The widebody leasing market is less fluid than that for narrowbodies and is heavily controlled by sale leasebacks for new deliveries. The market started its recovery from a post 9/11 slump in 2003 and this resurgence was affected by the global financial crisis only slightly. Since 2015, however, excess capacity has exerted immense pressure on rates in the market. Bankruptcies, fleet management decisions and lease ends, particularly young lease ends, have each played a part.
The failures of Skymark, TransAsia, WOW Air, Jet Airways and XL all resulted in additional units flooding the market. With caution being exercised over the future of Hong Kong Airlines and SAA, a further 24 units would be an unwelcome addition to the market's excess capacity should these airlines also fail.
Since 2015, Singapore Airlines' lease returns have supplied a steady stream of young aircraft requiring placement to the market. These units have been joined by more from China Eastern, Cathay and TAP whilst Etihad have stored their six returned aircraft and Thai Airways, despite gradually retiring their units over 20 years old, have increased excess market capacity by 10.
THY, Air Canada, Brussels Airlines, Thai AirAsia X and iFly are amongst those fortunate operators who have taken advantage of the low rates and long leases available for high capability, young aircraft. Against a backdrop of airline failures, depressed lease rates and repossessions, trading for lessors is, conversely, challenging. A glimmer of hope in such a bleak re-lease environment could be to move older aircraft to freight conversions since, as new 787s, A330neos and A350s become available, there will be scant opportunity for passenger aircraft lease rates to experience a resurgence.
A copy of our full analysis with commentary is available to download here.
If you have any further questions, comments or feedback please contact: Stuart Hatcher
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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
The A330ceo is now in its replacement phase. Secondary market availability and storage are relatively high and the A330-200 in particular has been in oversupply for some time. Powered by IBA.iQ, our advisory teams have seen lease rates soften in recent years. The wave of pre-GFC delivered aircraft have returned from their initial leases which has put downward pressure on rentals in the market.