Remaining Times

'Upliftingput a precise valuation on outstanding negotiations, saving the client $145,000.00 and ensuring the helicopter did not suffer negative equity on resale'

When deciding to purchase a pre-owned helicopter often buyers don’t have the extensive knowledge to budget, judge and foresee the lifecycle maintenance costs. We encountered this when one of our clients wanted to purchase a 1990 pre-owned Agusta A109C with a total time since new of 2,973 flight hours. 

At the time, the seller offered the helicopter for USD 1,250,000.00, which was just under the market value. However, within the next 527 hours, the two engine compressor and turbine modules required overhaul and the budget for this work was over US$370,000.00. Also the main rotor transmission and tail rotor gearbox were also due to be overhauled. The budget for these two components was around the $130,000.00 mark.  In total the buyer was faced with a huge spend of half a million dollars over the next 527 hours corresponding to a massive $948 per flight hour!

Expert Valuation And Cost Saving

In this scenario, there was no chance of retrieving some or all of the investment on the resale of the helicopter.  We presented to the seller the spend coming in the next 527 hours. We then handed over a complete market analysis showing the number of helicopters offered on the market and compared, on a prorated basis, the component remaining times. We also of course looked at other similar A109Cs, taking into account the year of manufacture, TTSN and mission equipment fitted.

We negotiated the purchase price to take into account the forthcoming four major events and included a factor for the betterment with the remaining hours on the compressors, turbines, main transmission and tail rotor gearbox. We negotiated the purchase down $925,000.00, saving the buyer $325,00.00. We then secured a deal on two mid-life compressor and turbine modules for $200,000.00 and sent the transmission and tail rotor gearboxes to be overhauled as planned with an additional $5,000 negotiated saving.

At the end of the exercise, the total acquisition cost including the mid-life turbines and compressor modules with a fully overhauled main transmission and tail rotor gearbox was $1,130,000.00. The helicopter was valued at $1,275,000.00 which was a total success because the client not only upped the value of his helicopter by $145,000.00 but also avoid loses.