Q4 11 CITATION MUSTANG & CJ SERIES MARKET REPORT. Prepared by. Sales Delivery Training

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1 Sales Delivery Training Q4 11 CITATION MUSTANG & CJ SERIES MARKET REPORT Prepared by Cyrus Sigari President, Citation Market Matt Stringfellow Vice President, Citation Mustang Market Patrick O'Brien Vice President, Market Intelligence

2 Canada USA The Citation Team Mexico Cyrus Sigari, President Co-founder, President Cyrus is co-founder and President of jetaviva, an industry leading light jet sales/acquisition, training, and delivery firm based in Santa Monica, California. In addition to his duties at jetaviva, Cyrus sits on the Citation Jet Pilots owner's association Board of Directors and the NBAA 500 series technical committee. Cyrus is a sought after aviation author with articles having been published in AOPA Pilot, CJ Magazine, Twin & Turbine, Plane & Pilot, Aviation International News, and Pilot Journal magazines. Cyrus is a type rated pilot in the Boeing 747, Citation Mustang, Citation CJ series, Embraer Phenom 100, and Eclipse 500 jets. Cyrus is also a graduate of Purdue University's Aerospace and Aeronautical Engineering program, an experienced acceptance test pilot, and nationally ranked competitive aerobatic pilot. Matt Stringfellow, VP Vice-President, Citations Sales Matt comes to jetaviva as a seasoned aviator and aircraft sales professional. Matt leads jetaviva's Mustang market activities. Prior to joining jetaviva, Matt most recently served as a Sales Director for the largest new Cessna Dealer in the world. Having bought and sold over three hundred aircraft, Matt holds an expert knowledge of the owner flown aircraft market. At the age of 13, Matt took his first flying lesson followed by his first solo on his 16th birthday. Matt now holds an Airline Transport Pilot Certificate with a type ratings in the Citation Mustang and Citation CJ series. Matt graduated from Purdue University with a degree in Aviation Technology and minor in in business management. Matt also is bilingual in Spanish and English. Derrick Schmidt Director of Maintenance and Technical Services Having flown over 2,000 Citations, including every single Citation X built (through serial 306), and with over 8,000 flying hours, 7,000 have been in Citations and 5,000 of those were in flight testing, Derrick is one of the foremost technical experts when it comes to Citation jets. Derrick's history with Cessna Aircraft is robust. Derrick got his start with Cessna as an A&P mechanic at the Wichita Citation Service Center and retired from Cessna in 2010 as the most senior production test pilot. During this time Derrick honed his flying skills working for Cessna s Air Transportation Department and later as a demonstration pilot on the Cessna Caravan. His knowledge both inside and outside the cockpit made him a natural choice for the production flight test team where he became a Product Specialist on the Citation X and Senior Production Flight Test Pilot. Derrick remains an active member of the Society of Experimental Test Pilots (SETP) Ecuador Panama Brazil

3 Norway jetaviva s Global Reach jetaviva has transacted and delivered hundreds of Ireland UK Germany Austria jets into over 30 countries around the world. Spain Switzerland Italy Portugal Turkey Greece China Jordan India Philippines Singapore Australia S. Africa About jetaviva jetaviva provides unmatched expertise and client focus to those purchasing a light jet. From aircraft selection to familiarization, acquisition and technical evaluation, only jetaviva has the knowledge, understanding and breadth of experience to perfectly match the right light jet with the mission requirements that are right for you.

4 Q Market Overview With 2011 behind us, it s time to report year end activity related to the Citation Mustang and CJ markets (inclusive of the 525, 525A, 525B, and 525C model Citations). Highlights from Q4: Citation Mustang continues to maintain high liquidity, yet sees pricing dip compared to Q3 CJ1+ market experiences surprisingly high transaction volume European uncertainty driving pre-owned exports out of the EU, particularly in the CJ2 market CJ2+ pre-owned market hit by CJ3 inventory overhang CJ3 market experiences 50% increase in inventory as compared to Q3, partially driven by new CJ4 deliveries CJ4 market still too young to characterize, only one pre-owned unit for sale The jetaviva Team Ben Marcus Co-founder Cyrus Sigari Co-founder Greg Oswald VP Phenom Market Matt Stringfellow VP Mustang Market Marcio Lucchese Manager, Phenom Acceptance & Delivery Services Scott Marti Training Manager Derrick Schmidt Director of Maintenance & Technical Services Patrick O'Brien VP Market Intelligence Erin Haase Office Manager Citation M2 picking up steam Bonus depreciation expiring In addition to analyzing empirical market data for the aforementioned markets, it is important to note some of the competitive forces that have affected or will likely have an affect on the markets. Piper has canceled the Piper Altaire single engine jet program; Honda has delayed the entry into service of the HondaJet until 2013 as a result of issues related to engine certification; and HawkerBeechcraft (HBC) has indefinitely paused development of the Hawker 200 (formerly known as the Premier II) due to the company s overall financial position and the segment s strength (or lack thereof) moving into On the other end of the spectrum, Cessna has had a positive response from the announcement of the M2, scheduled for delivery in 2013; Eclipse Aerospace has been reinvigorated by Sikorsky s continued support of the Eclipse 500 and 550 programs; and Embraer continues to make strong headway into the light jet market with their Phenom 100 and 300 programs. Meanwhile, 100% bonus depreciation for new aircraft purchased in 2011 increased factory new activity, tempering pre-owned activity. Moving into 2012, the expiration of bonus depreciation will level the playing field. This has the potential to bolster pre-owned prices across the board, amongst most in production model types.

5 Q Mustang Market Report Mustang Over the last 12 months, on average two pre-owned Mustangs traded hands each month. While Cessna has significantly reduced new Mustang production (as compared to 2009 and 2010), pre-owned Mustang pricing saw another dip in Q4 on the order of 5%. This can be partially attributed to factory incentives and bonus depreciation driving would be pre-owned buyers to the factory. There were a total of 7 aircraft transacted in the quarter with 6.6% for sale. This compares to 11 aircraft sold and 7.8% for sale in Q3. Mustang owners upgrading to an M2 or other aircraft should bear in mind that the Mustang s residual values will likely be at risk once M2 deliveries begin in A similar effect can be seen in the CJ3 market today as a result of CJ4 deliveries. Citation Mustang: Average Price $3,200,000 $2,920,000 Citation Mustang: % For Sale 6.6% $2,640,000 $2,360,000 $2,080,000 $1,800, Citation Mustang Q Used Aircraft Listings 25 Total Fleet 380 Percent of Fleet for Sale 6.6% Low Ask Price $1,995,000 Average Ask Price $2,242,900 Average Airframe Total Time 497 Average Days on Market 137 OEM Deliveries (2011) 35 Pre-Owned Transactions (2011) 30 Sources: AMSTAT, JetNet, Aircraft Blue Book, UBS Market Research, JPMorgan, jetaviva Research Team.

6 CJ: % For Sale Q Market Overview Cessna CJ Series 14% CitationJet CitationJet (built from ) buyers are faced with approximately 50 aircraft to choose from, representing 14.2% of the CitationJet fleet. This compares to 61 aircraft and 17.3% of the in service fleet for sale in Q3. With the most transactions of the CJ series in Q there were 11 transactions and pricing levels remained in the low to mid $1Ms for high-pedigree aircraft. CitationJet pricing has stayed relatively constant throughout Many buyers transitioning up to a CitationJet are typically coming from high performance piston twins and early model twin turboprops and see the $1 million price range as desirable. CJ1 With only 3 pre-owned transactions in Q4, the CJ1 (built from ) market remains tempered as current inventories rest at 15.2% of the total in service fleet for sale. This compares to 28 aircraft and 14.2% in Q3. CJ1: % For Sale 15% CJ1+ While the CJ1+ (built from ) has officially been discontinued, and inventories have increased quarter over quarter, CJ1+ liquidity has significantly increased with five pre-owned CJ1+ transactions completed in the quarter, representing 5% of the in service fleet trading hands in the last three months. Compare this to five transactions in the first three quarters combined. Despite the brisk transaction volume, CJ1+ inventories saw an increase from 14 aircraft for sale in Q3 to 17 aircraft for sale in Q4, representing 13.9% and 16.8% of the in service fleet for sale, respectively. CJ1+: % For Sale With first delivery of the M2 scheduled for approximately 22 months from now, CJ1+ owners should consider their asset value protection strategy as the M2 availability will likely adversely affect long-term residual values. With Cessna promising to deliver the M2 as a more affordable, capable, and technologically advanced aircraft than the CJ1+ a decline in pre-owned values will likely be triggered. 17%

7 Q CJ Series Market Report Citation Jet (CJ/CJ1/CJ1+): Average Prices $5,000,000 $4,635,000 $4,270,000 CJ CJ1 CJ1+ $3,905,000 $3,540,000 $3,175,000 $2,810,000 $2,445,000 $2,080,000 $1,715,000 $1,350, Cessna Citation CJ/CJ1/CJ1+ Q CJ CJ1 CJ1+ Used Aircraft Listings Total Fleet Percent of Fleet for Sale 14.2% 15.2% 16.8% Low Ask Price $995,000 $1,295,000 $2,950,000 Average Ask Price $1,530,000 $2,080,000 $3,510,000 Average Airframe Total Time 3,521 2, Average Days on Market OEM Deliveries (2011) Pre-Owned Transactions (2011) Sources: AMSTAT, JetNet, Aircraft Blue Book, UBS Market Research, JPMorgan, jetaviva Research Team.

8 Q CJ Series Market Report CJ2 The CJ2 (built between ) experienced a strong fourth quarter with ten pre-owned transactions since the beginning of the quarter. A unique attribute of the CJ2 market in Q4 is the statistically significant number of new to market CJ2s coming from Europe. Likely due to continued concern of the European financial crisis, 6 European aircraft entered the market as for sale aircraft, while only 4 US based aircraft. In general, pricing and transaction activity has held consistent in Q4 as compared to Q3 with a total of 10 CJ2s transacted in Q4 and 7 transactions in Q3. CJ2+ Currently there are 19 CJ2+s for sale with only two pre-owned CJ2+ trading hands on the retail market for the entire quarter. Inventory in Q4 increased by 4 aircraft as compared to the previous quarter. With the significant increase in CJ3 inventory in the quarter (discussed to the right), would be CJ2+ buyers are looking more seriously at purchasing a pre-owned CJ3 vs. CJ2+ for a relatively small increase in pricing. Citation (CJ2/CJ2+): Average Prices $7,000,000 $6,550,000 $6,100,000 CJ2 CJ2+ $5,650,000 $5,200,000 $4,750,000 $4,300,000 $3,850,000 $3,400,000 $2,950,000 $2,500, CJ2: % For Sale Cessna Citation CJ2/CJ2+ Q CJ2 CJ2+ 16% CJ2+: % For Sale 10% Used Aircraft Listings Total Fleet Percent of Fleet for Sale 15.8% 10.2% Low Ask Price $2,930,000 $4,295,000 Average Ask Price $3,500,000 $4,950,000 Average Airframe Total Time 2, Average Days on Market OEM Deliveries (2011) 0 11 Pre-Owned Transactions (2011) Sources: AMSTAT, JetNet, Aircraft Blue Book, UBS Market Research, JPMorgan, jetaviva Research Team.

9 Q CJ Series Market Report CJ3 Q was one of the most dynamic quarters the CJ3 market has experienced. Since September, there has been a nearly 50% increase in CJ3 pre-owned inventory. At the end of Q3, CJ3 pre-owned inventory stood at 4% of the in service fleet for sale (17 aircraft) versus 7% now (26 aircraft) with 40% of the for sale fleet coming on the market in the last 90 days. The current landscape of the CJ3 market is reminiscent of the summer of 2010 when inventories were at similar levels. The end result is likely to be that of short term pricing degradation for owners and better deals for buyers. The above notwithstanding, buying activity has remained consistent in the CJ3 market with 7 pre-owned CJ3s trading hands in the fourth quarter, as compared to 13 in third quarter. Citation (CJ3): Average Price $8,000,000 $7,700,000 $7,400,000 $7,100,000 $6,800,000 $6,500,000 $6,200,000 $5,900,000 $5,600,000 $5,300,000 $5,000, CJ3: % For Sale Cessna Citation CJ3 Q % Used Aircraft Listings 26 Total Fleet 366 Percent of Fleet for Sale 7.1% Low Ask Price $4,550,000 Average Ask Price $5,680,000 Average Airframe Total Time 966 Average Days on Market 254 OEM Deliveries (2011) 16 Pre-Owned Transactions (2011) 42 Sources: AMSTAT, JetNet, Aircraft Blue Book, UBS Market Research, JPMorgan, jetaviva Research Team.

10 Q CJ Series Market Report CJ4 With just over 60 aircraft in operation, the 2011 production of the CJ4 out paced all other Cessna jets by over 30%. While Cessna and early operators work through entry into service issues of the CJ4, deliveries continue to be brisk. Due to the relative newness of the CJ4, with the exception of two post delivery open market transactions, no true pre-owned transactions have taken place in the CJ4 market. Currently, only one pre-owned CJ4 is listed for sale. The lack of actionable data makes it difficult to assign residual values to the CJ4. Moving into 2012, we expect a few pre-owned sales, which will allow us to establish quantifiable metrics to the liquidity of the pre-owned CJ4 market. CJ4 Deliveries By Quarter Q Q Q Q Q Q Q CJ4: % For Sale 2% Cessna Citation CJ4 Q Used Aircraft Listings 1 Total Fleet 64 Percent of Fleet for Sale 1.6% Low Ask Price $8,500,000 Average Ask Price $8,500,000 Average Airframe Total Time 15 Average Days on Market 109 OEM Deliveries (2011) 45 Pre-Owned Transactions (2011) 0 Sources: AMSTAT, JetNet, Aircraft Blue Book, UBS Market Research, JPMorgan, jetaviva Research Team.

11 Q Light Jet Market Overview Liquidity Index JetAVIVA created the Liquidity Index as an informative tool. This measure of relative liquidity for a particular aircraft provides one indication of a markets direction. In other words, looking at recent sales in comparison to the number of sellers is an indicator of supply, demand and subsequently pricing. This is typically correlated to how quickly and how much an aircraft can sell for, independent of all other factors. By no means is this the only factor one should consider when transacting in any market. If you would like to discuss this data or any data in this report please contact the jetaviva sales and research team at Percent of Fleet For Sale Q Percent of Fleet Sold Q % 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0% 5.5% 4.9% 4.3% 3.7% 3.1% 2.4% 1.8% 1.2% 0.6% 0% Phenom 100 CJ Mustang CJ1 CJ1+ CJ2 CJ2+ CJ3 Phenom 100 CJ Mustang CJ1 CJ1+ CJ2 CJ2+ CJ3 0.3 Liquidity Index Q HIGH = GOOD LIQUIDITY Phenom 100 CJ Mustang CJ1 CJ1+ CJ2 CJ2+ CJ3 Note: The liquidity index does not include any data on the Phenom 300 due to a lack of pre-owned transation history.

12 Q Citation Mustang & CJ Series Market Report Sales Delivery Training Photos courtesy of Jessica Ambats