- 07 Nov 2018
- Dave Higdon
- Aircraft Ownership
How to Understand the Scrap Value of a Jet
Aircraft appraisal expert Jeremy Cox offers a guide on how to understand the value of an end-of-life business jet. If ‘de-manufacture’ is an option you’re considering, what will your aircraft fetch in scrap?
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Jeremy Cox
Jeremy Cox is president, JetValues-Jeremy LLC and enjoys direct interface between aircraft purchasers...
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Aircraft appraisal expert Jeremy Cox offers a guide on how to understand the value of an end-of-life business aircraft. If ‘de-manufacture’ is an option you’re considering, what will your jet fetch in scrap?
There is a new term emerging in Business Aviation. Aircraft ‘de-manufacture’ sounds better than ‘salvage’ or ‘parting-out’ even though it is essentially the same thing. So, what is the process of the de-manufacture of an end-of-life aircraft (EOLA)? The following list should help clarify:
- Position aircraft in the disassembly/destruction area
- Drain all fluids and gases from aircraft
- Removal of components
- Cut-up and shred airframe
- Prepare inventory of removed items
- Segregate the scrap materials
- Recycle the scrap materials
- Protect, recertify, store and sell components.
Where’s the Value in an EOLA?
The engines have the highest value in an end-of-life aircraft (see Table A), assuming the aircraft flew-in and/or the engines have been run every 30-45 days, per the engine manufacturers’ maintenance manual.
If they have neither been run per the specifications, nor been placed into a long-term storage program, the likelihood is they will only return a core value (at worst), or the sum of all the life-limited parts (at best) once the engines have been dismantled. If the engines are junk and there is no resale market, they will return only scrap value.
Hypothetical Example
Let’s consider the hypothetical example of an early model Gulfstream GV (circa 1995). To my knowledge only two GVs have been written-off and parted out. These were s/n 508, which had a very hard landing causing structural damage to the aircraft, and s/n 647, which had a catering truck run into it.
Using a fictional GV aircraft that has a value of $5m, Table A provides a reasonable depiction of how that $5m value is ascertained from our GV part-out.
When all of the ‘greater than scrap value’ components have been removed, a derelict airframe structure sitting either on the ground or on supports is all that remains.
Sections can be dissected (i.e. the cockpit) and might be sold to a training company, a restaurant or an architectural company. Some home interior designers like to hang a polished section of fuselage with window-line remaining on a wall as decorative art. The possibilities are only limited by the designers’ mindset, and vision in how to repurpose a piece of EOLA structure.
More ‘repurposes’ of an EOLA airframe include that of maritime reef creation for underwater wildlife, or sunken object d’art for scuba divers to explore, or fire-department training. If taking the time to explore these repurposing options for your EOLA is not on your schedule, then the next step will likely involve the cut and shred process.
Scrap Value Examples
The mantra of most metal recyclers (once a pile of torn metals has been created by the guillotine drop weight, excavator claw grapple, and sometimes an on-site metal shredding machine) is this: Sort, segregate, mutilate and then refine.
Every item of scrap has a value and will result in varying amounts once the scrap from an EOLA is refined. For example, in the US, ‘dirty aluminum’ scrap (with steel, rubber, plastic, etc. attached) currently runs at about $0.07/lb. – the same as for steel and iron. Clean aluminum is more than four times that at $0.32/lb. Stainless steel is about the same at $0.30/lb., while copper is $1.95/lb., and insulated copper wire $0.85/lb.
The final count-up for our fictional Gulfstream GV EOLA that is being readied for ‘de-manufacture’ will come from the scrap value of the remaining derelict airframe structure. The weight is approximately 21,750lbs, and is accounted for within Table B.
Assuming the empty weight is 21,750lbs, for which an average $0.195/lb. is obtained for a mixture of dirty and clean aluminum, an additional $4,241 in additional final scrap value can be gleaned.
With upcoming mandates in the US and around the world likely to push a number of older jets to the brink of de-manufacture, it is hoped the above summary will be of use to those weighing up the value of their aircraft for eventual scrappage.
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