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Value of engine time at resale?

When selling an aircraft, how does the engine hours impact the price? How does the engine hours impact salability, price element aside?

Is the engine value portion of the total aircraft value simply remaining hrs to TBO proportion of total new engine price? This would be (1- engine hrs / TBO hours) x new engine price. Or is the value less linear wrt hours? For example, does an engine with few hours have comparatively more value (% new) than an engine approaching TBO?

What impact on aircraft price and salability does a 2000 TBO engine with say 2500 or 3000 hrs have vs one approaching TBO, assuming aircraft is flown regularly and has a current CofA and Annual?

I have heard that some prefer to buy an aircraft with run-out engine, as the price hit (buyer benefit) is greater than engine replacement cost (incl labour) and/or results in a known engine.

LSZK, Switzerland

I bought my a/c with 150 hours short of TBO at a good price. Gained confidence in the engine with oil analysis and engine monitor data. Now I am enjoying “free engine time“ beyond TBO in my a/c. I will sell it one day as is in order to leave the next owner with the choice of how to deal with a possible overhaul.

As a buyer I am not interested in freshly overhauled engines because of doubts about the quality of the overhaul and the risk of “infant mortality“ in the first 400 hours.

For mid-time engines a pro-rata discount sounds reasonable and fair to me.

I don‘t think a 2000/2500/3000 hour engine should make a big difference.

Last Edited by cessnatraveller at 17 Jan 13:11

But the value of the AC will be effectively discounted by price of said engine. So dangerously close to zero, sans the C152/172 and maybe PA28 trainers.
Then again, one can effectively do an overhaul in everything but name (paperwork), so TT can be misleading, it is the whole maintenance history that counts.

tmo
EPKP - Kraków, Poland

My preference is to go for mid or high time engine aircraft for a good price. I’d not pay premium for a freshly overhauled engine not knowing where, how it was overhauled and who/how broke in the engine. I bought my airplane with engine at 1200 hours. I did not like the compressions, oil consumption and time since overhaul so I had it overhauled. It is a great feeling to be in complete control of the process and the break in period of the new engine. To sum it up, fresh overhauled engine does not mean much to me when buying unless the aircraft is sold at a price to difficult to ignore.

Switzerland

There are different buyers. Assuming that the overhaul was done by a reputable shop or the engine time is since new, there are several factors which go into the value. The value of anything is finally determined by what the market is prepared to pay for it.

TBO today with part NCO and on condition has a different meaning for private ops than it used to have. Previously, when engine TBO was considered pretty much a hard limit or if today operating commercially and being dependent on TBO, the hours remaining to TBO were a massive issue for many buyers, primarily because most want to buy an airplane and fly it without hassle for a long time and possibly resell before anything worth mentioning comes up. People like this will be prepared to pay more for a low time engine in the expectation it will free them from any overhaul consideration. E.g. someone buying a plane with a 200 hours since overhaul/new will calculate that at 100 hours a year he can fly 18 years before an overhaul is even an issue. Obviously there is some naivity in this, but that is how people think. Many also completely disregard calendar time, as it is regarded as irrelevant in most places, but it can be a big issue: A 200 hour engine with the last overhaul done 20 years ago could well be a much bigger problem than a 1800 hour engine with the same overhaul date.

For most here, who know better, the issue is totally different. Nobody in this forum will buy a plane just because the engine has few hours without a lot of investigation and checks. Or there are people who will take the calculated risk and buy a run out engine and profit from the time they can run on condition until they have to do it and then do it on their terms.

Looking at valuation programs like the ones done for Mooneys by Jimmy Garrison, engine hours TSN or TSO are calculated with a full value at zero hours up to the approximate cost of an overhaul at 2000 hours. I’ve linked the Mooney 201 tool here, the others can be found here: Mooneyflyer

As to what the market likes best there are as many opinions as buyers but what I’ve been seeing is people like planes with around 400-1000 hours since TBO and TBO done within the last 5 to 10 years correspondingly. Why? Any bugs done in a bad overhaul should have surfaced at that time, actually it is said that most failures occur between overhaul and 400 hours by some experts. 100 hours per year and done throughout the year would preclude any damage induced by non-use. 1000 hours is approximately half time for most engines. So the potential for a 100 hour / year private plane would be between 16 and 10 years with those hours.

So if you want to sell a plane, I would suggest you find a valuation tool such as the one I linked and calculate an asking price based on that. If possible, I would aim to sell in the time bracket I mentioned between 400 and 1000 hours 4-10 years after overhaul, planes like that appear to get a lot of interest. Always indicate not only the hours since overhaul, remanufacture or new but also the year the last overhaul was done and by whom, that is valuable information. If the airplane has been conserved for a while, mention that fact! I had a Mooney here not too long ago which had been standing for several years and got sold only after it had become clear that it had been professionally conserved and maintained throughout.

On the other side, we had a PA28 not too long ago which had been standing for 10 years without ANY conservation done but in a heated hangar all the time and the subsequent checks done found the engine to be in pristine condition without any damage whatsoever. So only a good PPI will give results a buyer can actually use.

LSZH, Switzerland

The guidance from brokers I’ve heard is that if 80% of time on engine TBO is used up, it’s considered a run out for pricing purposes.

I think the answer will vary a great deal according to

  • type
  • rarity of a particular specimen
  • how smart the buyer is (and how cash strapped he is)
  • how smart the seller is (and how cash strapped he is)

For example I would prefer a plane with a shagged engine because then I can do an overhaul at a known-good company (of whom there are very few in Europe). But most buyers would not do that, since they are buying relatively close to their funding limit.

If I was replacing my plane, I would look for a TB20GT with a good condition airframe, and the rest is not so important. For European IFR you don’t need fancy avionics although WAAS would be good.

It is the same with houses. A house in a nice location in the countryside will sell according to its general size and its location. Most houses for sale in nice countryside locations are in a poor condition, because people tend to stay in them until forced to move out, and they have abandoned improvements decades before that. So whatever you buy you have to be prepared to sink another 100k into it right away (but you might get lucky). So if looking for say a C172, there will be so many for sale that the details will matter.

Administrator
Shoreham EGKA, United Kingdom

chflyer wrote:

(1- engine hrs / TBO hours) x new engine price

It depends mainly on who is buying the plane.
If buyer buys the plane for commercial rent out operations, this is Pretty much the formula. Not many buyers, however, fall under this category.

If buyer is a private owner operator – who does typically use it more in tha ballpark of 100-200hrs/year, things are completely different – esp. if it is a first time buyer:
- If engine is within 300-600hrs to next TBO, buyer would consider it as “have to calculate for overhaul within the next 1-3 years” (i.e. the personal financial fineplanning horizon) and therefore full cost of overhaul will be mentally added to the price of the plane.
- If time to next TBO is >1000hrs, many such buyers would think like “it needs an overhaul every 10 yrs. anyways so TBO for me is practically unlimited”.
- Planes with <300 hrs. since last TBO look suspicious to such buyers in any case as they feel to be either hangar queens or have some kind of damage history – “who would invest x0k to overhaul an engine and then sell a perfectly fine plane directly thereafter …?”

So if you sell to a private owner, sweetspot for selling is in the middle of TBO: You do not get much more credit for a younger engine and a significant markdown for more used ones.

Germany

Malibuflyer wrote:

So if you sell to a private owner, sweetspot for selling is in the middle of TBO: You do not get much more credit for a younger engine and a significant markdown for more used ones.

I think for the average buyer that is absolutely valid. In this situation you have a pretty good chance of never having to overhaul the engine in your ownership. You keep the overhaul cash available but might never have to spend it.

I bought my plane with about 900 hrs since new, and while there was a risk associated with decades of previous low utilization, that risk has not since been realized. I was also able to use the engine as a bargaining point, so I think I ended up getting the best of both worlds.

Last Edited by Silvaire at 23 Jan 14:37
9 Posts
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