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Freighter Values Fail to Advance

August 5, 2019

The weaker airfreight market has inevitably caused some weakness in the values of freighter aircraft although there remains considerable appetite for some types.

Whereas most of 2018 saw a significant improvement in the market this has not been replicated in 2019. The appetite for additional capacity is not what it once was and some cargo aircraft remain in storage. The B767-300F is however seen a particularly desirable not least because of the intention of Amazon to expand operations with the type. The feedstock for B767 freighter conversion is also limited.

The Aircraft Rating www.aircraftvalues.com) reflects the considered suitability for asset based financing over a seven year period. Ratings range from A++ to E—and are provided by The Aircraft Value Analysis Co. Ltd. (AVAC) who were the first to launch ratings for aircraft in Aircraft Value News more than a decade ago. The Aircraft Value Analysis Co. Ltd. (AVAC)s Aircraft Ratings have since become the benchmark for the industry, investors and the appraisal community. Those aircraft scoring an A or B rating indicate suitability for asset based financing over the next seven years. A rating of C or D indicates that the owner needs to be aware that the risks are much greater even if the rewards can also be higher. A rating of E indicates little suitability for asset based financing and that attraction lies with the existing operator.

Freighter Current Values US$ millions – August 2019
Aircraft Rt Age Value Trend Analysis
A300F4-200 E 1976-79 0.9-1.3 Placing a value on the A300F4-200 at least in terms suitability for asset based financing, is difficult as the type is operated in limited numbers. The market for the A300F4 mainly lies in earlier decades when the type was more sought after. The A300F4 still has some relevance as its capacity makes it more suited to ad hoc cargo operations where volume and low capital cost in the midst of low utilization make it more attractive. Selling the aircraft in its entirety for cash is perhaps a forlorn hope as a power by the hour (Rolls-Royce coined this term) is much more likely. ACMI – aircraft, crew, maintenance and insurance – rates are also more common. Values have fallen slightly but are at scrap levels.
1980-84 1.1-1.3
A300-600RF D- 1994-981999-06 7.0-10.09.0-20.0 In 2006 a new -600RF had a new price of more than $65 million but the fall has been significant since then. There has been reasonable stability in the last few years but only because of the previous falls. The type has important volume capability that has seen greater suitability as a replacement for the A300F4.
A310-300F D- 1985-901991-97 2.5-2.92.9-4.3 The values of the -300F has have fallen slightly as the type is not perceived to be particularly attractive even if it can carry a reasonable load over a long distance. While there are few alternatives – ie the B767-200F – this does not mean that values should be strong.
A330-200F C++ 2009-18 35.0-70.0 The values of the -200F are falling once more as the backlog is non existent. The aircraft continues to provide good service even if the operator base is transitioning already. The mid size market is lacking capacity to some extent although the conversion of the -200 and -300 will soon change this. The A330-200F is a good aircraft but it arrived at the wrong time – just when the airfreight market fell into the abyss. Values have consistently fallen since then then. The depth and breadth of the operator base is severely limited and remarketing is an issue. In the current market, values should be nearly $10 million higher but values of even new examples continue to decline.
B727-200FA E– 1972-78 0.2-0.2 There remain a surprising number of B727 freighters still in service not least because three engines and cheap maintenance make for continued utility in regions of the world that do not need more expensive or more modern assets. The aircraft will remain a part of the shadow freighter fleet for some years yet.
1979-83 0.2-0.2
B727-200FHA E- 1972-78 0.2-0.2
1979-83 0.2-0.4
B737-300SF D+ 1986-91 2.9-4.6 Disparate distribution warehouses cannot always be serviced by road. The development of the A320/B737-800 freighter conversion programs are a notable event and will impact the type in the medium term but not for the time being. Despite the age of the fleet – far greater than 20 years of age – the limited utilization will ensure continued use for more years yet. There is however, little opportunity for an improvement given the weight of the competition in the coming years. The -300SF may not be as popular as the -400F but it remains a core part of the narrowbody freighter fleet – at least for the moment. The values of the -400SF are also holding steady and will continue to do so for the short term at least. There exists considerable demand on a regional and domestic basis not least because of the increase in internet shopping.
B737-400SF C- 1992-971988-931994-99 4.6-7.85.0-7.87.4-10.5
B747-200SF E 1974-78 0.8-0.9 Values are largely irrelevant today and asset based financing has long since passed.
1979-84 0.9-1.1
B747-400F C 1993-002001-09 10.0-18.016.0-38.0 The nose loading door is still seen as most desirable as this enables very quick loading and unloading as well as greater flexibility in terms of the type of payloads carried. The freighters are one of the few categories of aircraft for which values can actually rise and rise relatively quickly. For a short time recently there seemed to be a possibility that values of the -400F would see a significant improvement due to the improvement in airfreight traffic. But with the reduction in traffic growth, there is less enthusiasm for such a rise. Instead values are remaining stable with values at the upper end of the indicated ranges perhaps becoming more difficult to achieve.
B747-400BCF C- 1989-002001-03 9.0-19.016.0-31.0 The converted freighters may not have nose loading door but are still very much a part of the freighter fleet. There is naturally a preference for the NCD of the -400F but the converted freighter still offers sufficient capacity. There is also a lower capital cost to consider when assessing the -BCF.
B747-8F B– 2010-19 85.0-155.0 With a few new -8Fs continue to be sold values remain stable. There will however, be considerable pricing flexibility when negotiations start as Boeing is desperate to maintain production. The capital cost of the -8F makes it necessary for the aircraft to be used intensively and there are relatively few routes that can support such operations. The issues over trade may more focus on goods transported by surface than airfreight. The conversion of B777-300ERs in the coming years will have an impact.
B757PF C- 1987-93 5.8-9.0 The values of the B757PF and SF are remaining unchanged yet again although there can be variation in the pricing depending on the condition. Maintenance may be reduced with lesser utilization but corrosion still needs to be addressed particularly if the aircraft is parked in a high humidity and salt laden environment.
B757SF C- 1994-981982-871988-93 11.5-12.33.0-7.05.5-10.0
B767-300F C 1995-022003-13 11.0-19.015.0-38.0 The expansion of internet services is translating into demand for the type. Most of course are operated by the small package operators in the U.S. which perhaps provides a measure of concern when remarketing occurs. The type is likely to face significant competition going forward. The market for the -300F remains strong and finding suitable feedstock for conversion can be difficult. The type is being used by multiple operators although perhaps not as intensively as for aircraft. The capital cost of the aircraft is low enough to allow for such lesser utilization.
B777F B- 2008-19 73.0-140.0 The used market is still in its infancy but it is expected that values might not be as strong as some suggest because of discounting on new aircraft and the conversion of alternatives. The aircraft needs intensive operations to make it economic although the fuel saving alone will be a considerable inducement to replace four engined aircraft. Going forward the aircraft will face the pressure of conversions of -300ERs which cannot be ignored. Boeing has not announced a B777X freighter but this may be in the offing given the need to stimulate orders in the middle of the next decade
BAe146QT C– 1984-89 0.6-0.9 A good aircraft in the right market. The aircraft remain a viable part of the worlds freighter fleet particularly when moving freighter and airmail over shorter sectors on a regional basis. The B737 Classic is inevitably taking some of the market away from the type.
MD11SF E– 1991-931994-00 1.0-1.51.0-2.5 Placing a value on the aircraft is difficult at the type slips out of the mainline freighter fleet and into the history books. The type is facing considerable pressures and a D check or an engine overhaul will easily result in its demise. A good candidate for a hotel.
Commentary reflects change from the last update to Freighter Values of April 2019

 

 

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