2017 financial analysis of the king air 200 - blackhawk · 2017 financial analysis king air b200...

2017 FINANCIAL ANALYSISKING AIR B200 SERIES WITH THE BLACKHAWK XP52

ENGINE PERFORMANCE UPGRADE

PROVIDED BY CONKLIN & DE DECKER

Conklin & de Decker62B Cranberry Highway

Orleans, MA 02653Phone (508) 255-5975

FINANCIAL ANALYSISBLACKHAWK XP52 ENGINE+ UPGRADE

FOR THE KING AIR B200

Report based on research prepared by Conklin & de Decker Aviation Information | Page 1

7601 Karl May Drive | Waco, TX 76708 Phone: 254.755.6711 | www.blackhawk.aero

INTRODUCTIONBlackhawk Modifications, Inc. has an engine upgrade program replacing the PT6A-42 engine of the stock King Air B200 with a PT6A-52 engine. This engine upgrade offers several advantages:

• More power at altitude• Faster cruise speed at altitude• Potential for enhanced resale value

1 Beechcraft Super King Air B200/B200C performance, page 5-852 Engineering data for Maximum Cruise, 1800 RPM, ISA conditions.

Note: The costs and assumptions used are typical estimates based on known costs and market conditions. These calculations do not represent any financial guarantee of return.

ENHANCED PERFORMANCEAt cruise, the PT6A-42 produces the maximum 2,230 ft/lbs of torque up to 16,000 feet and 1,708 ft/lbs of torque at 26,000 feet(1). The PT6A-52 engine generates the maximum 2,230 ft/lbs of torque up to 26,000 feet(2), a 31% increase of available horsepower at cruise altitudes. The added torque manifests itself in faster climbs, higher cruise speeds and better take-off performance on significantly warmer than standard days.

We calculated a 800 NM trip with four passengers and NBAA IFR fuel reserves for a 200 NM alternate. Cruise altitude was 28,000 feet at 1800 RPM. The trip was calculated based upon the standard operating performance of the King Air B200.

The PT6A-52 powered King Airs, with their more powerful engines, can easily fly the trip at 28,000 feet with a power setting of 1800 RPM. At this altitude and power setting, the B200 is flying at almost its Mmo speed.

800 NM TripStock

King Air B200Blackhawk King Air

B200 XP52

Engine PT6A-42 PT6A-52

Altitude FL 280 FL 280

Temperature ISA ISA

Power Setting Max Max

RPM 1800 RPM 1800 RPM

Cruise Speed at Altitude (KTAS) 284 311

Fuel Flow at Altitude (GPH) 84.2 101.5

Trip Time 2 hr 54 min 2 hr 43 min

For 100,000 NM Utilization per Year

Flight Hours per Year 362 339

Gallons Fuel Used per Year 33,280 37,336

Cost per NM $4.62 $4.17

With the Blackhawk XP52 ENGINE+ UPGRADE, the King Air B200 cruises 27 knots faster compared to a standard King Air B200.

With the Blackhawk XP52, there is a 31% increase in

available horsepower at cruise altitude.

The cost per nautical mile with the Blackhawk

XP52 is 45 cents less when compared to a stock King Air B200.





OPERATING COSTSThe PT6A-52 engines offer more power while decreasing the nominal Hot Section Inspection and Overhaul budget.

Using the Conklin & de Decker Life Cycle Cost data, we calculated the average hourly costs for a King Air B200 with and without the upgrade using hourly set aside above. This then assumes the PT6A-42 engines have been accruing for their LLP since new.

The costs calculated were 10-year averages for the following items:

• Fuel. Fuel burn was calculated for a 800-nautical-mile trip using the manufacturer’saircraft performance manuals. It was assumed that four passengers plus bags (200lb each) were on board, fuel reserves were based upon an NBAA IFR 200 NM alter-nate. Standard conditions (ISA), no-wind were used.

• Maintenance Labor. This is the labor required to accomplish scheduled andunscheduled maintenance on this aircraft.

• Parts. This is the cost of parts required to accomplish all unscheduled and minorscheduled maintenance on this aircraft.

• Inspections. This covers set-asides for the estimated cost of major airframe inspections.

• Engine Restoral. The hourly set-aside allowance for the engine Hot SectionInspection and Overhaul at TBO.

• Parts Guaranteed Mx Plan. N.A.

• Airframe Guaranteed Mx Plan. N.A.

• Avionics Guaranteed Mx Plan. N.A.

• Component Overhaul (All). This covers set-asides for the estimated cost ofmajor component overhauls. This includes the propellers.

• Life Limited Components (All). This covers set-asides for the estimated cost ofmajor life limited components.

ENGINE SET-ASIDE

PT6A-42 Cost Interval

Mid-life $50,600 1800 hrs

Overhaul $350,000 3600 hrs

Total for two engines $810,200 $222.56 per hour set-aside

Blackhawk XP52 Cost Interval

Mid-life $41,800 1800 hrs

1st Overhaul $300,000 3600 hrs

Total for two engines $683,600 $189.89 per hour set-aside





With the Blackhawk XP61 on a King Air B200, expected annual operating cost savings is $45,017.10.

REDUCED OPERATING COSTSStock King Air B200

NM Flown/Year 100,000 NM

Hours 362.1 hrs

Variable cost/hr—no fuel (Maintenance reserves, misc. costs)

$907.00

Fuel cost/gallon $4.00

Fuel cost/hr (92 GPH) $368.00

Average variable cost/hr $1,275.00

TOTAL variable cost/year $461,677.50

King Air B200 Blackhawk XP52

NM Flown/Year 100,000 NM

Hours 339.3 hrs

Speed Advantage at Cruise 18.6 KTAS

Variable cost/hr—no fuel (Maintenance reserves, misc. costs)

$788.00

Fuel cost/gallon $4.00

Fuel cost/hr (110 GPH) $440.00

Average variable cost/hr $1,228.00

TOTAL variable cost/year $416,660.40

Annual Operating Cost Savings

Stock vs. Blackhawk XP52 $45,017.10

WHEN TO DO THE CONVERSION?The typical cost of the Blackhawk XP52 conversion is $1,014,000. This price also includes the trade-in value of the PT6A-42 engine cores. The $700,000 overhaul expense of the PT6A-42 engines would be avoided.

($700,000)$1,014,000

Conversion at Overhaul(2) PT6A-42 overhaul avoided (2) PT6A-52 conversions Net Cost $314,000

When upgrading engines at overhaul, the net cost to the King Air B200 owner is $314,000.

If done prior to overhaul, Blackhawk offers a $60 per engine hour credit for the time remaining until overhaul. Assuming the conversion is done at mid-life:

Conversion at Mid-life($101,200)($216,000)$1,014,000

(2) PT6A-42 mid-life avoided$60/hr Engine credit (2) PT6A-52 conversions Net Cost $696,800

If done at mid-life, the net cost to the King Air B200 owner, $696,800, is significantly less than the eventual PT6A-42 overhaul cost. Plus, the PT6A-52 engines come with the full new warranty.

While the cost seems substantial compared to waiting until the PT6A-42 overhauls are due, these costs and savings ignore the added value in the market of a PT6A-52 powered King Air B200 and substantial yearly opera-tional savings.

POTENTIAL FOR ADDED RESALE VALUEThe Blackhawk XP52 has established a record of increased value after the conversion. A popular aircraft value reference, Vref, in their appraisal points for the King Air B200 adds $1,014,000 to the aircraft value for Blackhawk conversion3.

It is doubtful to assume that an operator will perform the conversion simply to sell their King Air immediately afterwards. However, if required, there is a very high likelihood of enhanced value should that occur.

3 Vref for Windows

The average Non-fuel Variable Costs were calculated, and then the fuel savings were calcu-lated separately. The non-fuel variable costs are detailed in Appendix A and are:

Stock King Air B200 Blackhawk XP52

Non Fuel Cost/Flight Hour $907.56 $788.23





But what about over a period of time? Return on Investment has a number of ways to be calcu-lated. In this analysis, we used the following considerations:

• Conversion at mid-life with a net conversion cost of $696,800

• Four years operation at 100,000 NM per year with operating cost savings.

• A reduction in the enhanced value of the King Air B200’s added value of 5% per year estimated market depreciation (i.e. the added value of the conversion declines at 5% per year).

With the Blackhawk engine conversions on the King Air B200, expected annual operating cost savings is $45,017.10.

It is not reasonable to assume that an operator will perform the conversion just to sell their King Air immediately afterwards. However, if required, there is a high likelihood of enhanced value should that occur.

CONCLUSIONOur analysis shows that for a King Air B200 operator whose next engine overhaul is due, an engine upgrade to the PT6A-52 is the preferred alternative in terms of aircraft performance and cost. The operator need not wait until that overhaul to reap the financial advantages of this program, which are significant.

RETURN ON INVESTMENT IF CONVERTED AT MIDLIFE

Return on Investment

King Air B200 Blackhawk

XP61Total Operating

Cost Savings ReturnEnhanced value

At Conversion $1,014,000 $1,014,000

After Year 1 $963,300 $45,017 $1,008,317

After Year 2 $915,135 $90,034 $1,005,169

After Year 3 $869,378 $135,051 $1,004,429

After Year 4 $825,909 $180,068 $1,005,977

Initial Investment ($696,800)

Added Residual Value After 4 Years $825,909

Operating Costs Saved After 4 Years $180,068

Excess return over initial investment if converted at mid-life $309,177

After four years operation, there is still

a net excess return over the initial

investment of the Blackhawk XP52.





Calculated with Conklin & de Decker Aircraft Cost Evaluator Type of Operation: Corporate; Program Length: 10 years

Direct Cost (average)

Used Stock King Air B200

King Air B200 Blackhawk XP52

Fuel - -

Fuel Additives/Lubicants - -

Maintenance Labor $152.60 $152.60

Parts $220.43 $220.43

Inspections $181.63 $181.63

Engine Restoral $309.22 $189.89

Engine Guaranteed Mx Plan - -

Parts Guaranteed Mx Plan - -

Airframe Guaranteed Mx Plan - -

Avionics Guaranteed Mx Plan - -

Component Overhaul (all) $23.22 $23.22

Life Limited Components (all) $20.46 $20.46

Other Services - -

Flight HourCost - -

Fixed Cost - -

Landing/Parking Fees - -

Crew Expenses - -

Small Supplies - -

Total Direct Cost per Hour/10 yr. avg. $907.56 $788.23

APPENDIX A - STOCK KING AIR B200 VS. BLACKHAWK XP52

2017 financial analysis of the king air 200 - blackhawk · 2017 financial analysis king air b200...

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