Aircraft lessors and traders believe that values of the workhorse Boeing 737-300 are coming under pressure as more airlines pull them from their fleets.
Aircraft owners that choose to hold onto these fleets during the course of the next year will see their values decrease, says Steve Manley, CEO of aircraft trader Universal Asset Management. There are just over 1,000 in service, according to ACAS.
Manley says 737-300 retirements at two carriers he declines to name will see about 100 aircraft hitting the market during the next year. These moves, he says, will depress values of the model.
Current 737-300 values are just north of “metal value” which is over $5 million, he says. But during the next 12 months he expects them to decline by between 15% and 20%.
About a year ago values of ‘naked’ 737-300s - those without leases attached - were in the $6.5 million area. Today the same aircraft are closer to $6 million, he says.
Already aircraft with leases attached to Continental Airlines and Southwest Airlines have become available on the open market.
Southwest previously disclosed it would retire or dispose of 10 aircraft - a combination of 737-300s on lease and 737-700s that are owned. However the airline says the majority of impacted aircraft will be 737-300s.
Eight Boeing 737-300s on lease to Continental Airlines are currently being offered for sale. The aircraft, which were built in 1986 and 1987, are attracting bids around $5.5 million, says a lessor, but adds that the seller is said to be looking for numbers closer to the high $6 million range. Current monthly lease rates on the aircraft range from a low of $82,479 to a high of $95,000.
According to the lessor, which is more pessimistic on 737-300 values than Manley, there is a “huge” difference in 737-300 pricing compared with just a year ago.
“Pricing is much tighter now, and for the Continental deal to make sense the new buyers would need to purchase these aircraft for between $4.5 million and $5.5 million,” says the lessor.
Flight’s newly acquired aircraft finance information service Commercial Aviation Online (CAO) has obtained full details of the individual lease rates for 12 aircraft currently in service with Continental and Southwest.
- For more information on Commercial Aviation Online click here
Source: Commercial Aviation Online
