The market for airfreight continues to be strong despite some recent data which shows a distinct slowdown.
The slowdown for March 2018 compared to the previous March was only 1.7 percent according to IATA. This meant that the 4.4 percent rise in capacity saw a lower load factor. Even so operators are moving forward with plans to increase capacity with Lufthansa ordering more two more B777Fs. Atlas Air also reported a good first quarter. However, the trade dispute between President Trump and China has the potential to cause problems if it includes the type of products that are carried by air.
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 – May 2018|
|A300F4-200||E||1976-79||1.0-1.4||The values of the A300F4-200 have continued to experience of precipitous fall. The prospect of an onward placement is likely to be low and any retention by existing operators will be the preferred option. Actually selling the aircraft in its entirety 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. For a freighter, utilization is not high being just a few hours per day.|
|A300-600RF||D-||1994-981999-06||7.0-10.09.0-20.0||The values of the -600RF have managed to remain stable over the last quarter because of the improvement in the airfreight market. The aircraft may no longer be viewed as a frontline aircraft like the B767-300F but the regional capability and volume are still held in sufficiently high regard. In 2006 a new -600RF had a new price of more than $65 million but since then more than two thirds of its value has been lost. Most of the decline has been absorbed so there was expected to be a measure of stability.|
|A310-300F||D-||1985-901991-97||2.7-3.03.0-4.7||There may be limited appetite for the -300F but for those seeking an aircraft for longer thinner routes with a volume focused aircraft then the -300F is an option. The Aircraft Rating has fallen slightly but this is to be expected as in the next seven years the type will increasingly be removed from service. Values have diminished to some extent.|
|A330-200F||C++||2009-18||38.0-75.0||The Aircraft Rating has now fallen to C++ reflecting the lack of orders and the move to newer equipment. The type has failed to secure a sizeable orderbook which is perhaps understandable in what has been the worst of market conditions for airfreight. With Etihad withdrawing five from its operations there is cause for further concern. The focus will be on the youngest aircraft as these will be the most vulnerable as used A330s are converted and as the product line transitions to the A330neo. 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||While the B727 freighter is in use with a range of operators the type has long since lost its appeal in terms of asset based financing. The aircraft can largely be bought for loose change though running costs can be more onerous. There is a temptation to suggest that the type is only suitable for parting out but that ignores the suitability of the type for a variety of operations from a wide range of operators. Finding a buyer willing to pay $500,000 seems doubtful.|
|B737-300SF||D+||1986-91||2.9-4.6||The market for the -300SF continues to be reasonable. Despite the age of the fleet – far greater than 20 years of age – the limited utilization will ensure continued use for more years yet. The -400SF is the more attractive proposition and values are holding steady as demand is strong and more conversions are taking place. There is little opportunity for an improvement given the weight of the competition in the coming years. The development of the A320/B737-800 freighter conversion programs are notable events.|
|B747-200SF||E||1974-78||1.0-1.0||Even fifteen years ago conversion was very much a viable option for the aircraft but the last ten years has seen very little interest. Values are largely irrelevant today.|
|B747-400F||C||1993-002001-09||10.0-18.016.0-42.0||The freighters are one of the few categories of aircraft for which values can actually rise and rise relatively quickly. The values of the -400F – the production freighter – have improved as the airfreight market has enjoyed continued growth. The U.S. trade issues with China are a concern but the consequence of this will likely see a switch to the European and South American markets which will put any airfreight growth in the U.S. last rather than first. The values of cargo aircraft are noted for their volatility such is the inability of the manufacturers and conversion facilities to meet any improvement in cargo traffic in the short term. Most operators of the -400F will make use of the nose loading door.|
|B747-400BCF||C+||1989-002001-03||9.0-19.016.0-32.0||While airfreight traffic has increased and a number of acquisitions have been made, values are now only stable largely because there are still some in storage. The converted freighters may not have the nose loading door of the production freighters but the combination of volume and capital cost make for an efficient transport allowing for values to remain stable.|
|B747-8F||B–||2010-18||90.0-160.0||Production of the B747-8F is plodding along. Values are having some breathing space having fallen but the improvement in the airfreight industry keeps the type relevant. New deliveries are still being made though orders remain firmly in the doldrums. Boeing may be able to sell a few more albeit at a heavily discounted price. The conversion of B777-300ERs in the coming years will have an impact.|
|B757PF||C-||1987-93||5.9-9.1||The values of the B757 are remaining stable even as the type is facing new pressures due to age and new types. Conversions are still taking place. The B757 is used less intensively which will ensure longevity. The arrival of the B737-800BCF will be a factor in determining how residuals will now fare. Finding suitable feedstock is an issue in view of age restrictions and a production profile that was at its peak some 20 years ago.|
|B767-300F||C||1995-022003-13||11.0-20.016.0-42.0||Boeing has been pushing the sale of new aircraft and this is having an effect on the market in terms of new aircraft pricing. for the used market there has been little change. The type though likely to face significant competition going forward but at least at present the type represents a cost effective solution. Low utilization will ensure that the type remains very much part of the mainstream freighter fleet for many more years.|
|B777F||B-||2008-18||75.0-145.0||The B777F is still being ordered and delivered and makes a compelling case for a number of operators. The need to ensure strong bi-directional traffic makes it suited to a limited number of operators. 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. Boeing has not announced a B777X freighter but this may be in the offing given the need to stimulate orders in the early years of the next decade.|
|BAe146QT||C–||1984-89||0.6-1.0||The quietness of the BAe146 is a positive but the age of the type remains an issue. The B737 Classic is inevitably taking some of the market away from the type.|
|MD11SF||D+||1991-931994-00||2.5-3.53.0-5.0||Values have fallen to new levels and scrapping is likely to be the only option. The last example rolled off the production line less than 20 years ago but the demand for the freighter is limited as there are too many other options now on offer.|
|Commentary reflects change from the last update to Freighter Values of February 2018|