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Monday, March 27, 2006

Beechcraft 1900 Making Strong Showing in Used Market

The 19-passenger market is not dead.

In the past four years, Raytheon Airline Aviation Services (RAAS) has halved the number of Beechcraft 1900 aircraft available for sale, with more than 75 percent of the sales going to international customers, according to David Carter, RAAS's manager of marketing.

"We are operating under the radar screen of the larger aircraft, and are basically without direct competition," Carter told RAN. "Our aircraft are going into selected niche markets. We are finding that our commitment to supporting our aircraft - with parts, operator conferences and training - over the long term is a major factor in maintaining a strong market. Those markets include passenger, cargo and humanitarian missions around the world, as well as a growing general aviation/corporate shuttle application. Most of our business is overseas with the vast majority of our transactions cash sales self-financed by customers."

Carter indicated that select markets do remain in the U.S. He cited Big Sky Airlines' fleet transition incorporating the Beech 1900D into its traditional route structure and to accommodate expansion plans. The use of the 1900 to most of the small communities that receive Essential Air Service subsidies represents an important domestic application as well.

Fuel is the driver in the turboprop resurgence, he added. Every cent increase in jet fuel price equals an $80,000 increase in annual expenses, making the RJs uneconomical in certain markets, and offering limited new route opportunities for turboprops. The fiscal crunch resulting from the fuel increases, however, means U.S. regionals have limited opportunity to fill those markets because they are as cash-strapped as their major partners.

Carter admitted that during the production cycle of the 1900, the company had leased many aircraft, and with the advent of 9/11, the company received many of them back. At its founding in 2002, the company held 515 aircraft. But now, RAAS is selling its available aircraft into the third quarter of 2006.

Many turboprops are being excised by the majors, he noted. According to JP Airline Fleets International, American Airlines [AMR] and Continental Airlines [CAL] have been disposing of their Saab 340s and Embraer Brasilias. As of the third quarter 2005, American had 155 340s, including subleased aircraft, down from 178 in 2004. In addition, the Brasilia fleets at Continental and Delta Air Lines [DALQ] were parked or subleased.

As of July 2005, there were 522 parked aircraft in the 19- to 30-seat category, suggesting that the market will remain highly competitive for some time, at least for those aircraft types. Notably, the aircraft with the sharpest reduction in fleet availability was the Beechcraft 1900, with a 25 percent reduction over 12 months.

>>Contact: Dave Carter, Beech, (316) 676-1007<<

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