FOR CURRENT &
FUTURE AIRCRAFT VALUES

Leasing Still Attracting New Players As Rates Mostly Remain Stable

March 6, 2017

Competition Intensifying Which Could Impact Rentals

The profits being secured by the lessors continues to be between 15-20 percent thus underlining the continued relative attraction of aircraft leasing compared other asset classes such as shipping and real estate.

The leasing of aircraft continues to increase despite as yet proven speculation that low interest rates may increase the amount of aircraft being bought directly by airlines. As a proportion of the fleet, the number of leased aircraft continues to increase. The lessors regularly trade blocks of aircraft between one another as a means of generating revenue; to meet objectives of retaining an average aircraft age; to increase the portfolio; to avoid waiting for new aircraft deliveries. Typically, lessors re-lease 10 percent of their portfolio each year. The lessors are involved in buying aircraft from lessees and other lessors and therefore have considerable knowledge, perhaps more so than the appraisal community.

The returns being reported by the lessors are based on relatively stable lease rentals though some older widebody rentals are facing weakness as they transition to new lessees. However, a move to a second tier lessee can see a rise in rental due to a shorter term and/or weaker credit. Given the strength of most of the market, renegotiation of lease rentals is a relatively rare event with the preference being to take back the aircraft and place with another lessee. The effect of Cape Town on repossession has been limited thus far.

Aircastle, in presenting its 2016 results, noted that investor demand for aircraft remains strong such that some 30 of its aircraft were sold during the year resulting in a net gain of $39.1 million with $24.2 million of the gain being secured in the final quarter. The portfolio of Aircastle was seen as improving by the sale or three freighters and seven widebodies. Moreover, three A330s that are due to come off lease in 2017 have been placed though another A330 has yet to be placed as has one freighter. As a result the fleet of Aircastle had 99 percent utilization for the year. The lease rental yield was 12.4 percent for the final quarter of 2016.

Lease Encumbered Current Market Values

As the number of aircraft traded on a standalone basis diminishes, aircraft values are increasingly needing to assess the value of the attached lease – the Lease Encumbered Current Market Value (LECMV) or Securitized Value (SV).

The number and more importantly, the proportion of aircraft being leased has been increasing over the last 20 years has experienced a continual upward trend such that they will soon represent the majority, particularly in the narrowbody segment of the market. In contrast to other asset classes such as Real Estate, there is no transparency of transaction data. This is largely because relatively few of the approximate 24,000 aircraft in service are traded on a standalone basis. Instead, the operating lease has come much more to the fore as the method of trading – and investment – which in turn has created a need for an additional method of asset valuation. The value of the attached lease is increasingly being calculated as an addition to the current market value.

With the rise of the lease there has been a growing imperative to include the value of the attached lease. Most appraisers use the definitions defined by ISTAT. “Securitized Value or Lease-Encumbered Value is the Appraiser’s opinion of the value of an aircraft, under lease, given a specified lease payment stream (rents and term), and estimated future residual value at lease termination, and an appropriate discount rate. Comment: The Securitized Value or Lease-Encumbered Value may be more or less than the Appraiser’s opinion of Current Market Value.” (ISTAT). To an extent, valuing the attached lease by means of the above ISTAT definition is a simple arithmetic exercise and does not need the input of the appraiser given that all appraisers using such definition would see the same premium – or deduction – to the market value. Apart from the probable base value to which the “value” of the lease stream is added, the ISTAT definition of the value of the attached lease is a statement of fact rather than an expression of opinion. However, some appraisers may use alternative market relevant methods to assess the LECMV such as taking the difference between the actual lease and the market lease over the remaining term of the lease and adding to the current market value. Also other appraisers may take into account the financial standing of the lessee as well as whether the lease is the result of a sale and leaseback.

While there is a need to assess the “value” of the attached lease there also exists a concern that a simple arithmetic solution may be more relevant to financial engineering rather than an assessment of market attraction particularly if base values are used. Seeking to add a premium – which is likely to be purpose of such a calculation – to the standalone asset value also has more relevance to some parties than others.

The regulatory authorities overseeing the financial standing of the banks have made considerable demands for asset values to be more realistic. The exclusive application of a premium to the asset value as a means of expressing the value could negate this pursuit of prudence should the aircraft need to then be sold without the attached lease. The resulting disposal could then result in a significantly lower figure than the LECMV, particularly if used without reference to standalone market values. In the event a number of deals involving the sole use of a LECMV resulted in distressed sales, the losses could lead to contagion and aversion to future aircraft financing. The use of only LECMVs as the book value for investors and lessors could also lead to difficulties both in terms of the market and regulators.

The difficulty of applying the ISTAT arithmetic calculation is further compounded by the use of lease rentals resulting from a sale and leaseback transaction (SLB) which would distort the lease element. Such SLBs usually see a premium already being applied due to a higher purchase price of the aircraft. In this instance, the lease calculation could be significantly above that of a standard operating lease even though the market value used is the same in either case. The SLB lease premium applied in this method seems to takes no account of the premium paid for the aircraft, again perhaps reflecting financial engineering imperatives than the assessment of risk.

The use of the LECMV is indeed relevant though perhaps complementary to asset values. The method used to calculate the value of the attached lease may need to be indicated (this is not an Intellectual Property issue given the simplicity of the calculation) as well as being provided as a separate amount such that users can clearly see the asset risk and the financial engineering element.

The table is published on an annual basis and complements the quarterly updates to specific aircraft categories. The table encompasses both current and future lease rentals. The methodology involved in calculating lease rentals differs from that of values. Lease rentals display greater volatility. Rentals are calculated individually and are not directly linked to values.

The listing of current and future lease rates is based on the year of build. However, unlike values, the relevance of the year of build is less significant. The essential assumption is that the aircraft are being leased as a single unit and between a willing lessor and willing lessee on a dry operating lease basis. Maintenance reserves are assumed to be payable in addition to the quoted rates.

The assumed rentals period ranges between seven years for modern narrowbodies to nine years for the larger widebodies. Aircraft out of production will likely involve shorter terms. The assumed rental period will change depending on the then prevailing market conditions. Weak market conditions will usually result in shorter terms while stronger conditions will likely result in lessors seeking to lock lessees at higher rentals for the longer term.

The high and low figures for October 2016 lease rentals represent adjustments for length of lease, the financial standing of the lessee and the return conditions. A longer lease to a stronger credit will likely result in lower rentals. These are not absolutes and sale and leaseback transactions may fall outside the figures indicated. Some transactions involving renegotiations on less popular aircraft may be considered exceptional and can fall outside the rental ranges. As aircraft age there may be less reliance on dry operating leases and greater emphasis on wet leasing or power by the hour agreements.

The rentals quoted below were prepared in late October 2016 in the context of a still stable but increasingly vulnerable market. The lease rentals listed below are Market Rates not theoretical Base Rentals. In addition to the commentary and lease rentals an indication of the Mid Case Lease Rate Factor (LRF), which expresses the current monthly rental as a percentage of the value, is also provided together with the relevant age of aircraft.

The quoted future rental, expressed in thousands of dollars per month are Market not Base Rates and attempt to predict cyclic trends when supply will exceed demand and vice versa. Rentals may therefore experience a rise as well as a fall in any projected year. The future rentals – three and seven years from 2016 – are expressed in thousands of current dollars having been adjusted for inflation and are based on only the Mid Case projection rentals. The figures are for guidance only. M/R = Maintenance reserves are excluded and return conditions assume half-life.

The data has been extracted from the October 31st 2017 semi-annual Aircraft Value Reference 2016-2036, priced $1,475.00, by courtesy of The Aircraft Value Analysis Company.

Telephone: +44 (0) 203 468 5594, Fax: +44 (0) 203 468 5596, E-mail: pleighton@aircraftvalues.net, Internet http://www.aircraftvalues.net; www.aircraftvalues.com

YEAR October 2016$’000 per month excl. M/R FUTURE LEASE RATE
MID HIGH LOW 2019 2023
A300F4-200 (Converted). LRF 1980 = 2.8A good if faded freighter. The lease rates have more turned to power by the hour (a form of leasing created by Rolls-Royce) where the operator pays for each hour of operation over and above a set minimum number of hours. For a freighter utilization is not high.
1975 45 65 32 - -
1977 49 71 35 - -
1979 53 77 38 - -
1981 57 82 41 - -
1983 60 88 44 - -
A300-600. LRF 1990 = 4.5The -600 has long since past its sell by date which is no surprise. Rates are perhaps at levels that make then suited to the needs of operators on the fringes who need aircraft for a limited number of hours. The aircraft was at one time a prime candidate for freighter conversion but market conditions meant that the -600R became more favored. As a passenger aircraft, the -600 had as much charisma as the B767-300.
1985 62 95 42 - -
1987 67 102 45 - -
1989 70 108 47 - -
1991 73 112 49 27 -
A300-600R. LRF 1992 = 1.9Newer types such as the A330 have been more favored for more than a decade leaving the lease rentals of the -600R languishing for too long. The type though does have good capacity for regional routes and with such low rentals a profit can be made.
1987 48 68 35 - -
1989 58 81 42 - -
1991 65 91 47 27 -
1993 71 100 51 41 -
1995 76 107 55 45 19
1997 81 113 58 49 29
A300-600RF. LRF 2000 = 1.0Boeing has managed to keep the B767-300ERF production line going while that of the -600F ended many years ago in favor of the A330-200F which is itself only ticking over. The -600F has failed to capture the market and lease rentals have tumbled as indeed have most other freighters and the fall continues.
1994 127 178 99 114 84
1996 146 206 114 130 101
1998 160 226 125 147 118
2000 172 243 134 164 135
2002 185 261 144 182 153
2004 199 281 156 201 173
2006 212 299 165 220 192
A310-300LGW. 153t. CF6. LRF 1990 = 3.1While there are very few in service, the type still has some utility. The aircraft is however, facing pressure as a result of age and replacements. The lease rentals are at levels that make good sense for lessees but less so for lessors such as they are. A small widebody generates considerable drag due to its wider fuselage but perhaps if a wider single aisle that allows passengers to pass one another can be designed that may provide a solution.
1985 28 39 19 - -
1987 42 58 29 - -
1989 53 74 37 - -
1991 62 87 44 23 -
1993 70 98 49 38 -
1995 77 107 54 48 15
1997 82 115 58 54 25
A310-300SF. 157t CF6. LRF 1990 = 1.9The freighter sector remains very fragile even with slightly improved market conditions. The rates for the freighter version do not generate the type of premium that would be expected for a freighter. The aircraft is finding the market tough when competing against the likes of the B757.
1985 89 123 68 - -
1987 91 125 69 - -
1989 92 126 70 - -
1991 93 128 70 58 -
1993 94 129 71 69 -
1995 95 131 72 71 41
1997 97 133 73 74 50
A318. LRF 2004 = 1.1The A318 is not a niche aircraft but rather a marginalized aircraft. Rates are low and are expected to remain under pressure but lessors may be able to extend leases at reasonable rates. In common with the B737-600 the aircraft could not capitalize on the success of the B737-200ADV nor the B737-500. The aircraft is too small for the majors and too large for the regional operators. Lease rates may hold up given its scarcity.
2003 76 91 57 67 45
2005 95 113 71 82 59
2007 110 131 83 98 74
2009 124 148 93 114 88
2011 138 165 104 131 103
A319HGW. LRF 2001 = 1.0At one time the lease rentals for the A319 seemed to be heading ever lower but there is a measure of attraction for some smaller operators. Bangkok Airways for example operates some 12 A319s from lessors such as AerCap, BBAM and CIT. The reasonable rates allow the smaller capacity aircraft to be filled with good yielding traffic on less mainstream routes as such as between Bangkok and Da Nang, one of the fastest growing destinations in IndoChina.
1996 78 100 60 64 37
1998 93 119 72 74 51
2000 107 137 83 86 61
2002 121 155 94 100 72
2004 136 174 105 113 84
2006 151 193 117 128 96
2008e 164 196 131 151 114
2010e 197 237 158 175 136
2012e 230 276 184 206 163
2014e 262 315 210 234 186
2016e 295 354 236 259 203
A320-200HGW. 77 tonne CFM56. LRF 1998 = 1.3The depth and breadth of the operator base of the A320 ensures that there is always demand for quality A320s. The very large number of A320s that are leased however, means that there can be competition, particularly from newer market entrants placing greater emphasis on portfolio utilization than rentals. The A320ceo is now defined by three categories CATI, CATII, CATIII with each representing a period of build. The oldest A320s are fortunate to see rentals of $50,000 per month. The high gross weight examples with sharklets and latest engines are still the most favored.
1989 61 80 47 25 -
1991 89 116 69 49 -
1993 111 144 85 83 30
1995 129 168 100 100 54
1997 148 192 114 117 85
1999 165 215 127 133 99
2001 180 234 139 148 112
2003 192 249 148 161 125
2005 201 261 155 173 136
2007e 211 274 165 189 149
2009e 240 312 187 206 168
2011e 265 345 207 233 192
2013e 290 377 226 257 215
2015e 326 423 254 284 235
A320neo. LRF 2015 = 0.80The rates for the A320neo are holding firm despite initial suggestions that the premium was less than $10,000 per month compared to the more realistic $30,000. The rental differential is therefore notable. As all leases will have been negotiated months if not years ago, to suggest that that rentals for the A320neo have fallen fails to take account of no leasing availability until next year at least – ALC has placed all its A320 for 2017.
2015 357 464 278 304 264
A321-100LGW. LRF 1999 = 1.5A good aircraft – for the few. The rentals of the -100 remain low because of the lack of interest in the aircraft. There is little attraction to the -100 and lessors will be keen to extend leases with existing lessees as this will provide the least stress!
1994 58 72 48 40 13
1996 71 88 59 49 25
1998 83 103 69 59 37
2000 95 118 79 69 45
2002 106 132 88 79 53
2004 119 147 98 89 61
A321-200LGW. LRF 2001 = 1.1For once it is an Airbus product that has forced Boeing to respond as the US manufacturer has to consider a larger B737 capable of undertaking longer sectors. There remains some question mark over the B737-10 regarding range and the landing gear extension. The early examples may be facing downward pressures but the later higher gross weight aircraft are much more popular. The longer range of the latest sharklet equipped aircraft is a bonus. Rates are good but operators can expect to generate revenue without having to resort to adding extra aircraft.
1996 108 128 84 84 59
1998 133 159 104 103 76
2000 156 185 121 124 94
2002 176 209 137 143 111
2004 196 234 153 162 129
2006 218 259 170 183 147
2008e 245 289 208 237 194
2010e 288 340 245 269 226
2012e 329 388 280 312 265
2014e 369 435 313 349 299
2016e 409 483 348 381 322
A321neo. LRF 2016 = 0.8A great aircraft that will represent a significant portion of deliveries in the coming years, somethng that cannot be said of the B737-10 when considering the B737MAX. Yet, there has to be a sense of realism when considering the relative premium over the A320ceo. The different doors can cause some confusion at present as can SpaceFlex versus CabinFlex.
2016 455 537 387 442 379
A330-200. LRF 2001 = 1.1The rates of early -200s are continuing to face downward pressure. There will be some difficulty in securing rates of more than $800,000 for a new aircraft except as a sale and leaseback. Lessors will be mindful of the fall in values and therefore the need to generate profit via rentals. The A330-200 is leased in relatively large numbers and lessors may therefore find remarketing more difficult. The newer 242 tonne version adds to the range – and attraction.
1998 189 233 155 151 109
2000 226 278 185 178 132
2002 261 321 214 213 160
2004e 370 425 322 315 243
2006e 445 512 387 387 303
2008e 521 599 453 461 366
2010e 594 683 517 537 431
2012e 663 762 577 612 497
2014e 729 838 634 670 551
2016e 791 909 688 716 587
A330-300HGW. LRF 2000 = 1.3The MLA (Mid Life Aircraft) are still facing weakness as the type ages and new models act as displacement rather than growth capacity. For new aircraft rentals of more than $900,000 now seem out of sync with the market. The North Atlantic is seeing problems in terms of traffic and yields and this is a sector in which the A330 excels. The rentals for the -300 are therefore falling but placements are still taking place with a minority not being in a position to be leased or leased at lower rates. The weight is an important consideration.
1994 159 189 130 126 63
1996 186 222 153 148 103
1998 219 260 179 178 126
2000 248 295 203 205 148
2002 274 326 224 230 170
2004e 451 537 383 367 282
2006e 531 632 451 443 344
2008e 604 719 514 515 405
2010e 672 799 571 586 465
2012e 733 872 623 652 524
2014e 788 937 669 700 567
2016e 836 995 711 732 588
A340-200. LRF 1996 = 1.9The aircraft continues to fall even with the lower price of fuel. Lessors include Airbus themselves as well as GMT Holdings. The type may still be viewed as a stop gap measure until the arrival of new types. ETOPs is not an issue for four engined aircraft.
1993 102 124 85 76 32
1995 114 139 96 85 53
1997 126 154 106 92 59
A340-300ER 275t. LRF 2002 = 1.5The leasing market continues to experience problems and while the placement of the aircraft remains possible, the ball is clearly in the court of the lessee. AerCap has a number on lease and GECAS is also a lessor. The aircraft has not benefitted from the lower price of fuel in the sense of higher lease rentals.
1996 161 202 132 122 74
1998 185 232 152 142 88
2000 212 265 174 166 105
2002 237 297 195 188 121
2004e 283 342 238 223 154
2006e 326 394 274 266 187
2008e 365 442 307 305 218
A340-500I. LRF 2004 = 1.5The aircraft is facing downward pressure again and rates should be high but the lack of appetite is all too apparent. The interest in non stop flights was strong but eventually the aircraft needed to be filled with mostly business passengers. Ultra long haul direct flights limits origin and destination points and constrains scheduling flexibility. Homes are being found but at much more attractive rentals. The flexible engine support programs on the Trent are playing their part.
2002 251 296 206 208 152
2004 349 412 286 298 224
2006 435 513 357 379 291
A340-600I. LRF 2004 = 1.4Again the market for the -600 is fragile, very fragile. Lease extensions will be more difficult to secure unless they are at lower rates. Capacity is being enhanced and this is enabling the operating economics to be improved.
2003 340 397 296 281 215
2005 424 496 369 358 280
A350-900. LRF 2014 = 0.8The -900 continues to be very much a popular widebody with in service experience with the dedicated Rolls engines being positive. Though passengers may still be identiy a B787 over a A350, the rates for the Airbus aircraft are stable. The lease rental however, have little opportunity to move higher except in the event interest rates rise.
2014 982 1081 909 965 766
2016 1121 1233 1037 1113 872
A380LGW. LRF 2007= 0.9The market for the A380 is deteriorating in the context of no new orders for some time. The market is facing uphill pressures in terms of placing aircraft at rentals that would be attractive to lessees. Lease extensions are likely to be much lower. Sale and leasebacks are still seeing higher rentals.
2007 968 1075 900 921 761
2009 1139 1265 1060 1065 903
2011 1304 1447 1213 1260 1084
2013 1467 1629 1365 1431 1250
2015 1635 1815 1520 1574 1385
A380HGW. LRF 2013=0.8The 575 tonne version offers operators greater versatility particularly in the context of filling the lower hold with cargo as more passengers use the overhead bins for luggage. Still the US operators resist using the aircraft despite high profile advertising and ever more non-US carrier flights.
2013 1563 1735 1453 1532 1348
2015 1739 1930 1617 1682 1491
B717-200. LRF 2001 = 1.5The rates are remaining stable as the market for the aircraft remains strong. Yet, the aircraft is now of advancing age and the arrival of newer types will continue to place pressure on the type. There is always a danger in assuming that the wider market matches the appetite of a single lessee.
1999 83 107 66 64 35
2001 89 116 71 70 40
2003 96 125 77 77 45
2005 103 134 82 84 50
B727-200HADV. LRF 1978 = 26.0The B727 is still in service with a myriad of operators of which a number are leased. The aircraft remains viable though the attraction remains with the operator rather than the wider market. Lower utilization will keep the aircraft flying for a few more years.
1972 8 14 5 - -
1974 11 20 8 - -
1976 15 27 10 - -
1978 18 33 13 - -
1980 22 39 15 - -
1982 25 46 18 - -
B727-200FHADV. LRF 1978 = 18.8The freighter still has considerable utility for many operators. There are just too many out there to ignore. The type will be good for leasing for many more years though power by the hour arrangements will be preferable for some.
1972 37 64 24 - -
1974 43 73 28 - -
1976 49 83 32 - -
1978 54 92 35 - -
1980 60 102 39 - -
1982 66 112 43 - -
B737-200HADV. LRF 1978 = 17.7The rates are at levels that make it difficult for lessors to consider going lower. Leases of any reasonable duration become more difficult to achieve.
1971 12 20 9 - -
1973 21 34 15 - -
1975 29 47 21 - -
1977 38 60 26 - -
1979 46 74 32 - -
1981 54 87 38 - -
1983 63 100 44 - -
1985 71 113 50 - -
B737-300HGW EFIS. LRF 1992 = 2.7The aircraft refuses to exit the market despite advancing age, inferior fuel efficiency, and increasing maintenance costs. The leasing of the aircraft can be very difficult for those in lesser condition. Rates are more or less holding steady – having fallen so far.
1985 48 58 40 - -
1987 50 61 42 - -
1989 52 63 43 17 -
1991 53 65 45 20 -
1993 56 68 47 30 4
1995 59 72 49 36 9
1997 61 75 52 39 15
1999 64 78 54 41 19
B737-300SF. LRF 1992 = 1.6The -300SF – and the -400SF particularly – are in demand and rates are strong and stable. The development of the -800SF will have consequences in the medium term but not at the moment.
1985 69 86 58 - -
1987 71 88 60 - -
1989 73 90 61 42 -
1991 74 92 62 63 -
1993 77 95 65 67 33
1995 80 100 68 71 50
1997 84 104 70 76 55
1999 86 107 72 80 59
B737-700HGW. LRF 2002 = 1.0In common with the A319, the B737-700 has its supporters in terms of the used market. Southwest continues to acquire used aircraft, the latest being an ex Aerolineas example from AerCap. AerCap will probably be expecting to scrap the aircraft after this latest lease. Approximately 50 percent of the fleet resides with Southwest and the operator is soaking up any that come onto the market.
1997 116 142 98 98 68
1999 127 156 108 109 78
2001 137 169 117 122 89
2003 148 183 126 135 99
2005 161 197 136 149 111
2007/3 169 208 143 159 117
2009/3 197 242 167 187 141
2011/3 224 275 190 222 168
2013/E 262 322 223 260 200
2015/E 295 363 251 293 224
B737-400HGW EFIS. LRF 1996 = 2.2Rates for the -400 have some stability given the cost of alternatives. In terms of rentals these are actually on a par to older A320s. The issue of age limits is a factor for some operators who may have been interested. The lower price of fuel has some relevance to those contemplating lease extensions.
1988 48 59 39 17 -
1990 54 66 44 22 -
1992 59 71 47 31 4
1994 63 77 51 44 11
1996 68 82 55 49 19
1998 73 89 59 54 29
B737-400SF. LRF 1996 = 2.1The -400SF continues to experience considerable demand and this has allowed rentals to remain stable and have even drifted higher.
1988 94 115 79 57 -
1990 97 119 81 83 -
1992 100 123 84 87 40
1994 103 127 87 92 63
1996 108 133 91 98 68
1998 113 139 95 104 74
B737-800HGW. LRF 2002 = 1.1The -800 continues to be held in in the highest regard though there is some suggestion that rates for the A320 and B737-800 are now more or less identical but this is perhaps based on very few data points. The information coming from the lessors may portray a different picture. Even the arrival of the MAX8 is not denting enthusiasm at least not yet. The lower escalation being applied to new deliveries will provide some greater lease rental flexibility in return for longer lease terms.
1998 167 205 142 133 101
2000 182 224 155 147 115
2002 197 242 167 164 131
2004 211 260 180 180 146
2006 228 280 194 198 163
2008/3 250 308 223 220 187
2010/3 270 332 240 252 216
2012/E 312 384 277 297 260
2014/E 346 426 308 337 293
2016/E 380 468 339 363 308
B737-500HGW EFIS. LRF 1996 = 1.7The market for the -500 is facing continued downward pressures. The regional jets in the form of the E190/E195 easily fill this segment.
1990 40 47 34 16 -
1992 43 51 36 22 1
1994 45 53 38 30 6
1996 47 55 39 33 12
1998 49 57 41 36 18
B737-600LGW. LRF 2002 = 1.1The -600 is failing to meet the demands of the market, just as it failed to do so in the past. The type straddles two market segments and fails to meet the needs of either. As both the -600 and A318 are not part of the respective MAX and neo families, this provides a clue to how much the market has transitioned to newer and larger types.
1998 55 64 46 42 26
2000 66 77 56 53 36
2002 76 89 64 62 44
2004 86 101 72 72 53
2006 96 113 81 83 63
B737-900. LRF 2004 = 0.9The -900 remains very much an isolated type liked by a few operators – but not that many. The -900 is not one of the Boeings success stories. Any lessor would do well to ensure that the aircraft remains with existing lessors for as long as possible to reduce the need for lengthy and costly remarketing.
2000 91 105 78 75 56
2002 103 119 88 86 66
2004 114 132 98 99 77
B737-900ER. LRF 2007= 0.9The type has some achieved modest success but as a proportion of the B737NG deliveries remains a much lesser fraction when compared to the A321. Rates are reasonable but as more come onto the market, there may be greater resistance to paying such rates.
2006 218 249 192 185 145
2008/3 236 269 208 205 171
2010/3 262 299 231 239 199
2012/E 309 352 272 275 239
2014/E 349 398 307 318 276
2016/E 389 443 342 347 296
B747-200B. JT9D LRF 1979 = 15.0The market for the -200B is nonexistent. Rates reflect the lack of attraction.
1971 8 13 5 - -
1973 22 36 16 - -
1975 30 51 22 - -
1977 35 59 25 - -
1979 38 64 28 - -
1981 41 70 30 - -
1983 43 72 31 - -
1985 43 71 31 - -
1987 46 68 29 - -
B747-200SF. JT9D/PW4000 LGW LRF 1984 = 5.1There were some that were converted in the last decade, few of which are likely to have paid their way since. The aircraft is still of some use as a backup and for its engines but that is about all.
1975 33 48 25 - -
1977 39 56 30 - -
1979 42 61 32 - -
1981 44 64 34 - -
1983 47 68 35 - -
1985 50 72 38 - -
1987 52 75 39 - -
1989 53 76 40 19 -
1991 53 76 40 26 -
B747-300. LRF 1987 = 7.4Finding one that is actually in revenue service is difficult.
1983 25 34 17 - -
1985 29 40 20 - -
1987 32 45 23 - -
1989 36 50 25 3 -
B747-400. CF6 LRF 1993 = 1.5The size and original cost of the aircraft should elicit higher rentals but the replacement with much more efficient twins and the A380 means that the market for the type is limited even with second tier carriers. Leasing the aircraft has never been popular anyway as the majority were acquired by the major airlines through a finance deal.
1989 104 126 82 43 -
1991 121 148 96 72 -
1993 136 165 107 96 45
1995 149 182 118 108 73
1997 163 199 129 121 97
1999 178 218 141 134 111
2001 192 234 152 147 124
2003 204 249 161 159 138
B747-400M. LRF 1993 = 1.2With freighter conversion no longer a realistic prospect the -400M has lost much of its attraction. The lease rentals of the type are falling and offer only a modest premium over the passenger version.
1989 168 199 145 97 -
1991 179 211 154 122 -
1993 188 222 161 132 93
1995 197 233 169 141 122
1997 209 246 179 152 135
1999 222 262 191 164 148
2001 234 276 201 175 162
B747-400F. LRF 1998 = 1.4The -400F is leased in surprising numbers but placement can take time – and money. The type does change hands. Rates for the younger -400Fs are under particular pressure and can be expected to continue to decline. The considerable age range ensures that there exists lease rental convergence with fewer operators willing to pay such a premium for newer examples which offers similar the same capacity and performance. Rates are falling which may also be partly a response to the -8F.
1993 263 303 229 211 146
1995 306 351 266 243 173
1997 346 398 301 281 203
1999 386 443 335 318 233
2001 427 491 371 356 265
2003 470 540 409 397 299
2005 511 588 445 438 333
2007 551 633 479 480 369
2009 589 677 512 523 407
B747-8I. LRF 2012 = 0.9Rates can be expected to continue to decline even for new examples. The -8 program manages to stagger on as Boeing attracts new custom. But the market for the -8 passenger aircraft remains very limited and rentals have to reflect this. Some sale and leasebacks have taken place but lessors will now have to be very conscious of making sure that a remarketing plan is in place well ahead of lease expiration.
2010 990 1099 891 866 791
2012 1065 1182 958 914 869
2014 1137 1262 1023 984 959
2016 1212 1346 1091 1033 1019
B747-8F. LRF 2011 = 1.0The -8F is being acquired more seemingly through barter arrangements than straight sales and rentals can be hard to discern through the fog of side letters. Lease rentals are relatively high at least in terms of the lease rental factor. The -8F has something of a monopoly which would be good if airfreight was achieving the same level of growth as the passenger market.
2009 1141 1300 1027 1092 899
2011 1271 1449 1144 1196 1001
2013 1401 1597 1261 1340 1130
2015 1533 1747 1379 1447 1220
B757-200 (220,000lbs RB211). LRF 1990 = 1.8The B757 struggles on but demand is not what it once was and lease rentals can sometimes be lower than might be expected. The aircraft is facing new pressures as the A321neo emerges and takes over the routes served by the B757.
1982 55 69 43 - -
1984 69 86 54 - -
1986 80 100 62 - -
1988 89 111 70 39 -
1990 96 121 75 63 -
1992 102 128 80 68 30
1994 107 134 83 73 48
1996 111 139 86 77 52
1998 114 143 89 81 57
2000 117 147 91 85 61
2002 120 150 94 89 66
B757-200ER (250,000lbs RB211). LRF 1994 = 1.6Whatever the negatives the -200ER is still the aircraft that can fly across the Atlantic and to Hawaii. The A321-200 is being used for Hawaii flights and the A321neo will offer more flexibility in terms of seating capacity and range albeit with extra fuel tanks and therefore lesser cargo/baggage.
1987 86 106 72 - -
1989 95 117 79 53 -
1991 103 126 85 69 -
1993 109 134 90 75 41
1995 114 141 95 81 54
1997 119 146 99 85 59
1999 123 151 102 90 64
2001 127 156 105 95 69
B757-200SF. LRF 1992 = 1.2The freighter version is still very much relevant and will remain so for a considerable period of time. The rentals ate therefore remaining stable but for the younger examples can be expected to fall.
1982 57 71 49 - -
1984 79 97 67 - -
1986 95 118 81 - -
1988 108 134 92 52 -
1990 117 146 100 84 -
1992 124 154 105 91 49
1994 128 159 109 97 77
1996 130 162 111 102 84
1998 131 163 112 106 90
2000 132 164 112 110 96
2002 132 164 112 114 102
B757-300LGW. LRF 2001 = 1.1A stretch too far for most operators but there can be some variation in rates depending on the needs of the lessor and lessee. A wider aisle is needed should a single aisle be present on the new MoM aircraft being contemplated by Boeing at long last. The B737-10 offers only a temporary solution.
1998 97 113 84 81 63
2000 106 123 91 89 72
2002 113 131 97 96 81
B767-200. LRF 1986 = 4.5The B767-200 is a useful though not essential asset and rates have been at low levels for many years. The type provided the foundation for the much more popular -300ER. The rates for the -200 are perhaps the lowest they can be.
1981 18 23 14 - -
1983 25 33 20 - -
1985 32 42 26 - -
1987 38 50 31 - -
1989 44 57 35 12 -
1991 50 65 40 22 -
B767-200ER HGW. LRF 1990 = 2.3The range of the -200ER provided operators with proof of concept for longer range of operators for twins (notwithstanding the A300 and A310). The rentals of the type have failed to provide much solace for the few lessors that participated in leasing but then the credit standing of the lessee was seen as the more important.
1984 63 78 53 - -
1986 68 85 57 - -
1988 73 90 61 26 -
1990 78 96 64 42 -
1992 83 102 68 53 17
B767-300. LRF 1992 = 1.7The aircraft is far from ideal and was always expected to be displaced. Like the A300-600R the rates offer good value and rates are at levels that makes further falls unlikely in the short term.
1986 46 57 37 - -
1988 53 65 42 16 -
1990 58 72 47 24 -
1992 63 78 50 36 9
1994 68 84 54 40 17
1996 73 90 58 44 28
1998 78 97 62 49 32
2000 83 103 66 53 36
B767-300ER HGW. LRF 1999 = 1.3The potential for securing rates at the top end of the indicated ranges is low as the market increasingly moves to alternative equipment. Yet, the appetite for the aircraft should not be underestimated as it provides a good service in a relatively low cost fuel environment. Very few have been delivered in the last decade making the majority of the fleet rather old.
1988 107 130 91 41 -
1990 144 174 122 84 -
1992 171 206 145 120 49
1994 192 232 163 139 85
1996 211 256 180 156 116
1998 232 281 198 175 133
2000 250 303 213 192 149
2002 268 324 227 209 165
2004 278 336 236 222 178
2006 283 343 241 232 190
2008 285 345 242 240 200
2010 282 341 240 245 209
B767-300F. LRF 2003 = 0.9A good aircraft that has suffered as a result of the airfreight issues. The demand for more next day deliveries will continue and the B767 is well placed to take advatange of the increase.
1995 202 248 174 164 119
1997 218 268 188 171 130
1999 229 282 197 185 145
2001 239 294 206 198 158
2003 251 309 216 212 173
2005 266 328 229 229 190
2007 279 343 240 246 206
2009 289 355 249 260 221
2011 296 364 254 273 234
2013 299 368 257 280 239
B767-400. LRF 2000 = 1.3The -400 operates in the wings of the market given that few were built. Lease rentals are low for such a size of aircraft but then demand is also limited.
2000 166 194 143 140 99
2002 203 238 175 165 121
B777-200. LRF 2001 = 1.4Rates for the -200 are remaining under pressure as the type has been forced to trade under its own merits rather than those of the -200ER. The -200 allowed some lessors on the periphery to lease a widebody but the aircraft needs an experienced lessor to manage the risk.
1995 140 164 112 105 76
1997 161 189 129 118 89
1999 181 212 145 134 104
2001 200 234 160 151 119
2003 219 256 175 167 135
B777-200ER. LRF 2001 = 1.3The rates for the -200ER are far from fragile but the aircraft is not operating in a strong market. The type is being moved onto to second tier operators and this process will continue apace as the B787-9 and B787-10 take hold. The lower price of fuel has been an incentive but operators have other considerations than operating costs – IFE and reliability for example.
1996 320 375 260 249 185
1998 382 447 310 293 225
2000 430 503 349 333 263
2002 470 550 381 371 301
2004 506 592 410 409 338
2006 545 637 441 449 377
2008 587 686 475 493 421
2010 623 728 504 536 464
2012 653 764 529 575 504
B777F. LRF 2008 = 0.9Boeing is now struggling to secure fresh orders for the B777F which is understanable given the number of orders placed to date. The aircraft provides very good economics on those routes which have dense high value loads. The rates for the -200F are still reasonable and will continue to provide good returns for lessors.
2008 939 1032 826 877 770
2010 1028 1131 905 926 830
2012 1113 1224 979 1006 912
2014 1196 1316 1053 1075 978
2016 1281 1410 1128 1126 1007
B777-300. LRF 2003 = 1.2The -300 has the capacity which allows the type to be used on regional services by a handful of carriers. To some extent freighter conversion will pass the type by as the focus will be on the -300ER. Rates are still falling.
1998 265 308 218 201 145
2000 323 374 265 240 179
2002 369 428 302 271 209
2004 408 474 335 307 242
2006 445 516 365 342 275
B777-300ER. LRF 2004 = 1.0The reduction in production rates is not a surprise and nor is the reduction in lease rentals for the older aircraft. The decline is rates going forward will be ever more noticeable. The first -300ERs are being released and demand on the used market may not be as strong as some envisage. The arrival of the B777X is now not too far distant.
2003 768 868 676 622 487
2005 897 1013 789 699 558
2007 1022 1154 899 798 645
2009 1145 1294 1007 910 742
2011 1268 1433 1116 1029 845
2013 1394 1575 1226 1136 939
2015 1521 1719 1339 1222 1008
B787-8. LRF 2011= 0.8The rates for the B787-8 – even for newer examples on sale and leasebacks – are not what they once were. The type has now been in service for a number of years and the secondary market will be upon us in the not too distant future. There may be a need to be more realistic going forward. The backlog of the -8 is falling in favor of the -9.
2010 651 761 586 627 490
2012 742 869 668 714 565
2014 832 973 749 807 640
2016 922 1079 830 878 684
B787-9. LRF 2014 = 0.8The -9 is now seen as the preferred example and rates are holding strong. Longer lease terms – 10-12 years – to good credits can easily see rentals of less than $1m per month. Rates are expected to remain stable with the B787-10 likely to see rates in excess of $1.3 million though 10-12 leases will see lower rates.
2014 1026 1201 939 986 786
2016 1158 1355 1060 1070 844
BAe146-200. LRF 1989 = 5.9The -200 is being replaced by ever more capable aircraft but the lease rentals of the BAe146 are already at very low levels such that the lessors cannot really afford to accept anything lower.
1984 31 38 24 - -
1986 34 42 27 - -
1988 37 46 30 7 -
1990 39 48 31 15 -
1992 40 50 32 20 -
BAe146-300. LRF 1989 = 6.1The -300 is undertaking a rearguard action against newer types and losing. The aircraft still has some utility not least because of its capacity. But lease rentals are low with nowhere else to go.
1984 30 36 24 - -
1986 33 40 26 - -
1988 35 43 28 6 -
1990 37 45 30 14 -
1992 38 47 30 18 -
Avro RJ85. LRF 1998 = 1.7A good versatile aircraft that provided and continues to provide good service for a range of operators. Availability is an issue and rentals are virtually the same as for the -200. The RJ85 is now all but two generations away from the competition and this is causing rentals to be slightly weaker. The four engines may seem to belong to a previous era but the performance is such that it can be used at a number of otherwise inaccessible airports. Four engines also means that it can climb out of terrain affected airports.
1993 35 43 27 26 7
1995 36 45 28 27 11
1997 38 47 29 28 13
1999 39 49 31 31 15
2001 41 51 32 33 17
Avro RJ100. LRF 1998 = 1.8The type has considerable capacity. Rates are dependent on the lessee and the term of the lease. Compared to the new offerings of similar capacity the rentals on the RJ100 are a bargain.
1993 38 48 30 28 8
1995 41 51 32 30 13
1997 43 54 34 32 15
1999 45 57 36 35 18
2001 48 60 38 38 21
Canadair CRJ200ER. LRF 2001 = 1.9The 50 seat market continues to face pressure but the CRJ200ER can be placed with rates experiencing considerable variance. While values still have the ability to fall further, the same cannot be said of rentals.
1996 24 30 19 13 -
1998 30 38 24 18 4
2000 36 45 29 23 9
2002 42 52 33 29 14
2004 47 59 37 34 19
Canadair CRJ700ER. LRF 2002 = 1.3Production of 70 seaters remains in name only as the market has moved to larger aircraft. The scope clauses in the US are still having an impact. On the one hand the EPA is damning the car manufacturers but on the other hand scope clauses are failing to allow the use of larger and newer aircraft offering much lower emissions – emissions however have now seemingly been dismissed by the U.S. as an issue.
2000 78 95 64 63 47
2002 88 107 72 69 55
2004 96 117 79 78 64
2006en 123 146 106 107 88
2008en 135 160 116 121 104
2010en 144 170 124 135 120
2012en 151 178 130 148 135
2014en 157 185 135 156 146
2016en 163 193 140 162 152
Canadair CRJ900ER. LRF 2002 = 1.3The CRJ900NG continues to be made in small numbers. Inevitably, Bombardier is under pressure to sell more aircraft and with no amortized development costs associated with this model, the selling price has been reduced which in turn has had an impact on rentals. The rentals for the type are expected to experience further declines in the near future.
2002 93 107 81 77 59
2004 106 122 92 87 73
2006en 128 147 111 106 92
2008en 145 167 126 123 110
2010en 160 184 139 141 129
2012ng 172 197 149 170 156
2014ng 182 210 159 170 162
2016ng 191 220 167 177 169
Canadair CRJ1000. LRF 2011 = 0.9The lack of demand for the CRJ1000 is all too notable and rates are falling and will decline at even faster rates in the next future as the type transitions to second tier operators.
2009 180 202 160 177 148
2011 194 218 173 186 160
2013 207 232 185 200 176
2015 220 246 196 211 187
CS300. LRF =
2016 284 355 233 261 206
ERJ145ER. LRF 2001 = 1.9The rates for the ERJ145 are no better than those for the CRJ200ER as supply continues to exceed demand. The rates are lower with around $40,000 per month being the minimum that will be practical for lessors. There is no upside for the type.
1996 34 42 28 24 8
1998 40 49 33 28 12
2000 46 56 37 34 17
2002 51 62 42 39 22
2004 56 69 46 45 27
Embraer 170. LRF 2005 = 1.1The E175 is much more favored these days than the E170 such that lease rentals of the latter continue to falter with rates falling even for the newer examples. The development of the E2 underlines the fact that the ERJ170 is not part of the new line-up though the offering from MRJ is waiting in the wings.
2003 101 114 89 78 64
2005 121 137 107 98 84
2007 138 156 121 116 103
2009 152 172 134 133 123
2011 166 187 146 150 142
2013 179 203 158 166 160
2015 193 218 170 178 174
Embraer 175. Aircraft Rating = The E175 is the more preferred aircraft with the US market being forced to acquire the type because of scope clauses. The Enhanced version has been in service for a few years but will now not be replaced any time soon because of the scope clauses not being sufficiently relaxed.
2004 114 128 100 90 74
2006 135 152 119 111 95
2008 153 173 134 131 116
2010 169 191 149 151 136
2012 185 209 163 170 157
2014E 216 244 190 200 187
2016E 231 261 203 212 197
Embraer E190. LRF 2006 = 1.1The E190 is successful but the used market still requires work to ensure placement at reasonable rates. The age profile of the variant is now of an age that increases the possibility of used equipment entering the market. Indeed there is a concern that a surplus may be emerging which indeed will have a negative impact on rentals.
2005 150 170 134 120 100
2007 173 195 154 144 124
2009 192 217 171 166 147
2011 210 237 187 189 170
2013 228 258 203 209 192
2015 246 278 219 225 207
Embraer E195. LRF 2008 = 0.9The size of the E195 stimulated a reasonable number of additional orders but in this segment of the market the extra capacity can be difficult to fill particularly during off peak flights. With the E2 the capacity is increased further. Rentals are down slightly as would be expected for a decade old aircraft though much in line with expectations. Lessors include GECAS, GOAL, ICBC, HKAC, Aircastle all of who underline the fact that leasing the regional jets is an activity for mainstream lessors though ALC has notably changed direction since being formed given its sale of its ATR aircraft.
2006 169 190 150 138 118
2008 188 213 168 161 141
2010 206 233 183 182 164
2012 223 252 199 204 187
2014 241 272 215 222 205
2016 257 291 229 235 216
FD328JET. LRF 2001 = 1.8The FD328JET is to be developed by Turkey but in its current guise, the market for the type has been less than inspiring with tepid lease rentals to boot.
1999 18 23 14 13 1
2001 20 25 16 14 3
Fokker 70. LRF 1995 = 1.9The Fokker 70 has had its day and lease rentals reflect the lack of attractive except to a few operators. The aircraft is still being moved but such are values that it is more common for a cash sale to be achieved. Lease extensions will be at discounted levels.
1994 31 40 25 22 7
1996 31 40 25 22 9
Fokker 100LGW. LRF 1992 = 2.7The Fokker 100 is now some 30 years of age and lease rentals reflect such vintages with further weakness all too evident. Yet the Fokker 100 is still in operation with a range of operators and has some utility.
1987 42 53 34 - -
1989 43 54 34 18 -
1991 43 54 35 26 -
1993 44 55 35 27 6
1995 45 56 36 28 11
MD82. LRF 1986 = 5.6Lessees are able to dictate rates rather than the lessors and power by the hour arrangements are likely to dominate.
1981 19 25 14 - -
1983 20 26 15 - -
1985 21 27 15 - -
1987 22 28 16 - -
1989 23 30 17 1 -
1991 24 31 18 4 -
1993 25 33 19 7 -
1995 26 34 19 8 -
1997 27 35 20 9 -
MD83. LRF 1988 = 5.0The number of operators is still high considering that the type is not perceived to be popular. Rentals reflect the very limited appeal.
1985 23 30 17 - -
1987 26 34 19 - -
1989 28 37 21 5 -
1991 31 40 23 10 -
1993 34 44 25 14 -
1995 37 48 27 17 -
1997 39 51 30 19 -
1999 42 55 32 22 -
MD88. LRF 1992 = 5.1The digital cockpit is of relevance to a few operators but the type is not mainstream and lease rentals depend more on the lessee.
1987 26 33 19 - -
1989 30 38 23 5 -
1991 34 43 26 11 -
1993 38 48 29 16 -
1995 43 54 32 20 -
1997 47 59 35 23 -
MD90. LRF 1997 = 2.8The MD90 still has considerable merit but the aircraft is facing pressures from which there is no escape. Lease rentals can be higher for some lessees but are simply marginal compared to newer types.
1994 48 60 36 33 10
1996 52 65 40 36 14
1998 57 71 43 40 18
MD11P. LRF The aircraft is no longer of relevance and hasn’t been for a decade. Rates are largely irrelevant.
1990
1992
1994
1996
1998
MD11SF. LRF 1996 = 1.7The MD11 freighter is still in active service with FedEx and UPS as well as Lufthansa. But the operator base is much less diverse than it used to be and partly because of the lack of demand for airfreight, rates have inevitably declined again.
1990 91 113 74 65 -
1992 107 133 88 77 51
1994 123 153 101 90 61
1996 138 172 113 103 71
1998 153 190 125 115 82
2000 167 207 137 128 93
SUPERJET. LRF 2009 = 0.9The Superjet is set for service in Europe and is still a force to be reckoned with in some markets. The size of the aircraft dwarfs that of the CRJ900 and offeres a manline type interior.
2009 128 143 108 118 99
2011 137 152 115 124 108
2013 143 158 120 133 118
2015 147 163 123 138 124
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