Aviation advisor and equipment appraiser IBA continues to see only modest value erosion among new-generation airliners during the Covid-19 pandemic, while older generation jets have suffered far steeper declines due to the large number of units still in storage.
In a summary of the value profiles of the various categories of airliners published Monday, IBA reported only “modest market value changes” for new-generation widebodies since the start of the pandemic. IBA also forecast the quickest recovery for that aircraft group, but it warned of near-term risks due to insolvencies and restructurings, which could increase supply. IBA data shows that market values dropped between just 5 percent and 8 percent for new Boeing 787-9s/10s, Airbus A330neos, and A350 models, while the smallest Dreamliner, the 787-8, dropped 13 percent.
While values of the new models have for the most part held relatively stable, all models of current-generation widebodies have seen steep downward adjustments to both base and market values. Of those, the Airbus A380 has seen the biggest decline as a combination of the large-scale grounding of the global fleet and the forthcoming end of production drives down market values by more than 50 percent for aircraft of all ages.
The Boeing 777 has fared better, seeing its market value fall by 19 percent for a five-year-old aircraft. IBA attributed its stronger position to airlines’ use of passenger airplanes as freighters, its potential for freighter conversion, its retention in service by airlines who favor it over larger types such as the A380, and delays to the Boeing 777X.
Meanwhile, the Airbus A330ceo has continued a downward trajectory that started before the onset of Covid-19. With significant oversupply in the marketplace, driven partially by the failure of numerous airlines with A330s in their fleets, market values have dropped 19 percent for a five-year-old aircraft as part of an ongoing trend that has seen values cut in half since 2018.
Among new-generation narrowbodies, IBA reported that Airbus outperformed Boeing from a value perspective. Although neither of the OEM’s models saw a base value change, the market values of new A320neos and A220s declined between just 3 percent and 8 percent, while new Boeing 737 Max models declined 11 percent and 12 percent. IBA said it expects values and lease rates for the Max remain under “continued pressure.”
Conversely, the value estimates of previous generation narrowbodies have shown the A320ceo fall further than the Boeing 737NG, although IBA believes the 737NG’s more stable position will prove temporary as more 737 Maxes return to service.
Of the A320ceo family, the A321 has performed best from a value perspective, experiencing a market value fall of just 17 percent for a five-year-old aircraft, due to higher utilization and greater attractiveness for freighter conversions. With more than 30 percent of the A320ceo fleet still in storage, market values for a similar age aircraft have dropped 20 percent; lease extension rates have held up well, but secondary placement rates remain under “significant” downward pressure.
Market values of the most popular Boeing 737NG, the 737-800, have fallen by 17 percent—less than the A320ceo. Although just over 20 percent of 737-800s remain in storage, that proportion stands to increase along with Max supply levels, resulting in further declines in values and lease rates for the 737NG, said IBA.
“Whilst Covid has negatively affected the values of all aircraft types, current generation widebodies have suffered most reflecting the pandemic’s impact on long-haul and business travel,” said IBA president Phil Seymour. “New generation aircraft, and in particular narrowbodies, are proving much more resilient, with the A320neo continuing to lead that marketplace from a value and operational perspective.”
Finally, oversupply remains a problem in the turboprop marketplace, although IBA said it believes the ATR series will recover more quickly than the De Havilland Dash 8-400. The value of a three-year-old ATR has fallen between 2 percent and 7 percent depending on the variant, while a Dash 8-400 of the same age has dropped 13 percent.
Similarly, In the regional jet marketplace, high storage levels of certain types, particularly the Embraer E190, has suppressed pricing. However, IBA forecasts a recovery in utilization and values as domestic and regional markets re-open.