IBA has outlined a divergence in value trends between narrowbody and widebody aircraft driven by a surge in domestic travel in certain markets, but continuing low levels of international travel globally.
In a recent Aircraft Values webinar, IBA illustrated how a surge in domestic passenger flights, driven largely by rapidly returning demand in North America, is driving a recovery in market values of newer generation narrowbody aircraft.
The gap between the base and market values of the Boeing 737 MAX, now re-certified for operation in most global markets, with China being the notable exception, has narrowed significantly since the start of 2021. Values of the Airbus A320neo have stabilised and remain ahead of Boeing 737 MAX aircraft of an equivalent age, according to data from IBA's InsightIQ intelligence platform.
IBA forecasts that market values of both the Airbus A320neo and Boeing 737 MAX will each trend back towards base over the next two years, and will align with base values by 2024.
Values of the older A320ceo and Boeing 737-800 narrowbody models are performing less strongly. Market values of both types built between 2008 and 2018 are continuing their divergence from base values, although the Boeing 737-800 continues to perform more strongly with a price range for a ten year old model of US$19.35m compared to US$16.43m for the A320ceo. This is driven by the former's stronger demand for freighter conversions and less fleet dispersion due to ongoing replacements by the Boeing 737 MAX. Once the MAX is certified in all global markets, IBA forecasts the value gap between the A320ceo and 737-800 to narrow.
IBA believes that this softening of market values is not yet severe enough to signal a reduction in base value for those types.
The continuing low level in international travel due to the Covid-19 pandemic is impacting widebody aircraft values. The Boeing 777-300ER and Airbus A330, the current generation widebodies that are the twin-engined mainstays of many airline fleets, are both seeing a continuing drop in values and an accelerating divergence between market and base values.
The market values of a 10 year old Boeing 777-300ER fell 25% from US$46.3m to US$34.85m in the first six months of 2021. An Airbus A330-300ceo of the same age fell over 30% from US$27.39m to US$18.41m over the same period.
Phil Seymour, IBA's President, says: "The divergence in traveller demand across the globe is driving a divergence in aircraft values, and this is a trend we believe will endure as the continuing growth in domestic flights boosts next generation narrowbody values.
"When international travel demand returns, we believe a similar trend will develop, with the newest widebody aircraft types seeing the quickest recovery in values."
Aircraft utilisation has grown in all global regions between June and July 2021, with Europe & CIS continuing the steepest recovery with flight levels at 63% of the same month in 2019. This compares to 58% for the Middle East, 63% for Asia Pacific and Africa, 72% for Latin America and 78% for North America.
The IBA webinar slides can be downloaded from here.
Phil Seymour, President, IBA is available for interview to offer further comment and insight.
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IBA has over 30 years' experience in delivering independent, expert business analysis and data on the aviation sector. Established in 1988, it provides a wide range of services including InsightIQ, a one-stop intelligence platform combining speed, accuracy, visual analytics and intuitive navigation
IBA advises prominent investment funds and banks, aircraft leasing companies, operators, manufacturers and MROs. In January 2020, IBA was named 'Appraiser of the Year' by Airline Economics. For more information, visit www.iba.aero.
Newer generation narrowbody aircraft values are performing the strongest overall, with aircraft attracting good investor interest and displaying positive value trends.
What is the trajectory of commercial aircraft values around the world? In our upcoming webinar, our experts will be sharing their views plus the latest market intelligence from InsightIQ on the speed of recovery, future value performance and what the implications are for aviation finance globally. Listen in to our panel of experts; Mike Yeomans, Director - Valuations and Phil Seymour, Company President, as they uncover, review and discuss global trends across aviation finance. Using intelligence from InsightIQ, topics covered include: Regional Recovery Commercial Aircraft: How will aircraft values and lease rates move across narrrowbody and widebody aircraft? What are the driving forces behind future market movements? How and why have different ages and generations of aircraft been affected differently? What is IBA's opinion on what might happen for Q3/4 2021? The slide deck is available to download here. If you have any further questions, comments or feedback please get in touch: Phil Seymour Discover what makes InsightIQ the leading aviation intelligence platform. Book a demo
Following on from last week's session where IBA presented their approach to valuations and lease rates, our panel take a deeper dive looking specifically at commonly traded aircraft types. Topics covered included; IBA's opinion on likely market performance in the near and long term, which assets types are more vulnerable and a 30 minute Q&A session with our panel. The webinar was chaired by Phil Seymour, an ISTAT Senior Appraiser Fellow and former ISTAT International Appraisers' Program Chairman. Phil was joined by Stuart Hatcher and Mike Yeomans - two of IBA's Senior ISTAT Appraisers, and David Archer, IBA's Senior Engine Analyst. Our senior ISTAT appraiser team also review the impact from Covid-19 on future asset performance for specific Narrowbody and Widebody aircraft. If you have further questions please contact: Mike Yeomans