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26/08/2018

How Far Away Is The Tipping Point For The A320ceo/Neo And B737NG/MAX Transition? June 2018

IBA's recent Market Update analysis covered a range of market dynamics including our thoughts on the Farnborough Airshow orders, the New Mid-Sized Aircraft and operator profitability. If you missed it, the materials can be accessed here.

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For this week's iQ insight, we are re-visiting our analysis on fleet development of the Airbus A320neo and the Boeing 737 MAX to reflect on transitions, timeframes, pressure on older aircraft and new fleet development.

 

The following analysis assumes there is a continuous production rate of 60 aircraft per month and the aircraft will retire after 25 years.

 

 

Using data extracted from IBA.iQ Fleets and the assumptions above, IBA expects the size of the A320neo fleet to reach 50% of the A320ceo fleet size by 2022. Growth of the neo fleet coupled with continued retirement of the ceo fleet would see the A320neo exceed the A320ceo fleet by 2026 and reach around 8,000 aircraft two years later in 2028.

 

From a Boeing perspective, following the same assumptions, fleet development of the 737 MAX trends closely with the A320neo. The size of the 737 MAX fleet is expected to reach 50% of the 737NG fleet by early 2023 and exceed the size of its predecessor fleet by 2025. By 2028, the 737 MAX fleet is expected to grow to around 7,500 aircraft.

 

 

From our findings, we would advise investors and lessors to begin monitoring their position in the next year or so. IBA.iQ Fleets and Values data can provide an insight into delivery, retirement and lease return profiles, identify suitable candidates for P2F conversions and view future and residual value forecasts. The latest addition to IBA.iQ, iQ Trends, will allow users to carry out historical analysis, looking at the impacts of variables such as GDP, fuel prices and interest rates, and perform constant age analysis. Awareness of growth of new generation aircraft in the next few years is key, as is remaining mindful of the impact on lease rates and values of old generation aircraft in the secondary market.

 

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