretch over the -200, has CFM56 engines, is Stage 3/Chapter 3 compliant and was first delivered in November 1984 to USAir and Southwest.

It is succeeded by the B737-700, which has the same pax capacity but greater range and operating weights. Population count below excludes 60 -300F/SFs and 41 -300QCs. Values are for EFIS aircraft where available. Subtract $500-1,000K for analog. The number of parked B737 classics increased substantially during the second half of 2008.

Deliveries – Actual & Scheduled Year 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984

CFM56-3C1 (22%) CFM56-3B2 (24%) CFM56-3B1 (54%)

Aircraft Demographics Total in service Outstanding orders Operator Average age Years manufactured

957 0 112 17.8 1984–1999

Deliveries 28 50 63 37 52 51 48 49 54 64 70 115 106 96 69 5

Current Future Values as of March 2009 Year

1984

1986

1988

1990

1992

1994

1996

1998

Aircraft Specifications

Current Market Value

3.8

4.3

5.0

6.1

7.1

8.3

9.6

11.0

Length Wingspan MTOW (000) Range (nm) Capacity (typical/max) Typical OEW (000) Fuel capacity

Base Value 2009

4.8

5.6

6.5

7.6

8.7

10.0

11.5

13.1

2010

4.5

5.3

6.2

7.2

8.3

9.6

11.0

12.6

2011

4.2

5.0

5.9

6.9

8.0

9.2

10.5

12.1

2012

3.9

4.7

5.6

6.5

7.6

8.8

10.1

11.5

2013

3.6

4.4

5.3

6.2

7.2

8.4

9.6

11.0

2014

3.3

4.1

4.9

5.9

6.9

8.0

9.2

10.6

2015

3.0

3.8

4.6

5.5

6.5

7.6

8.8

10.1

2016

2.7

3.5

4.3

5.2

6.2

7.2

8.4

9.7

109.6 ft 94.8 ft 124.5–139.5 lbs 2,255 w/ 126 pax 126/149 pax 69.4–72.5 lbs 5,311/6,295 USG

Geographic Distribution North America

380

South America

49

Europe

255

Africa/Middle East 48 Asia/Pacific

225

2017

3.1

4.0

4.9

5.8

6.9

8.0

9.2

2018

2.8

3.6

4.5

5.5

6.5

7.6

8.8

3.3

4.2

5.1

6.1

7.2

8.4

2019

Values in U.S.$ millions for a typical aircraft. Used aircraft are built in June, new aircraft in second quarter 2009. Values assume single or small/moderate lot transactions, not launch orders or large purchases and that aircraft/engines/major components are in average condition and half-life/half-time status. See our value assumptions in the Introduction on Page 1. Future Base Values assume 2.5% annual inflation. These values may change with time and exclude the effects of any attached leases.

The aircraft values stated herein are the product and property of independent third-party sources, and ISTAT neither approves nor endorses the information contained herein or the use thereof for any purpose whatsoever. Information current as of 3/16/09.

16 The official publication of the International Society of Transport Aircraft Trading

ISTAT foundation Our future involves cultivating relationships with young people and encouraging their interest in the aviation industry. I urge you to become a sponsor company for the ISTAT Internship Program—now in the placement process for this year. We have a solid pool of interns who will be a great asset to any company willing to give them a chance.

David P. Sutton, Chairman ISTAT Foundation

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I

t is a pleasure and honor to write to you as I begin my term as a chairman of the ISTAT Foundation Board of Trustees.

Found It is certainly gratifying to ect, during my 10 years as reflect trustee, on how far we have a trus come in our ability to actually make a major positive difference in the lives of so many deserving young people entering our industry.

We had a banner year in 2008 with total fundraising of over a million dollars! This achievement enabled us to give $150,000 in scholarships and award $90,000 in grants. We also continued to grow the Student Internship Program that we developed last year to bridge the gap between universities with strong aviation programs and active member corporations of ISTAT. At the annual ISTAT Conference in Phoenix, the Foundation announced a new humanitarian relief initiative, codenamed “Project G.” This initiative began with the observation that the allocation of air transport capacity in support of humanitarian aid projects occurs largely on an ad-hoc basis. Thus, due to the lack of an organized system, many non-governmental organizations (NGOs) incur high transport costs. These high costs materially reduce the efficiency and amount of humanitarian aid delivered in the world today.

It is also clear that cargo and passenger airlines do not always fly at full capacity. Project G will be a web-based matching service that will link NGOs with participating airlines. For more information, please contact Terry McGaughan at temcgaughan@northshoreaero.com or Bob Brown at bob.brown@vxcapital.com.

I look forward to reporting to you soon on our progress on this important initiative.

I would like to thank Steve Udvar-Hazy for the contribution of two week’s time at his Deer Park home at the Gala Dinner, a gesture that raised $34,000 for the Foundation.

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the

Photo courtesy of the National Museum of the U.S. Air Force

aviation history

CrossingChannel

In 1909, in his self-designed monoplane (similar to the replica shown here), Louis Blériot became the first man to fly across the English Channel.

How Louis Blériot’s historic flight opened up the skies

A

t the Queen Victoria Diamond Jubilee Fleet Review in the Solent off Spithead in June 1897, the Royal Navy showed lines of capital ships that were the latest in naval technology. The RN was twice the size of the next six largest fleets combined, and with fuel stations based at strategic locations worldwide, the Lords of the Admiralty were justified in expressing their confidence that no enemy would dare cross the English Channel to attack the British Isles.

Nearly 100 years ago, on July 25, 1909, that self confidence was rudely shaken when a 37-year-old Frenchman, Louis Blériot, flew a monoplane of his own design from Les Barraques, France, to England near Dover, in some 37 minutes. At 04:30, as dawn began to lighten the eastern sky and with a light southwesterly breeze to assist his attempt, Blériot pushed his Anzani 25 hp engine to its near maximum 1,200 rpm to clear wires near the end of the field. Climbing to 250 feet (76 meters) he reduced his rpm to give a speed of an estimated 40 mph (64k/hr). Without the benefit of a compass, he set his course towards the barely visible white cliffs of Dover 22 miles (35.2 km) away. The French government had placed a destroyer, the Escopette, at his disposal in the event he would not make landfall, as had happened a week earlier when a competitor, Hubert Latham, was forced to ditch when his engine overheated. Soon overtaking the destroyer, the gathering clouds blocked sight of the ship and his destination. With the wind picking up—together with rain, which cooled his engine—he had no idea of his location for some 10 minutes, until Dover Castle came into view. With a helper waving the tricolor fl ag at his intended landing spot, he then had to fight the gusts of wind that spun him around several times. Finally, he cut the ignition at 65 feet (20 m) and managed to wrestle the plane down, damaging the propeller and landing gear in the process.

By Bill Bath

So, why the competition? Lord Northcliffe, the owner of the Daily Mail, a conservative English newspaper, had offered a prize of £1,000 to the first person to fly from the mainland of Europe to England, approximately £195,000 in today’s currency, ($270,000). There were two other contenders, of whom only Latham actually made his soggy attempt before Blériot’s epic flight.

A Bit of Background Louis Blériot was born in Cambrai, France, on July 1, 1872, and after studying engineering in Paris, soon showed Jetrader 19

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his natural aptitude as an engineer and teamed up with another enthusiast, Gabriel Voisin, to found the Blériot-Voisin Company in 1903. Together, by 1905, they had built several of their designs, including a floatplane glider and a biplane powered by a small Antoinette engine. The partnership was dissolved in 1906 and Blériot continued on his own to build a variety of designs, including a canard (tail-first) model.

On March 18, 1906, a Romanian living in Paris named Trajan Vuia built and flew the first monoplane for some 40 feet (12 meters), and Blériot then switched from biplanes to monoplanes, which he had concluded would make for a more efficient wing.

In 1907, at Bagatelle, France he flew his first monoplane, Blériot Model VII, a distance of 500 meters, (1,640 feet).

It was on January 23, 1909, at Issy-les-Moulineaux that the monoplane destined to shake up the British Admiralty, first flew.

Blériot’s eleventh design, it was powered by a 30 hp (22.4 kilowatt) R.E.P. engine with a metal four-blade propeller; however, he soon replaced it with the more reliable Anzani engine of 25hp, (18.6 kilowatt) and the Chauviere two-blade propeller. On July 4, he proved the soundness of his design with a flight of 50 minutes. He was now confident that at last he could be the first to conquer the English Channel (La Manche) by air.

What were the Blériot XI specifications? With a wingspan of 25.5 feet (7.8 meters) and some 26 feet (8 meters) long, it had no ailerons but employed wing warping of the trailing edges for lateral control, similar to that patented by the Wright Brothers on their Flyer. For longitudinal control, the horizontal stabilizer had an elevator attached at each tip. There was no separate rudder on the vertical fin, which appears to pivot as a unit. The ash wood fuselage frame was uncovered from aft of the pilot’s station which had fabric attached to the sides of the cockpit’s frame. Besides wing warping for lateral control, the Wrights also invented the modern propeller and defended these designs vigorously against copiers. Not finding any record of legal action against Blériot for adopting them, it is possible that a royalty was paid, and by 1913, he had built and sold almost 800 Blériot XIIs. It was in one of these in 1912 that America’s first licensed woman pilot crossed the Channel in the reverse direction, to be killed later in an accident flying one at an air show near Boston.

Following his achievement Blériot became director-general of the Deperdussin Société in 1914, which was eventually renamed Société Pour Aviation et ses Derives (SPAD). During World War I, more than 5,600 combat aircraft were built by SPAD for France and also exported to Great Britain and other allies.

After hostilities, he founded his own company to construct commercial aircraft, eventually dying in August 1936 at the age of 64. By this time, of course both the Atlantic and Pacific had been flown and surveyed by the pioneers for regular commercial service, and the British started to plan its defense against a possible air attack from across the Channel by a resurgent Luftwaffe.

REFERENCES • • • • 20 The offi 417918_Genesis.indd 1 cial

Le Petit Larousse, Illustré www.centennialofflight.gov www.science.howstuffworks.com/bleriot-xi www.ctie.monash.edu.au/hargrave/bleriot.html

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