Used aircraft values are not likely to pick up until at least mid-2005 or possibly 2006, according to leading aircraft appraisers. Values are not expected to firm up for between 18 months and two years after an airline recovery, which is not expected until 2004. That means "we've got a long period of depressed values", said Clive Medland, vice-president of SH&E, at the Cargo Facts 2002 conference earlier this month.
Used aircraft trading prices and lease rates were well down before the 11 September terrorist attacks slowed their recovery, he says. The result is that "we have never seen a period like this for aircraft values".
Some aircraft types are suffering more than others, with 737-400 values, for example, unlikely to recover, says Fred Klein, president of Aviation Specialist Group. The base value (its underlying worth in a balanced market) of a middle-aged 737-400 is $22.7 million, while the market value in the prevailing soft trading conditions is $18 million, says Klein. Five-year operating lease rates for a middle-aged 737-400 are $170,000 a month, he adds. The main problem with the 737-400 is fleet concentration, with six of the largest operators - including US Airways, which has 30 for sale - operating 45% of the fleet.
In comparison, Klein believes the 737-800, with its strong market mass, is going to be "good value". The -800, of which 621 are in service and 385 are on order, has current market values from $30.8 million to $43.4 million for old to new aircraft (base values range from $34.2-43.4 million), he says. Lease rates are from $220,000-260,000, depending on age.
The situation is varied for widebodies. Values for Airbus A330-200s are low - from $53.5-77.5 million at current market rates compared to base values of $66.4-87.4 million - but "this aircraft could be a sleeper", says Les Weal, chief analyst at Airclaims, with values expected to improve. Values for the A340-300 are affected by its concentration among European operators, he says.
The Boeing 767-300ER has the broadest operating base of any widebody, with 480 in service, but it is hindered by a choice of three engine types splitting the market and a number of stored aircraft, says Doug Kelly, vice-president asset valuation at Avitas. This has particularly depressed lease rates, which range from $250,000 for older aircraft to $700,000 for new ones.
Values of the Boeing 747-400, meanwhile, are affected by United Airlines storing part of its fleet; a declining backlog in the passenger version, with competition from the Airbus A380; and three engine types, says Kelly. Market values range from $43.5-145 million (compared to base values of $54.5-145 million), while lease rates range from $500,000 to $1.2 million.
Source: Flight International
