Historically, regional jet market values have proven resilient in spite of market cycles, always recovering towards base. Over the last year however, significant downward pressure on demand for some assets, (especially larger jets such as the Embraer E190LR and ATR72-500) has disconnected market values from base values, so we are monitoring them closely. Additionally, further depression towards soft values could force base value adjustments. Whilst freight conversion demand is apparent, this comes with lower price expectations.
IBA is optimistic about trends in this area, which largely reflect US market recovery. The Embraer E170 shows the greatest uplift with strong demand from American Airlines, Envoy and Azorra. E175 values have seen slight softening and transactions have been fewer though we have witnessed new deliveries. Our recent analysis on Embraer’s new Turboprop concept examined whether the right Turboprop design could break North America’s love affair with the regional jet.
Larger E-Jet family members like the E190 and E195 inspire less confidence in the valuation sphere. Oversupply in the market means storage levels are generally higher, and therefore values are considered stable rather than recovering. Pressure on Embraer E190 lease rates has forced pre-Covid levels around $110K - $130K below the $100K mark, and the E195’s former premium over the E190 has diminished.
Whilst the younger E190-E2 has a smaller global footprint in terms of fleet size (and only a few transactions have occurred) we have actually improved our value expectations. The model has recently been certified to fly from London City Airport (LCY/EGLC) and re-fleeting requirements from operators such as BA CityFlyer and KLM Cityhopper may result in an uptick in orders for the type. Most E190-E2s deliveries have occurred but E195 orders are significantly backed up.
It should be noted that E-Jet performance clouds the CRJ’s outlook. With market perception of Bombardier’s CRJ being of an older aircraft with less passenger and baggage space (and thus a declining value)
Though a narrowbody rather than a regional jet, the Airbus A220, as a competitor, is performing strongly. Jet Blue, Delta, Breeze and Air France have significant fleets within both the 120 aircraft in operation and the 430 aircraft approximately on backlog. The popular, fuel-efficient A220-300’s value continued to stack up during the pandemic and we have improved our value expectations accordingly.
IBA’s InsightIQ analysis platform flexibly illustrates multiple asset, fleet and market positions, actual and potential, to inform client choices and identify acquisition opportunities. Immediate access to crucial aircraft, engine, lease rate and fleet data eases appreciation of historic and future aircraft concentrations and operator profiles.
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Airline Economics Growth Frontiers, Dublin will now be taking place in London due to Covid restrictions in Ireland. IBA's Phil Seymour, Company President, will be giving an overview on lessors and the environment on Tuesday 21st September at 9am. Owen Geach, IBA's Chief Commercial Officer, is pleased to be moderating the Helicopter panel on Tuesday 21st September at 2:45pm. Mike Yeomans, Head of Valuations for IBA, will be part of the panel discussing Aircraft Appraisal and Valuations on Wednesday 22nd September at 3pm. IBA Group will also be giving two ESG briefings on Aviation and Aircraft Finance in an ESG climate. The first briefing will take place on Monday 20th September at 4pm, and the second on Wednesday 22nd September at 3:15pm. A team of IBA's expert analysts will be in attendance at this event, offering meetings and demonstrations of our leading data intelligence platform InsightIQ. If you would like to arrange a meeting with us at the event, please contact Marketing@iba.aero
What is the trajectory of commercial aircraft values around the world? In our on-demand webinar, our experts share their views plus the latest market intelligence from InsightIQ on the speed of recovery, future value performance of regional and turbo prop aircraft and what the implications are for aviation finance globally. Listen in to our panel of experts; Mike Yeomans, Director - Valuations and Stuart Hatcher, Chief Revenue Officer, 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 regional and turboprop 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: Stuart Hatcher Discover what makes InsightIQ the leading aviation intelligence platform. Book a demo
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