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Values of New A321-200s Increase by 2% Over 23 Years

May 13, 2019

As a means of emphasizing the role of inflation and production efficiency and the impact on residual values, the values of newly delivered A321-200s have failed to increase over 23 years – the value of a new A321-200 today is less than two percent higher than one delivered in 1996.

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The market may often look at interest rates in terms of lease rentals but the role of inflation plays a significant part in determining residual values and has contributed to values failing to meet the expectations of forecasts made 10-15 years ago. When the A321-200 entered the market in 1996 the value approximated $48 million and today the value of the much improved version is only $49 million. During the same time interval U.S. general inflation has increased by 62 percent which would have seen the value of a new A321-200 today being nearly $80 million. In the years before the financial crisis values of new A321s were increasing such that a peak of nearly $53 was recorded before tumbling by 20 percent in two years. With residual values of aircraft falling by an average of 8-10 percent per annum, the value of a new aircraft needs to increase by some 4-5 percent per annum for residuals to exhibit a much shallower fall but with values of new aircraft failing to register an improvement, the annual fall is that much greater.

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