Projecting residual values can be one of the most important tools in a financial transaction or analysis of your aviation assets.
Reasons for Obtaining Residual Value Projections
- Aircraft lease transactions
- Pricing analysis work
- Loan to value analysis
- Lease versus purchase decisions
- Projecting capital budgets
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Typical Residual Value Projections
- General market residual projections utilizing blended dollars and/ or a speculative analysis
- Economic residual projections employing specified inflationary considerations
- Economic residual projections employing no inflationary considerations
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General Market Residual Projections
- Analysis of the previous sales history of the specified product
- Analysis of the specified product and any competitive products
- Projections employing blended dollar figure
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Economic Residual Projections
- Analysis of the previous sales history of the specified product
- Inflationary adjustment of the previous sales history
- Analysis of the specified product and any competitive products
- Projections employing figures driven by specified inflationary considerations
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Projecting Residual Values - Important Issues
- The history of the specified product
- The overall history of the product line
- The ability of the aircraft or equipment to meet or exceed any known regulatory requirement
- The history of competitive products or product lines
- The economic cycle and its influence on the value of aircraft or equipment
- The proposed introduction of new products or product lines
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If the residual value is to be used in an operating lease, provide as much information as possible on the maintenance and return provisions of the lease.
If the residual projection is for a tax lease, provide the analyst or appraiser with as much information as you can on the Early Buy Out targets. >>Back To Top
