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Aircraft Asset Assessment – A340-300

May 24, 2021

Market Presence. The flawed original decision by Airbus to differentiate between four and two engines with respect to sector lengths finally unraveled with the launch of the A350 series after the launch of the B787 was met by an enthusiastic response. The size of the A340-300 was initially suited to the on-going fragmentation of the international scheduled market and the capability to serve a multitude of routes. However, the issue of higher fuel costs took their toll on the A340 as indeed did advancing age. The values of the A340-300 quickly became vulnerable to newer models. The problems for the A340-300 in latter years were perhaps caused just as much by the improvement of the range of the A330-300 as by the Airbus emphasis on selling new aircraft rather than seeking to support used aircraft. In 2007 Finnair placed an order for seven A340-300s but given the geographical location of Finland, the order was partly switched to the A330. This alternative was seen as being able to perform the majority, if not all, the routes destined to be served by the four engined variant but more efficiently.

Market Outlook. The number of operators capable of supporting the A330 and A340 are relatively few in number and the remarketing process is problematical. Values are usually assessed on the basis of a single unit, sold for cash, on a willing seller, willing buyer basis. For the larger widebodies, it must be wondered whether such an assumption is appropriate. With a heavily discounted initial price, values are then impacted by relative book values. Whilst some airlines have a modest depreciation policy others are more aggressive. This can result in the book value being relatively low, thereby allowing airlines – and lessors – to sell their aircraft at prices much lower than values would suggest. Used values have consistently faltered not least because the price of fuel is a major component of direct operating costs even if the financial element is minimal. The future market for the A340-300 is certain – scrapping is now top of any solution when the type comes onto the market. The B787-10 and the A350-900 are acting as replacements for the A340-300 as indeed is the A330neo. Values have experienced a significant and sustained decline over nearly 15 years.

 

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