2017 FINANCIAL ANALYSIS - Blackhawk

1 2017 FINANCIAL ANALYSISKING AIR b200 SERIES WITH THE Blackhawk XP52 ENGINE PERFORMANCE UPGRADEPROVIDED BY CONKLIN & DE DECKERC onklin & de Decker62B Cranberry HighwayOrleans, MA 02653 Phone (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 17601 Karl May Drive | Waco, TX 76708 Phone: | 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 value1 Beechcraft Super King Air b200 /B200C performance, page 5-852 Engineering data for Maximum Cruise, 1800 RPM, ISA : The costs and assumptions used are typical estimates based on known costs and market conditions.

2 These calculations do not represent any FINANCIAL guarantee of 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 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.

3 The trip was calculated based upon the standard operating performance of the King Air 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 NM TripStock King Air b200 Blackhawk King Air b200 XP52 EnginePT6A-42PT6A-52 AltitudeFL 280FL 280 TemperatureISAISAP ower SettingMaxMaxRPM1800 RPM1800 RPMC ruise Speed at Altitude (KTAS)284311 Fuel Flow at Altitude (GPH) Time2 hr 54 min2 hr 43 minFor 100,000 NM Utilization per YearFlight Hours per Year362339 Gallons Fuel Used per Year33,28037,336 Cost per NM$ $ the Blackhawk XP52 ENGINE+ UPGRADE, the King Air b200 cruises 27 knots faster compared to a standard King Air the Blackhawk XP52, there is a 31% increase in available horsepower at cruise cost per nautical mile with the Blackhawk XP52 is 45 cents less when compared to a stock King Air ANALYSISBLACKHAWK XP52 ENGINE+ UPGRADE FOR THE KING AIR b200 Report based on research prepared by Conklin & de Decker Aviation Information | Page 27601 Karl May Drive | Waco.

4 TX 76708 Phone: | COSTSThe PT6A-52 engines offer more power while decreasing the nominal Hot Section Inspection and Overhaul 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 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.

5 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. Airframe Guaranteed Mx Plan. Avionics Guaranteed Mx Plan. Component Overhaul (All). This covers set-asides for the estimated cost ofmajor component overhauls.

6 This includes the propellers. Life Limited Components (All). This covers set-asides for the estimated cost ofmajor life limited SET-ASIDEPT6A-42 CostIntervalMid-life$50,6001800 hrsOverhaul$350,0003600 hrsTotal for two engines$810,200$ per hour set-asideBlackhawk XP52 CostIntervalMid-life$41,8001800 hrs1st Overhaul$300,0003600 hrsTotal for two engines$683,600$ per hour set-asideFINANCIAL ANALYSISBLACKHAWK XP52 ENGINE+ UPGRADE FOR THE KING AIR b200 Report based on research prepared by Conklin & de Decker Aviation Information | Page 37601 Karl May Drive | Waco, TX 76708 Phone: | the Blackhawk XP61 on a King Air b200 , expected annual operating cost savings is $45, REDUCED OPERATING COSTSS tock King Air b200 NM Flown/Year100,000 hrsVariable cost/hr no fuel (Maintenance reserves, misc.)

7 Costs)$ cost/gallon$ cost/hr (92 GPH)$ variable cost/hr$1, variable cost/year$461, Air b200 Blackhawk XP52NM Flown/Year100,000 hrsSpeed Advantage at KTASV ariable cost/hr no fuel (Maintenance reserves, misc. costs)$ cost/gallon$ cost/hr (110 GPH)$ variable cost/hr$1, variable cost/year$416, Operating Cost SavingsStock vs. Blackhawk XP52$45, 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, done prior to overhaul, Blackhawk offers a $60 per engine hour credit for the time remaining until overhaul.

8 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 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 FOR ADDED RESALE VALUEThe Blackhawk XP52 has established a record of increased value after the conversion.

9 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 Vref for WindowsThe 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 $ $ ANALYSISBLACKHAWK XP52 ENGINE+ UPGRADE FOR THE KING AIR b200 Report based on research prepared by Conklin & de Decker Aviation Information | Page 47601 Karl May Drive | Waco, TX 76708 Phone: | what about over a period of time?

10 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 ( 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, It is not reasonable to assume that an operator will perform the conversion just to sell their King Air immediately afterwards.