The values of widebodies in the process of being replaced by new types are experiencing further weakness as supply still outstrips supply despite above trend growth.
The demand for leased narrowbody aircraft continues to rise with the lessors failing to satisfy demand yet this has not led to an increase in lease rentals. Traffic continues to grow at above trend levels such that the demand for capacity, and therefore leased aircraft, remains the highest its ever been. The sustained increase in traffic is due to economic growth in some regions, a burgeoning middle class, record airline profitability, a relatively low price of fuel, the efficiency of the airlines in paring down their expenses, the change in revenue generation models by the airlines, a low interest and inflation environment and new aircraft prices that have barely increased for a decade. While new aircraft orders remain elusive this year which is no surprise in view of the extensive backlog that exists and the significant placement of orders in previous years, the market remains buoyant and represents the best of conditions for a generation – or more. Yet, lease rentals for narrowbodies remain stagnant at best or have even fallen.
With so many narrowbody aircraft being leased and given the double digit returns that leasing still mostly enjoys, there has of course been greater interest in becoming part of the aircraft leasing community. Asian financial institutions as well as private equity companies have entered the market in the last decade and more notably in the last five years acquiring existing lessors as well as rapidly expanding portfolios. The competition has therefore increased significantly.
The newer market entrants, including those companies taking over existing lessors, may have been under pressure to prove their worth by a number of measures. Becoming a member of the lessor community but either acquiring individual aircraft or via the purchase of a leasing portfolio can be expensive. In such strong market conditions, this means that the purchase price may be higher than considered desirable, particularly when compared to the prices being paid for new aircraft by established lessors. Such a premium would normally suggest that the new lessor would seek to place aircraft at a high rental but there are other factors at work that are make it necessary for a new market entrant to offer lower rentals.
The leasing market is not just one driven by lease rentals but is one that relies on personalities and relationships to cement deals. To overcome such an established relationship then a new lessor will have to offer a lease rental that is particularly competitive. With the depth and breadth of the operator base, a large number of leases will be to the less financial secure which should warrant a higher rental to compensate for such risk. New or ambitious lessors may ignore such a necessity and lease at a lower rental. Equally, an investment grade airline will be expecting a low rental. Ensuring that the vast majority of a leased portfolio is placed is of importance to some lessors, particularly if the aircraft is returned or repossessed. This can mean the placement of an aircraft at a lower than market rent. The leasing of aircraft can also include taking older aircraft as a trade-in and some newer lessors may be tempted to place such older aircraft at low rentals because of a lack of experience with the type or simply to show that the aircraft has been placed. Longer than average lease rentals to a financially secure lessee will warrant a lower rental in any event.
In the last 20 years, the lessors have recognized the importance of – or perhaps more accurately the ability to monetarize – maintenance. A number of lessors actively make money on maintenance reserves and/or return conditions. This enables lessors to generate considerable revenue out of managing maintenance including whether to scrap a relatively young aircraft at the end of a lease because of some $7 million being held in maintenance reserves with the aircraft being worth another $5 million compared to an onward lease that may generate only $90,000 per month or be worth $8 million on the open market. The newer or target driven lessors may seek to reduce the emphasis on maintenance reserves and return conditions which will then have considerable consequences for when the aircraft is handed back at the end of the lease.
The lessor model is just as dependent on the onward sale of aircraft during the term of the lease than just the lease stream. Lessors regularly sell aircraft with a lease attached to generate a profit, to keep the average fleet age down – and therefore the risk – and to secure funds for new aircraft purchases. But if the lease rental is below par and there is inadequate maintenance provision, then the value of such aircraft for onward sale will be that much less.
The problem for the leasing industry is that the actions of some newer and target driven lessors has an impact on the wider community. Just as with an auction, the placement of an aircraft at a specific lower than market rental may then be viewed as the baseline for all future transactions regardless of who is leasing the aircraft. This perception on the part of the lessees, who may be fortunate to generate even single digit profitability compared to the double digit returns of the lessors, is contributing to stagnant or even lower rentals of mainstream rentals. For a new A320ceo the lease rental factor – the monthly lease rental expressed as a percentage of the current market value – is considered to be slightly lower than 0.8 percent. However, with indications that some lessors are willing to accept much lower lease rental factors other lessors are then under pressure to justify the 0.8 percent. Many of the established lessors will simply not participate in such a Dutch auction and fortunately given the finite supply of aircraft, there will not be a need to match the lowest offerings though there has been lesser flexibility. With the leasing market having seen major takeovers and consolidations in recent years there may be less willingness to place aircraft at any lease rental but with so many used aircraft coming off lease in the coming years and an emphasis on ensuring placement, there will still be an emphasis on lower rentals that will hamper any attempt to improve rentals.
The demand for aircraft continues with the last twelve months seeing traffic above the long term trend. IATA traffic data for August 2017 showed a 7.2 percent increase from August 2016. Traffic growth therefore continues to approximate 8 percent for the first eight months of 2017, well above the 5 percent average trend. Moreover, the growth seems to be in spite of the limited economic performance of many countries.
In the event traffic is above the long-term average and is at least comparable to the amount of capacity being added, then the demand for aircraft should be sufficiently strong as to be able to place aircraft with relative ease. Indeed, IATA traffic (IATA traffic does not include all carriers) for the first eight months of 2017 rose by 7.9 percent with capacity increasing by only 6.5 percent resulting in an 81.7 percent load factor. In such a positive scenario, the arrival of new aircraft satisfies growth as well as acting to a lesser degree, as replacement capacity. When traffic exceeds the long term average of some five percent per annum (measured in revenue seat miles or kilometres – RPM/RPK) and the manufacturers fail to supply sufficient new aircraft, there exists an imbalance leading to a shortage and theoretically, an increase in values and lease rentals.
Such high load factors, which means that aircraft are being filled for the majority of flights, continues to indicate that any increase in traffic can mainly only come from increasing the number of aircraft, raising utilization, or replacing existing aircraft with larger variants as there is no room on existing flights. The alternative is to add a greater number of seats to both existing and new aircraft, a course of action pursued by many operators. Seeking to increase utilization as a means of generating additional capacity is difficult. Most aircraft are already being used efficiently though with lower fuel prices operators have been able to retain older aircraft in service for longer in anticipated, using them as surge capacity during the peak Northern Hemisphere.
The values of used aircraft should therefore be enjoying the most significant exponential increase in nearly 30 years but all the indications are that values and lease rentals will, at best, continue to remain stable with further modest falls the most likely scenario for the majority and more major declines for a few. Yet, such traffic growth may have been stimulated by lower fares and with the ability to offer still lower fares now greatly diminished such growth may be difficult to sustain.
Passenger growth may be outpacing the long term trend but then so too is capacity. A number of international operators are facing difficulty in filling aircraft, particularly in the economy section of the aircraft flying to Asia. The international Middle Eastern and Asian market are likely to see further issues with regard to load factors which in turn will see lower ticket prices. Filling the myriad of new widebodies being delivered will be ever more difficult, particularly if such aircraft act as growth rather than replacement capacity. Asian and Middle Eastern carriers have been responsible for driving growth over the last decade, nullifying the limited lack expansion in more traditional markets. With nearly all airlines having established a much lower cost base then any change to either revenues or expenses will have more serious consequences for values and lease rentals.
The lower price of fuel is making it difficult for the manufacturers and therefore lessors, to extract a sizeable premium for new and re-engined types. Customers and lessees are facing ever greater pressures on their bottom lines and even though the newer efficient aircraft, offer the prospect of lower fuel costs, there exists a reluctance to pay a 10-15 percent premium. For those aircraft being replaced by newer models, the manufacturers are under ever greater pricing pressure, with prices of outgoing widebodies needing to be sufficiently low as to attract customers during the period of transition.
The relationship between new net prices and used values holds true as virtually stagnant new net prices should see values of used equipment fall and indeed this is the case despite the record backlogs. While used aircraft continue to be in vogue, the focus is still on new aircraft. New and expanding carriers continue to demand newer aircraft. Whereas in previous times, the growth in traffic which led to the rise in values was largely the result of global economic growth, today the state of the world economy is of little consequence. The demand for capacity is being more driven by industry metrics where lower seat prices are being achieved by adding ever more capacity. Low lease rentals and ready availability of aircraft has allowed airlines to expand but the merry go-round that depends on always adding more seats to simply stay still is becoming increasingly unreliable as a means of maintaining values and lease rentals in the future.
As passenger traffic has risen, the demand for new aircraft has been such that Airbus and Boeing have increased production. The rise in traffic however has become increasingly capacity driven whereby the availability of more seats has generated ever more passenger demand. To fill aircraft, fares have had to become ever more competitive and lower fares – pricing elasticity – increases demand again. The lower price of fuel is allowing operators to reduce pricing which again generates its own passenger demand. The low cost model of the last decade is dependent on such factors as capacity and low fares but the almost daily dropping and adding of routes to curtail losses and generate revenue underlines potential fragility. Thus far the low cost model seemingly requires a strategy based only on capacity growth rather than revenue enhancement. The expansion of the low cost model to the long haul sector will serve to make the market for established carriers even more difficult.
The listing of current and future values is based on the year of build. The essential assumption is that the aircraft are being sold as a single unit and between a willing seller and willing buyer for cash. The high and low figures for October 31st 2017 represent adjustments for offer and sale prices, financing arrangements, specification differences, maintenance status and condition. These are not absolutes and distressed sales as well as sale and leaseback transactions may fall outside the figures indicated. Some transactions involving distressed sales on fully run out aircraft are considered exceptional and can fall outside the value ranges. Scrap values are also likely to fall outside the indicated range of values. Quantity discounts, particularly for the larger equipment, will attract sizeable discounts.
The values quoted below were prepared in late October 2017 in the context of a modestly improving market. The values listed below are Market Values not theoretical abstract Base Values and seek to balance transaction pricing, where available, and the considered worth of the asset. The Market Value is therefore not merely a reflection of the latest lowest available datapoint. The quoted future values are Market not Base values and attempt to predict cyclic trends when supply will exceed demand and vice versa. Values may therefore experience a rise as well as a fall in any projected year. In addition to values, the original source for Aircraft Ratings is included for all aircraft types. The Aircraft Ratings – the first to be created and forming the industry standard – ranging from highest A++ to the lowest E–, reflect The Aircraft Value Analysis Company’s (AVAC) opinion as to the relative attraction of the asset over the short to medium term and is determined by a number of variables ranging from product life cycles to current and projected levels of availability.
The future values – four and seven years from 2017 – are expressed in current dollars having been adjusted for inflation approximating 2.0 percent (lower in the immediate years) and are based on the Mid Case current market values (AVAC also produce Best and Worst case projections reflecting different probability levels). The figures are for guidance only and are not intended to reflect actual recent market transactions – assuming that any reliable data exists. Rather the values represent the considered worth of the aircraft tempered by the prevailing market conditions.
The data has been extracted from the October 31st 2017 edition of the semi-annual Aircraft Values Basic 2017-2037, priced US$1,475.00 for 12 months web site access, by courtesy of The Aircraft Value Analysis Company. Telephone: +44 (0)203 468 5594, Fax: +44 (0)203 468 5596, firstname.lastname@example.org; www.aircraftvalues.net; www.aircraftvalues.com
|YEAR||October 31st 2017||FUTURE VALUE Inflated|
|A300B4-200. Aircraft Rating: N/AThe A300B4 has been gradually removed from service over the last decade with 65 being retired in the last ten years and three in the first six months of 2017. The type has lost all of its asset attraction hence the absence of values. The type however, proved to be the springboard for Airbus much like the C919 is for COMAC. Whereas it took Airbus 20+ years to become a force in aviation China will be seeking a 10-15 years to achieve similar status.|
|A300F4-200 (Converted). Aircraft Rating: EThe A300F4-200 continues to provide service to a few operators but there are some 10 parked some in the U.S. The asset attraction has been lost in recent years so values are very low. Perishables destined for supermarkets on a regional basis has long been the stable diet for the type. Values are at scrap levels and have been for many years.|
|A300-600. Aircraft Rating: E-A type that was only a short term stop gap measure and which saw only a few orders. The values for the type have always been exposed and they have long been at scrap levels. The type had limited range and instead focused on capacity for regional use, a market segment that was only just beginning to evolve. The type has always been in shadows with values to match.|
|A300-600R. Aircraft Rating: EThe -600R provided a number of operators with greater capacity for medium haul sectors but always struggled against the B767-300ER. There have already been over 100 retirements of the -600 and -600R and a few have been converted to freighters. There are many medium haul routes that require capacity – the U.S. to South America for example. Availability is an issue and values continue to descend.|
|A300-600RF. Aircraft Rating: D-Whole production of the B767-300F has continued, the same cannot be said of the -600RF. Airbus needed the A300 production line for other more profitable products. The values of the younger -600RFs have fallen by a considerable amount. While still offering good service finding a buyer can take some time. The -600RF will be with us for many years yet although values will continue to fall.|
|A310-200. Aircraft Rating: E-The market for the -200 is all but over as the values indicated. Many if not most of the -200 passenger fleet has in any event been converted to freighters leaving very few in service. There is no future for the type except as a Museum exhibit.|
|A310-300LGW. 153t. CF6. Aircraft Rating: E+There have over 160 A310 retirements with another six taking place in the first six months of 2017 demonstrating how lack luster the market is for the type. Only some 20 percent of those produced are still in passenger service. The aircraft still has something to offer though widebodies of this capacity due to suffer from excess drag, hence the pursuit of a larger narrowbody.|
|A310-300HGW 164t. CF6. Aircraft Rating: E+Valuues are all but at scrap levels with even those at 20 years of age failing to elicit much interest. The range of the higher gross weight exmaples has proved to be attractive. As a widebody on longer sector, passenger comfort can be enhanced particularly in terms of business class.|
|A318. CFM56. Aircraft Rating: D-The A318 has never been a sought after aircraft and 14 of the 80 produced have already been scrapped. The oldest is only 14 years of age. Those powered by the PW6000 have always suffered and values virtually reflect the value of the engines.|
|A319HGW. 70t. Aircraft Rating: C+Production has slowed to a crawl in recent years but more recently values have achieved a measure of stability as the type is still favored in the secondary market. Operators are moving away from the B737 Classic and the A319 offers the capacity and performance for those thinner routes. There are some 35 in storage and over 30 have already been scrapped. The A319neo is not an issue in terms of replacement effect.|
|A319ER. 75.5t. Aircraft Rating: C+The extended range version with 75.5 tonne MTOW and additional tanks can offer exceptional service but filling the aircraft with enough passengers can be an issue. The premium has dissipated to some extent in recent years and will continue to do so. The CSeries is seeing good service and the type is gaining credibility which is a concern for the A319 going forward particularly with Airbus taking over the program.|
|A320LGW. 73.0T -A1/-5A1/-5B4. Aircraft Rating E/B–The A320 is still going strong despite the arrival of the A320neo although lease rentals are perhaps lower than might be wished for by some of the more established lessors. The older vintage aircraft are available in numbers and at very low prices. There is no future for the type and even $4m now seems high given that this is for a 20 year old aircraft.|
|A320-200HGW. 77.0 tonne CFM56. Aircraft Rating: B–For the mid life and youngerA320s values are showing some stability although falls in line with the general trend continue to take place. The relatively low price of fuel is keeping the A320ceo viable. With the A320 having been in service for 30 years it is no surprise that over 300 have already been scrapped and that there are over 40 parked. While some may see parity with the B737-800, this more of a perception than reality. Airbus continues to pump out A320ceos not least due to the delays with the A320neo. More delivery slots seem to be made available and it must be wondered at what price the new A320ceos are being sold at. Most new aircraft are equipped with sharklets.|
|A320neo. 73.5t. Aircraft Rating: B++The A320neo has had its issues but these are slowly being resolved. The placement of new orders for the A320neo powered by the PW1100 seems to show that customers are confident that the problems are temporary. There will be ever more customers who will select SpaceFlex which warrants a $900,000 premium for the 186 seat version. Some have attributed only a $1-2 million premium over the A320ceo but in reality the differential is nearer $4m as will become evident with inevitably higher fuel prices.|
|A321-100LGW. Aircraft Rating: E++There are only some 60 -100s remaining in commercial service and the vast majority of these reside in Europe and within Alitalia. The type has some utility but values continue to fall by a considerable amount. Remarketing will become ever more difficult.|
|A321-200LGW. Aircraft Rating: C++/B—More than 30 have already been retired which is not that many given its near 25 year history. If there is one stretch that proved to a real winner for Airbus it is the A321. There are less than ten in storage. The demise of Monarch saw their A321s being dispersed to other operators within a short period of time. The arrival of the A321neo is an issue given the extra range and additional capacity but values of the A321ceo are falling by no more than the average. The A321 is much more favored than the B737-900ER.|
|A321neo. 89t. Aircraft Rating: B++The arrival of the A321neo offers operators ever more operating flexibity as is evidenced by the increase in the orderbook. The combination of greater capacity and new engines offers oeprators much lower seat mile costs, particularly over the longer sector lengths. The values will likely perform better than average though there will be improvements to both engine types in the coming years.|
|A330-200. Aircraft Rating: C–/C+The A330-200 is still in the process of being successfully remarketed but values are falling. The newer A330-200ceos are facing considerable downward pressure even though there still exists a question mark over whether further orders for the A330-800 will be forthcoming. There are over 20 listed as being in storage.|
|A330-200F. Aircraft Rating: B–The values of the -200F may be able to enjoy something of a respite now that airfreight is showing signs of recovery. The values have experienced a considerable decline in recent years but it remains to be seen whether there will be an improvement. Historically, the values of freighters have bounced back when the demand for airfreight increases because of the lag between demand and capacity. With the A330 now slated for conversion in the coming years there will be lesser appetite for the production version. In a more buoyant market, values should be nearly $10 million higher.|
|A330-300HGW. Aircraft Rating: C– / B–The market for the -300 is perhaps more fragile than the orderbook suggests. The market for the type is still strong with used aircraft being placed. However, the concern over rentals being paid is now an issue which is further impacting values as the service entry of the A330-900 approaches. A new -300 has a value of less than $100 million which compares with $108 million a few years ago. Such a fall in new net pricing has to have an effect on used values. There have been some 50 retirements of A330s but there are only approximately ten in storage.|
|A340-200. Aircraft Rating: E++There are only 16 in commercial service and four operators so seeking to remarket is likely to be a difficult task. The values are now at scrap levels and escaping from such a black hole is impossible.|
|A340-300LGW. Aircraft Rating: E++The values of the A340-300 continue to fall such that over the last decade they have lost much of their asset attraction. The four engines for such a small aircraft have long since lost their relevance. Placing these aircraft is still possible but difficult. The youngest examples of the type are facing the most pressure as value convergence takes on new significance.|
|A340-500LGW. Aircraft Rating: D–There are some ten in storage although these includes those owned by private companies and those undergoing conversion. There only ever 34 deliveries with the last taking place in 2012 after being parked for some years. The values of the aircraft are barely any higher than those for the -300. While ultra long haul is coming back into vogue once more with Qantas flying direct from the UK to Australia with a B787-9, for the four engined -500 this proved to be uneconomical. The market for the aircraft is limited with ad hoc charters perhaps being more credible.|
|A340-600L. Aircraft Rating: D-Lufthansa seemingly has a number in storage including some located in Arizona suggesting long term storage. The aircraft has not made any type of comeback even with the support of the manufacturers, above trend passenger growth, and relatively low fuel prices. The last delivery was in 2010. The weights of the -600 increased over time. With lower fuel prices the type has some economy. While the -600 is not suited to all routes it can be viable on selected routes where the four engines can be a positive rather than a negative – flying over mountains for example or eliminating the need for ETOPs.|
|A350-900. Aircraft Rating: B++Although there are some quality issues, the A350 is performing well and is being well received by passengers and operators. The values of the aircraft are likely to fall rather than remain stable but those for newly delivered examples are still rising by a modest amount.|
|A380IGW 569t. Aircraft Rating: C-The market for the A380 needs a boost with the placement of further orders to allay concerns over a cessation of production. Already production is to fall to less than one per month. The values of the A380 are suffering as those on the used market are not being placed. The move to improve the fortunes of the type by offering greater seating density and other improvements have yet to translate into additional orders.|
|B717-200. Aircraft Rating: DThe B717 continues to be of interest to a few operators but such is the desire among those few that values are remaining unchanged. The market is limited and is perhaps more of a niche rather than marginalized. There is an expectation that in the coming years there will be something of a reckoning.|
|B737-300HGW EFIS. Aircraft Rating: E+The values of the -300 have declined slightly but much of the fall is down to age related issues. As age takes its toll operators are moving to the A319 and B737-700. The quality examples continue to be cherry picked leaving those in lesser condition to languish. Age restrictions in some countries are also playing their part.|
|B737-300SF. Aircraft Rating: D++The -300SF remains favored in both the -300F and -300QC guises. The values of the aircraft are stable even if there remains an issue of age when seeking to place the aircraft. There exists considerable demand on a regional and domestic basis not least because of the increase in internet shopping. 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.|
|B737-700HGW Wing. 153,000lbs. Aircraft Rating: C+/C++The -700 may no longer be in production (a few examples remain on backlog)) but in terms of the secondary market placements are still taking placed. The problem perhaps lay with the dominance of the Southwest fleet. Values are still falling to some extent. The lack of orders for the MAX version underlines how the market structure continues to change.|
|B737-400HGW EFIS. Aircraft Rating: E+The values of the -400 have perhaps been buoyed more by the freighter market than for any intrinsic consideration of the aircraft as a passenger aircraft. For existing operators, the type is still useful, perhaps being used for less intensive operations thereby keeping reliability at high levels.|
|B737-400SF. Aircraft Rating: C-The values of the -400SF remain robust as demand remains high and conversions continue to take place. Remarketing the -400SF seems to be a relatively easy process not least because there is no interior refrubishment required. The -800SF may be on the horizon but will cost considerably more. Values may actually increase slightly as the airfreight market picks up.|
|B737-800HGW Winglets. Aircraft Rating: B– / B-Even with the arrival of the B737MAX, the values of most -800s are remaining strong with minor deterioration. The efficiency of the aircraft remains not least because operators are increasing the number of seats to the maximum of 189. The later built -800s have better engines and reliability. There can be no escaping that the oldest -800s are now nearly 20 years of age which means that sub $10 million values are becoming ever more common. The Split Scimitar winglet is the next thing that the lessors will have to consider introducing. The move to freighter conversion will keep availability to manageable levels.|
|B737-500HGW EFIS. Aircraft Rating: E+The -500 has lost much of its asset attraction in recent years as the market has moved to larger – and smaller – aircraft. Eastern Europe and Mid Asia airlines acquired a large number and currently have the largest number with Africa also operating a notable number. This segment of the market to the mainline manufacturers is not so relevant as it once was as the regional jets increase in size.|
|B737-600LGW. Aircraft Rating: D–This segment of the market is marginalized due to the weight of the aircraft being too high and the capacity being too low. The values of the -600 are at scrap levels with the engines providing most of any value. Only 69 were produced and only some 50 remain in service with others having already been scrapped. Those DAC powered aircraft that have been upgraded to -7/3s or -7E however, warrant a sizeable premium.|
|B737-900. Aircraft Rating: D–There is much to commend the -900 except in terms of the engines that can power other variants. There are only 52 in service. Size does not dictate relative values either when entering service or later on. Though larger than the -800, the values of the -900 are lower.|
|B737-900ER. Aircraft Rating: C-/CBoeing made a great showing for the -900ER but the A321 has been the runaway success although some U.S. centric appraisers sought to write off the Airbus product with the arrival of the -900ER. There were only 52 deliveries in 2016 versus the 222 for the A321.|
|B747-200SF. JT9D/PW4000 LGW Aircraft Rating: E–There is little to commend the type to the investor community.|
|B747-300. Aircraft Rating. E–There is nothing of relevance for the -300. Values have long been at levels whereby one of the few means of disposal seems to be via a donation to a museum.|
|B747-400. CF6 Aircraft Rating: D–The market for the -400 has all but disappeared in recent years and values have been declining a rapid rate. Operators have been less enthusiastic in carrying marginal economy passengers and have instead been seeking to improve yields aboard more efficient twins. The values of the -400 will continue to fall. Age and efficiency are against the type but the move to convert the aircraft to freighter may be on the cards – again.|
|B747-400D. Aircraft Rating: E–The experience of the -400 illustrates all too easily the dangers of producing a variant for a limited market. The type quickly moved into the marginalized segment of the market.|
|B747-400F. Aircraft Rating: CThe improvement to airfreight has ensured that most if not all production -400Fs with the nose loading door are now in service. There are still some converted units in storage but these will be returned to service if growth rates are maintained. The values of the -400F have the potential to remain stable and possibly increase depending on the extent of the traffic improvement.|
|B747-400BCF. Aircraft Rating: CThe market for the BCF is just as difficult as for the -400F if not more so because of the absence of a nose cargo door. There are still in storage and the cost of returning these to operation will not be cheap.|
|B747-8F. Aircraft Rating: B–The demand for the freighter is reasonable but this is not translating into any fresh orders though this may be on the cards in the not too distant future. Nonetheless, values of used aircraft are being adversely affected by lower new net pricing.|
|B747-8I. Aircraft Rating: D++The market for the -8 is very much weaker than that for the A380. Deliveries have been paltry in recent years and there must be a concern as to where the aircraft will go when they come onto the used market. Conversion to freighter is the obvious solution. There have eight -8Is built as VVIP aircraft. Values are declining.|
|B757-200 (RB211). Aircraft Rating: D-The values of the B757 are falling as age and maintenance continue to take their toll on the type. The arrival of ever more capable A321s is allowing operators to replace their ageing B757s. Conversion to freighter is still possible. The aircraft has to be well maintained and the cost of engine overhauls can still be a drain on cash. The Pratt & Whitney engine is not so disadvantaged as longer on wing life offered by the RB211 is not so relevant given the product life cycle of the type. The lower utilization of the aircraft will also extend life and improve reliability.|
|B757-200ER (250,000lbs RB211). Aircraft Rating: D-Even though some of the more modern narrowbodies can fly across the Atlantic, the -200ER is still preferred. Winglets improves efficiency still further. The A321neo is not too distant in terms of range. The Middle of Market concept is progressing but for the time being operators will have to settle for the B737-10 or more likely the A321.|
|B757-200SF. Aircraft Rating: C-The demand for the -200SF and PCF remain strong and even the arrival of the B737-800BCF will not easily usurp the B757. The aircraft may be old but with low utilization its efficiency is maintained.|
|B757-300LGW. Aircraft Rating: E++A seemingly good idea at the time for a few operators but the wider airline industry was not convinced. The -300 may give a clue to the design of the MoM design – a narrow aisle does not lend itself to high volume single aisle seating.|
|B767-200. Aircraft Rating: E+The type may be lacking a replacement but values are at parting out levels.|
|B767-200ER HGW. Aircraft Rating: E+The market for used -200ERs continues to contract and with it values are falling. The values of the type were previously reasonable but as soon as production finished then values tumbled.|
|B767-300. Aircraft Rating: E+In common with the A300-600, the -300 offered good capacity but not the range. The operator base was similarly restricted and remarketing has proved difficult. The values of the -300 may have benefitted from the Ripple Effect during the good times of a decade ago but the type was always marginalized with little potential for residual value strength. As a D check approaches this may the point at which the operator says enough is enough.|
|B767-300ER LGW. Aircraft Rating: D–The -300ER LGW has more limited payload/range but in comparison with the cost of newer aircraft, it offers considerable advantages. The reasonably low cost of fuel is something that is an advantage. The lower net cost of the A330-200 represents competition as will any restarting of production.|
|B767-300ER HGW. Aircraft Rating: DThe net price of the A330-200 is lower and this will have an effect but the -300ER continues to be in demand. The -300ER continues to be very much part of the worlds fleet and allows operators to carry passengers over a large number of routes at low capital cost. Values are falling but are not collapsing. The 407,000lb or even the 412,000lb versions of the -300ER have of course been much more popular as the payload range is better. In terms of IFE and passenger preference there may be some negativity.|
|B767-300ERF. Aircraft Rating: CProduction of the -300F continues as the type continues to offer efficient service. For used aircraft, low utilization will ensure longevity. The expansion of internet services is already 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.|
|B777-200. Aircraft Rating: D–The B777-200 is ever more vulnerable to the replacement process and values are falling at a greater than average rate. The type is facing pressure not least from the A330-300. The age profile shows that most were delivered before 2000 which increases the potential for retirement when they enter the market. The -200 managed to hold onto the coat tails of the -200ER for some years but its lack of range finally forced the grip to be released and values have failed to impress for nearly a decade.|
|B777-200ER. Aircraft Rating: D+Boeing is citing the cheapness of used A330-300s for the fall in demand and drop in values for the -200ER. Yet, the writing has been on the wall for many years. The lack of orders, age profile and arrival of new types have long provided clues that the used market for the type was weakening. The A330-300 on the used market is a factor though it could equally be argued that it is the low cost of -200ERs that has prompted lower -300 values. The weights can vary and engine type plays a significant role. There has been concern that the Trent powered aircraft may be less liquid but transactions still take place. The majority have a weight in excess of 632,000lbs.|
|B777-200LR. Aircraft Rating: D++The market for the -200LR is limited and values are facing downward pressures. The long range capability is now being supplanted by B787-9 and the A350-900 and eventually the B777-8. For too long the premium applied to the -200LR has been too high and values are now at a more appropriate level relative to the -200ER.|
|B777-200LRF. Aircraft Rating: B-The -200F continues to be very much sought after – as long as the aircraft can be heavily utilized. Values are falling however. The type has the efficiency that can be used for high value shipments. Airfreight accounts for a very small amount of freight in terms of tonnage but a much higher proportion in terms of value. 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.|
|B777-300. Aircraft Rating: D–Membership of the “B Group” – B757-300, B767-300, B767-400, B777-200, B747-8I – is not something that should be sought after given that it represents a marginalized aircraft which features higher than average residual value deterioration. Those -300s on the market are reportedly being offered at low lease rentals which in turn is impacting other types.|
|B777-300ER HGW 775,000lbs. Aircraft Rating: B– / B-The values of the -300ER are in decline even if transaction data has yet to provide evidence of impending weakness. The values of the B777-300ER are falling as the introduction of the B777X nears but also because of the age profile of the -300ER. The values of new examples are now fortunate to be more than $160 million and those built a decade ago are now worth less than half that amount. The 775,000lb version is by far the most popular weight selection and there is an Enhanced version that was introduced in 2016.|
|B787-8. Aircraft Rating: B-The values of the B787-8 are -8 are declining. The type has been in service for a number of years and the market has turned its attention to the -9. The number of new order placements is limited and some can be expected to enter the used market in the near future. Lease rentals on new aircraft can be below $700,000 for the right lessee.|
|B787-9. Aircraft Rating: A–The -9 has become the most popular widebody and values are managing to remain stable with those for newly delivered examples increasing. The greater capacity and range is hard to resist particularly as reliability has much improved. The Trent engines are providing something of a headache for some operators.|
|Avro RJ85. Aircraft Rating: E++The era of the Avro RJs has long since passed and values are falling as a result.|
|Avro RJ100. Aircraft Rating: E++The capacity of the RJ100 is notable though some long term operators have signaled their intent to move to alternative types in the coming years though this will not likely impact already weak values.|
|Canadair CRJ200ER. Aircraft Rating: EThere is a concern that the aircraft has a limited asset life. While still having a viable technical life, the type cannot be depended upon for asset based financing. There can be a wide variation in value depending on condition. Values are still declining even if they are at or near scrap levels.|
|Canadair CRJ700ER. Aircraft Rating: C–The 70 seat market is facing continued pressure from larger aircraft. Values are falling as the age of the aircraft advances. The market for the 70 seaters is not what it once was and values are declining by a reasonable percentage.|
|Canadair CRJ900En. Aircraft Rating: CThe price of a new CRJ900NG is virtually the same as that of a CRJ200ER 15 years ago. Bombardier has naturally been under pressure to sell aircraft and it is fortunate that scope clauses have prevented operators from ordering newer and much environmentally friendly aircraft.|
|Canadair CRJ1000. Aircraft Rating: CThe values of the CRJ1000 are facing sustained downward pressure as orders have failed to sufficiently improve. The market for the aircraft is more limited with the E Jets offering significant if not overwhelming competition. There seems little likelihood that the orderbook will now progress forward to any great extent.|
|CSeries CS300. Aircraft Rating: C++The inport duty imposed by the U.S. has yet to impact values. The “acquisition” by Airbus provide some solace for the beleagured aircraft. Assembly in the U.S., if confirmed, will provide some opportunities. The type has many advantages and in service experience is encouraging.|
|Embraer 135ER. Aircraft Rating: EThere can be variaiton in values particularly if the type is used in a corporate transport role. The market for the type is difficult however, and expectations concerning sales prices need to be realistic.|
|Embraer 145ER. Aircraft Rating: E+There are a large number on the market most of which originate in the U.S. and may not be easily exported to other countries. Values have continued to fall by a significant amount and this trend will continue as the 50 seat market contracts in favor of larger aircraft.|
|Embraer 170. Aircraft Rating: C-The E175 has become much more favored and there is a concern that the 70 seaters will face greater weakness going forward. However, used examples are being placed although it can take time. The interior space of the 70-80 seater is comparable to much larger aircraft. The MRJ70 represents a formidable competitor when it finally enters service.|
|Embraer 175. Aircraft Rating: C / C+The E175 is proving to be popular because of scope clauses. The US oeprators can just about operate this size of aircraft without falling foul of the agreements. The orderbook remains reasonable even as the E2 is developed.|
|Embraer 190AR. Aircraft Rating: C++The E190 was the most popular variant and values have managed to achieve a measure of stability. The aircraft is facing new pressures as the E2 arrives. Pricing of new E190s has also become competitive which has impacted used values.|
|Embraer 195AR. Aircraft Rating: C+ / C++The E195 was never as popular as it should been given its greater capacity and economics but then it is perhaps too large for some operators. The CSeries is playing a part in displacing the E195 but Embraer is now able to offer a larger capacity with the E195E2.|
|Fokker 100LGW. Aircraft Rating: E-There has been a measure of stability in values. There can also be variation in the pricing with some in good condition attracting much higher prices.|
|MD82. Aircraft Rating: E–The MD82 is still in service with a variety of operators but this has little relevance to asset value.|
|MD83. Aircraft Rating: E–The operator base is still spread wide and there can be an equally wide variation in pricing. But for the MD83 pricing has supplanted value as value implies that it can be viewed as an asset.|
|MD88. Aircraft Rating: E–The MD88 is relevant to a few operators but not many just as pricing is of importance to a minority.|
|MD90. Aircraft Rating: E+The MD90 could not effectively compete with the A320 and B737-800 but those that are operated continue to provide viable service. Values have long been at scrap levels.|
|MD11SF. Aircraft Rating: EThe MD11 is virtually no more and while there are still a number of freighters in use seeking to remarket them will be difficult even with the improvement in the airfreight market. The era of the trijet has passed.|
|Superjet 100. Aircraft Rating: E–There can be no escaping that the Superjet 100 still has some way to go in penetrating the homeland of Airbus and Boeing products but there are still ambitions to create a bridgehead.The Boeing debacle with regard to the CSeries is perhaps aimed at creating a precedent to prevent the influx of Russian and Chines products in the future without actually seemingly targeting the two countries.|