Values of A350-1000 Still Uncertain as First Delivery Takes Place

March 5, 2018

The values of the A350-1000 remain under scrutiny as the market for the type fails to progress even as the first example is delivered to Qatar and enters service.

The first delivery of the A350-1000 took place in late February to Qatar, a little later than planned because of issues with the Qsuite business class. The aircraft is being used on the route to Heathrow. The issue for values of the A350-1000 is that the number of orders has actually reduced in the last twelve months. In February 2017 there were 211 orders for the A350-1000 but as of January 2018, this had fallen to 169 units placed by 12 customers. This compares with the 326 B777X aircraft that have been ordered although only seven customers have placed orders. The last year has seen customers switch to the smaller A350-900. Even as traffic growth continues to be above trend, operators are seeking to ensure that aircraft are filled with higher yielding passengers. Operating the large widebodies can see a similar number of business class passengers to those on a smaller aircraft while carrying more marginal economy class passengers.

The value of a new A350-1000, carrying a similar number of passengers to the B777-300ER approximates $167 million, is only some five percent more than the value of a new B777-300ER which is declining as the arrival of the B777-9 edges ever nearer. There have been various discussions as to whether there should be a stretch to the A350-1000 to more match the capacity of the B777-9 but with few orders even for the Boeing competitor there is naturally a reluctance to expend further amounts on the A350 program until at least the existing -1000 is delivered in numbers and proven itself in service. The delivery rate of the A350-900 was initially slow due to quality issues and delivery of BFE (Buyer Furnished Equipment) items so Airbus will be seeking to ensure that the A350-1000 delivery rate is as scheduled. The recent reduction in the orderbook has been a concern but given the large number of young B777-300ERs in service, the move to replace existing equipment will take some time to materialize.

The value of approximately $167 million for a new A350-1000 has the potential to increase should service prove relatively trouble free and if further orders are placed. In terms of the future values of the A350-1000 there is naturally a degree of conservatism relating to any new aircraft variant. The fall in future values is expected to be in line with previous widebody types but the problem in remarketing the larger widebodies remains. The original customers for the A350-1000 have ordered in quantity and net pricing will likely be reasonably low allowing for a reduced book value. When the aircraft are sold in some 10 years, making a profit on the low book value will perhaps be of greater significance than achieving the market value provided by appraisers. There will be sale and leasebacks and the combination of virtually full payout leases over 12 years and attractive return maintenance compensation will probably see owners willing to dispose of the aircraft at lower than expected prices. The remarketing of the first A350-1000s to be delivered in 10-12 years will be competing against similar vintage B777-300ERs which are forecast to have at least 15-20 percent lower values/rentals.


A one-of-a-kind database filled with aircraft valuation data, including information on leasing, valuations and vital statistics, as well as Aircraft Assessment Reports.
Search an Aircraft Valuator
Error Demonstration

Live chat by BoldChat