LAXintl From United States of America, joined May 2000, 22055 posts, RR: 51 Posted (2 years 5 months 2 days 21 hours ago) and read 5484 times:
Over the years I have posted industry aircraft valuations and market lease rates and was asked to provide an updated view.
Overall as the industry fortunes appear to be turning for the better, aircraft values as well has seen modest gains(or at least stabilized) on the macro scale. While certainly some models like the 50-seat RJ and older widebodies like 747-400s see market softness, models like the A320, 737NG, A330 and 777 series see relative firm valuations due to their popularity.
Below are estimated current market value (USD$mil) based on oldest to newest airframes, and the sample monthly lease rates (USD$,000) based oldest to newest airframes.
joost From Netherlands, joined Apr 2005, 3128 posts, RR: 4 Reply 1, posted (2 years 5 months 2 days 20 hours ago) and read 5347 times:
Very interesting! Thank you very much!
Could you tell a bit more about these lease rates? For example, are maintenance costs typically included in the lease fee? Or is it a mixture of different contracts?
It's interesting to see that the older the air frame, the higher the lease fees compared to the acquisition fees. For the A320 series, the 777s or the E190, the lease fee is around 11% of the acquisition price on a yearly basis. But for the 747, the MD-11 or MD-80, the lease fee is between 20% and 40% of the acquisition price.
It's also interesting to see that the A320 is longer around, and therefore, the lower end price is lower than the A319 - simply because the oldest A320s are 8 years older than the oldest A319s.
bjorn14 From Norway, joined Feb 2010, 2776 posts, RR: 2 Reply 2, posted (2 years 5 months 2 days 20 hours ago) and read 5291 times:
Quoting joost (Reply 1): Could you tell a bit more about these lease rates? For example, are maintenance costs typically included in the lease fee? Or is it a mixture of different contracts?
Depends what kind of lease you have....wet, damp or dry. I think LAXintl quotes dry leases which means no maintenance, pilots, insurance, etc.
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LAXintl From United States of America, joined May 2000, 22055 posts, RR: 51 Reply 4, posted (2 years 5 months 2 days 2 hours ago) and read 4850 times:
Quoting joost (Reply 1): Could you tell a bit more about these lease rates? For example, are maintenance costs typically included in the lease fee? Or is it a mixture of different contracts?
No my rates are strictly dry-lease rates not including any accruals for airframe, engine, component or APU maintenance, nor additional things like insurance.
Quoting mrskyguy (Reply 3): LAX, do your figures take in to account after-market freighters? I see decent-time 733F's going for around $7M a pop.
No these numbers were for passenger aircraft. Freighters have their own valuation. The way you end up with a $7mil freighter is to take that depressed value $2.5mil passenger bird and do a check on it, and have it converted.
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joost From Netherlands, joined Apr 2005, 3128 posts, RR: 4 Reply 5, posted (2 years 5 months 2 days 1 hour ago) and read 4830 times:
Quoting LAXintl (Reply 4): No my rates are strictly dry-lease rates not including any accruals for airframe, engine, component or APU maintenance, nor additional things like insurance.
Thanks for the information. But then, do you have an explanation why for older air frames, the lease fee relative to the acquisition fee is so much higher?
For example, are these contracts typically for shorter periods? Or are these usually less stable airlines, so a risk-premium is charged?
Quoting LAXintl (Reply 4): The way you end up with a $7mil freighter is to take that depressed value $2.5mil passenger bird and do a check on it, and have it converted.
If you would do a similar Heavy Maintenance check on a passenger aircraft, would you end up with a similar price tag? So when the maintenance condition is equal, is there a price difference between freighters and pax aircraft?
LAXintl From United States of America, joined May 2000, 22055 posts, RR: 51 Reply 6, posted (2 years 5 months 2 days 1 hour ago) and read 4761 times:
Quoting joost (Reply 5): Thanks for the information. But then, do you have an explanation why for older air frames, the lease fee relative to the acquisition fee is so much higher?
For example, are these contracts typically for shorter periods? Or are these usually less stable airlines, so a risk-premium is charged?
Its simply market forces at work, and the perceived value various airframes have. Of course at some point the value can only drop so much before parting the aircraft becomes more attractive and salvaging and selling components individually.
Quoting joost (Reply 5): If you would do a similar Heavy Maintenance check on a passenger aircraft, would you end up with a similar price tag?
No just because you do a check does not mean its value jumps by the commensurate cost of the check.
An airframe with more hours left on it will generally be valued higher than an equivalent one with less remaining hours, however the difference might not reflect the cost of the check. For example heavy check an old 747-200 airframe can be upwards of $4mil, higher than the value of the airframe.
Quoting joost (Reply 5): So when the maintenance condition is equal, is there a price difference between freighters and pax aircraft?
Each very much has its own market forces at work and things like supply/demand effect the pricing.
A MD-11 pax might have low value today, but the freighter might be worth a few more dollars as the model is still in pretty broad use globally.
From the desert to the sea, to all of Southern California
stitch From United States of America, joined Jul 2005, 26720 posts, RR: 83 Reply 7, posted (2 years 5 months 2 days ago) and read 4730 times:
To add to the dataset, the A380-800's average value is $171 million for a 2007 model and $189 million for a 2009 model. Average lease rate ranges between $1.4 million and $2.0 million per month.
And while they are not yet in service, when they do finally get into an airlines hand, an initial-tranche 787-8 will be worth about $103 million and a 747-8 about $162 million.
As for freighters, my data is from the first half of the year and shows a 777F worth about $135-160 million, though that value has been rising as cargo recovers. No data for the A330-200F or 747-8F as of yet, but I'll go hunt down the 2H 2010 numbers and see if they are in there.
mrskyguy From United States of America, joined Aug 2008, 1203 posts, RR: 3 Reply 8, posted (2 years 5 months 2 days ago) and read 4649 times:
Quoting LAXintl (Reply 4): No these numbers were for passenger aircraft. Freighters have their own valuation. The way you end up with a $7mil freighter is to take that depressed value $2.5mil passenger bird and do a check on it, and have it converted.
Yep, I'm aware.. my question was one of clarification based on the figures presented. If it had included freighters, I would have contested those values.
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