ANALYSIS: Where have all the leased widebodies gone?

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Chris Seymour, head of market analysis at Flightglobal consultancy Ascend, examines where used and new widebodies are being leased

Although lessors have a bigger role in the narrowbody market, they have still maintained a 28% share of the widebody airline fleet over the past five years.

Flightglobal’s Ascend Fleets database shows that in 2013 and the first quarter of 2014, 72 used widebodies were leased to airlines by 21 different lessors. Of these, 59 were passenger aircraft and 13 freighters.

In the passenger market, the Airbus A330 has proven to be the most popular for leasing activity: 27 aircraft, some 6% of the fleet, were leased to 16 different airlines.

The lessors now manage 43% of the A330 fleet, and the type is the leading lessor widebody with over 420 aircraft, 55% of which are -200s. The -200 accounted for the majority of leasing activity in the past year.

The A330 lessees highlighted the variety of business models for which leasing has proved attractive, including: the long-haul low-cost (AirAsia X), charters (Ifly and Thomas Cook), the national carrier replacing older equipment (Aerolineas Argentinas), ACMI (Hi Fly and Air Atlanta Icelandic), fast-growing majors needing extra lift (Turkish Airlines and Etihad Airways), small nationals (Brussels Airlines), launching long-haul (TAME), and secondary carriers expanding their network (Air Europa and Pakistan’s Shaheen Air).

A long-time lessor favourite is the Boeing 767-300ER with a fleet of 250, almost a third of the airline fleet: 21 leases were recorded, of which 10 went into Russia or Ukraine, two countries currently being watched closely for effects on the aviation sector.

The lack of availability of the Boeing 777 is seen in just three new leases recorded, all -200ERs, to Austrian Airlines and Nordwind Airlines (two), despite a lessor fleet of just over 300.

Four-engined fleets have been the subject of book value writedowns at several lessors, and leasing activity has been muted at just eight aircraft, including Airbus A340-300 top-ups to Aerolineas Argentinas and SAS, while ACMI operators have taken A340s and Boeing 747-400s.

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The cargo market has been in a prolonged recession and is only now starting to recover. Despite significant widebody overcapacity, 13 used leases were recorded. Nine 747 Freighters were placed to operators including Centurion Cargo in the USA, which took two -400Fs to start replacing MD-11Fs, while Air Atlanta Icelandic added two -400SFs for its ACMI operations. Turkey has been a growth market and MyCargo Airlines also leased two converted -400SFs.

Two MD-11Fs went to AV Cargo Airlines in Zimbabwe and two 767s to Star Air and ABX Air for integrator operation.

The average age of the 72 leases was 15 years, with a spread of three to 27 years old. The youngest sub-10-year ages included aircraft returned by Kingfisher Airlines and other failures, plus some from expired seven-year leases. Most widebody leases being arranged now are for periods of over 10 years. The oldest aircraft (20 years plus) were all either 767-300ERs or 747 Freighters.

In the same period (2013 and the first quarter of 2014), lessors took delivery of 37 new passenger and five freighter widebodies and placed them on lease.

Of the passenger deliveries, 21 were A330s, 16 of them the -300 HGW variant. Nine were 777-300ERs and seven 787-8s.

Asia-Pacific was the most significant region for lessees of new aircraft, accounting for almost two-thirds of deliveries. Interestingly, only two went into China (A330s for Sichuan Airlines). Thai Airways International took six 777-300ERs, all from BOC Aviation, to continue renewal of its long-haul fleet, but all other Asian deliveries were of A330s.

Cebu Pacific expanded into widebodies with three leased from CIT. These are being used in a 436-seat economy layout from Manila to Dubai and within Asia. Other lessees included Singapore Airlines, Skymark Airlines, Virgin Australia, Asiana and China Airlines.

The four European deliveries included one A330-200 to KLM and three 787-8s to Norwegian. These latter aircraft are configured in a 291-seat layout (32 premium and 259 economy) and are initially serving the USA and Thailand from Norway and the UK, as the low-cost carrier expands into the long-haul market. Initially leased from ILFC for 12 years, two were then sold with their leases attached to Dr Peters Group.

In Africa, GECAS leased three 777-300ERs to Ethiopian and Kenya while Intrepid leased two A330-200s to Air Namibia to replace A340s. The four Latin American leases were all 787-8s to Aeromexico from ILFC.

The five freighter deliveries were three 777-200 Freighters from DAE Capital to Emirates and two A330-300Fs from BOC Aviation to Qatar Airways, highlighting that the Middle East is one of the stronger growth areas in the cargo market.

Thirteen lessors have a further 304 widebodies on order, of which almost half are 787s (including 75 of the new -9s and 40 -10s) – that type’s backlog is double that of the 74 A350s lessors have on order. In addition, 29 more of the popular A330 and 28 777-300ERs are also on order, as are 20 A380s for Amedeo.

Of this backlog, 136 have already had leases arranged with 28 airlines including Vietnam Airlines (19), Thai Airways (16), Air France (13), Aeroflot and Skymark (eight each). Air Lease (89), ILFC (85) and CIT (33) lead the lessors in terms of the aircraft backlog.