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Aircraft Market Assessment

August 20, 2018

The A340-600

Market Presence. The current market for the A340-600 and indeed, the A340-500, has experienced a precipitous fall in recent months, a trend that is expected to continue. The disposal of aircraft by existing operators continues but in a market that fails to generate any willing buyers. This has resulted in a significant fall in values in a matter of months as ever lower offer prices are made. The sale of multiple units at discounted prices has also contributed to the lower values. To some extent the market values for the A340-600 are now being dictated by latest offer prices rather than actual sales data. The premium applied due to full life maintenance status is also being eroded particularly with respect to the engine Life Limited Parts (LLPs). While this has traditionally been an arithmetical exercise, it has become increasingly apparent that the extensive “green” time remaining on the engines cannot be fully utilized in view of the restricted time that the A340-600 is expected to be in service. Moreover, the market for individual LLPs, should the engine be parted out, is limited as existing operators such as Lufthansa are cannibalizing out of service aircraft to maintain those that remain in service. Rolls-Royce also has no interest in buying spare LLPs are list prices.

Market Outlook. The market outlook for the A340-600, as evidenced by recent downward trends, is far from promising despite the best efforts of the manufacturers. Values can be expected to continue to fall even if they are already at virtually scrap levels. With a higher price of fuel and greater availability of used B777-300ERs are increasingly lower prices, there will be little appetite for the type. The “Museum Effect” is now pertinent for the A340-600.

 

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