LAXintl From United States of America, joined May 2000, 22237 posts, RR: 51 Posted (1 year 10 months 1 week 4 days 13 hours ago) and read 14872 times:
Back by popular request, here is an update on industry aircraft valuations and market lease rates.
Below are estimated current market value (in USD) based on oldest to newest airframes, along with sample monthly lease rates in (USD,000) based on oldest to newest airframes for many common models.
Information is derived from transactions and valuation and is current as of June 2011.
The grand bargain of the year continues to be the MD-80 series.
Other notable types that have seen swings in valuations from 2010 include the Bombardier Jet models which all notably slipped (Embraer’s held their prices better in comparison) and the MD-11 which saw a large 20% large decline in valuation as the type is falling out of favor even as a freighter. Meanwhile the Airbus small narrow bodies saw a bit of pricing weakness compared to their Boeing NG cousins which helped push the parting out of several older A320 aircraft. The 737-300 saw a bit of a resurgence in lease pricing as more parked airframes found new homes.
Looking forward as the finally 787 enters service, its likely models such as 767-300ER which have had rather resilient valuation will start to experience declines, while the large widebody 747-400 will continue to its valuation slip as more operators park the model and freighter conversion demand remains tepid.
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seabosdca From United States of America, joined Sep 2007, 4288 posts, RR: 4 Reply 1, posted (1 year 10 months 1 week 4 days 12 hours ago) and read 14815 times:
For all the 757 diehards out there, the market doesn't lie. Compare the A321, 737-900ER, and 757 values, even after adjusting for aircraft age.
I'm also surprised by the relative values of the A321 and 737-900ER. I'd expect the A321 to command more.
Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
TSS From United States of America, joined Dec 2006, 2884 posts, RR: 5 Reply 2, posted (1 year 10 months 1 week 4 days 12 hours ago) and read 14776 times:
Quoting LAXintl (Thread starter): The grand bargain of the year continues to be the MD-80 series.
Indeed.
With prices like that plus a well-established maintenance and spare parts network, why aren't we seeing more MD-80s being converted to private use?
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lightsaber From United States of America, joined Jan 2005, 10882 posts, RR: 100 Reply 3, posted (1 year 10 months 1 week 4 days 12 hours ago) and read 14744 times:
Thank you for the list. Some interesting numbers.
Quoting LAXintl (Thread starter): The grand bargain of the year continues to be the MD-80 series.
Until the fuel bill arrives.
Quoting LAXintl (Thread starter): the MD-11 which saw a large 20% large decline in valuation as the type is falling out of favor even as a freighter.
IMHO, this will be the #2 type hit by the 787 EIS. Not by the 787 directly, but by other airframes being made available for conversion as they are replaced.
Quoting LAXintl (Thread starter): while the large widebody 747-400 will continue to its valuation slip as more operators park the model and freighter conversion demand remains tepid.
This is the #1 airframe, in my opinion, that will be hit by the 787 EIS. The 744 is also being hit by the A380 *finally* hitting production stride as well as continued 77W success. Fuel and maintenance are just too high on the 744, even for freight duty. I expect freight will continue its shift towards a greater fraction going belly cargo.
Quoting LAXintl (Thread starter): Looking forward as the finally 787 enters service, its likely models such as 767-300ER which have had rather resilient valuation will start to experience declines,
And the #3 airframe that will lose value due to the 787EIS. However, I expect the 763ER to be more resiliant than the 744 and MD-11. What will spank the 763ER is going to be the A320NEO and 737RE *if* a good TATL version (which I expect) is made available. So I am predicting that by 2018, 763ER resale will look like 752 resale values today.
Quoting LAXintl (Thread starter): The 737-300 saw a bit of a resurgence in lease pricing as more parked airframes found new homes.
This was the #1 pleasant surprise for me in this list.
LAXintl From United States of America, joined May 2000, 22237 posts, RR: 51 Reply 5, posted (1 year 10 months 1 week 4 days 7 hours ago) and read 14455 times:
Quoting seabosdca (Reply 1): For all the 757 diehards out there, the market doesn't lie.
757 values are holding up as there is steady second-hand demand for them, primarily as Fedex has stated it will acquire some almost 100 (non-winglet) examples over the next few years.
But, I'd expect the floor to fall out if a US major were to park a large number of them at a faster rate then the secondary market supports.
Quoting seabosdca (Reply 1): I'm also surprised by the relative values of the A321 and 737-900ER. I'd expect the A321 to command more.
Remember there are a lot of older A321s out there, while the 737-900ER is almost new.
But in general the NGs are seeing a slight premium over their equivalent Airbus models.
Quoting TSS (Reply 2): With prices like that plus a well-established maintenance and spare parts network, why aren't we seeing more MD-80s being converted to private use?
Probably too big.
There is a freighter conversion project ongoing, but seems that has almost stalled due lack of customer desire.
The 747-400 has become yesterdays plane especially in the passenger game. Seems like every major operator has made succession plans for the model - many with the 77W.
Without a robust economy driving increased global trade, the demand for freighter conversions is weak which will only cause the models valuation fall further in the coming years.
Quoting lightsaber (Reply 3): I expect freight will continue its shift towards a greater fraction going belly cargo.
Not according to Airbus, Boeing, and industry estimates.
The percentage of cargo moved on pure freighters is actually on the rise in part due to more stringent security requirements for aceptanace of cargo at passenger flights, and also due to reduction in average aircraft size at many operators globally.
So the large pure freighter business in the long run looks bright.
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sxf24 From United States of America, joined Aug 2007, 1228 posts, RR: 0 Reply 6, posted (1 year 10 months 1 week 4 days 6 hours ago) and read 14360 times:
Quoting LAXintl (Reply 5): Remember there are a lot of older A321s out there, while the 737-900ER is almost new.
But in general the NGs are seeing a slight premium over their equivalent Airbus models.
From talking to lessors, I'd expect this premium to continue growing. There's a lot of extra A320s on the market and Airbus is making the problem worse with its aggressive sales campaigns. I've heard jokes that Airbus is no longer competing with Boeing when trying to sell new planes, but against lessors with A320s.
I'm not sure the trends makes complete sense to me since Airbus isn't producing that many more planes than Boeing. I guess they're less sensitive to the dynamics of the leasing community.
LAXintl From United States of America, joined May 2000, 22237 posts, RR: 51 Reply 8, posted (1 year 10 months 1 week 3 days 10 hours ago) and read 13864 times:
One of the issues is since the A320 has been in production much longer (10-year jump on Boeing), its found its way into many new and smaller secondary homes, which has kept the second hand market quite active.
The NG series being newer is a more stable market since the majority of frames are still with their primary first owners and less tails chasing customers on the secondary market.
Quoting CO38 (Reply 7): How are the less popular 757-300 and 737-600 doing
B737-600 - $11.0 - 19.5M, $150-200,000, which definitely is a depressed value compared to the -700.
For the 757-300, there really is no active valuation for it, as there have been virtually no transactions involving the type in recent years, so there is not much of a history to go on.
However I would estimate the 753 would have a higher value than the 752 fleet due to its younger age and greater capacity/revenue earning capability.
Of course this is all relative, since if for example Delta were to decide to park its fleet overnight, the value could plummet unless there was a counter party ready to take the frames.
From the desert to the sea, to all of Southern California
lightsaber From United States of America, joined Jan 2005, 10882 posts, RR: 100 Reply 9, posted (1 year 10 months 1 week 3 days 1 hour ago) and read 13631 times:
Quoting LAXintl (Reply 5): Not according to Airbus, Boeing, and industry estimates.
Do you have a link so that I may educate myself better on the transition of cargo to dedicated freighters from belly cargo? I'm under the impression that belly cargo was doing better than is apparently the case. In particular, I see a large part of the 'premium' for the 77W being its use as today's "combi" due to its excellent relative cargo capabilities.
That and reading threads with DL holding seats empty SLC-NRT for cargo, ditto with EK DXB-SFO (and vice versa).
TSS From United States of America, joined Dec 2006, 2884 posts, RR: 5 Reply 10, posted (1 year 10 months 1 week 3 days ago) and read 13587 times:
Quoting LAXintl (Reply 5): Quoting TSS (Reply 2):
With prices like that plus a well-established maintenance and spare parts network, why aren't we seeing more MD-80s being converted to private use?
Probably too big.
Compared to Gulfstreams, Citations, etc., certainly, but compared to BBJs an MD-80 would offer similar interior space at a fraction of the price. Figure 2.5 mil for a cherry, low-time MD-80 plus (I'm guessing) an equal amount for a full interior plus paint equals 5 mil all-in versus how much for a new BBJ?
On the other hand, I'm being practical about what is probably by nature a distinctly impractical purchase, and I'm ignoring the "bragging rights" angle, which I'd imagine factors heavily into any such purchase, so I've just invalidated my own argument.
Quoting LAXintl (Reply 5): There is a freighter conversion project ongoing, but seems that has almost stalled due lack of customer desire.
Would this be an update/adaptation of the DC-9/34 CF concept? I seem to remember seeing a photo of one with a huge cargo door, complete with windows, on the port side.
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CO38 From Norway, joined May 2009, 97 posts, RR: 0 Reply 11, posted (1 year 10 months 1 week 2 days 17 hours ago) and read 13327 times:
Quoting TSS (Reply 10): Figure 2.5 mil for a cherry, low-time MD-80 plus (I'm guessing) an equal amount for a full interior plus paint equals 5 mil all-in versus how much for a new BBJ?
Below is a website for a MD-87 Passenger-to-VIP conversion specialist/broker. (But the site seems to be down at the moment). Was working a couple of days ago. Lot of nice interior pics though According to controller.com theres a couple of MD87VIPs for sale.
Stitch From United States of America, joined Jul 2005, 26946 posts, RR: 83 Reply 13, posted (1 year 10 months 1 week 2 days 13 hours ago) and read 13093 times:
Quoting seabosdca (Reply 1): I'm also surprised by the relative values of the A321 and 737-900ER. I'd expect the A321 to command more.
The lowest number is likely for the A321-100.
Quoting LAXintl (Reply 5): Without a robust economy driving increased global trade, the demand for freighter conversions is weak which will only cause the models valuation fall further in the coming years.
The latest spec of the 777-200 freighter is good for some 107t in payload, which is within ~5t of the 747-400BCF and you don't have the lower floor loading issues forward of BS1000 (the forward edge of the wingbox).
Yes, a new 777F is a good bit more of a capital investment than a used 747-400 and conversion, but your operating costs are going to be a great deal lower from the beginning and your useful airframe life will be longer. So the economics over the long term likely favor the 777F.
erikgnoha From Venezuela, joined Jun 2006, 214 posts, RR: 4 Reply 14, posted (1 year 10 months 1 week 2 days 11 hours ago) and read 12970 times:
Quoting LAXintl (Thread starter): Below are estimated current market value (in USD) based on oldest to newest airframes, along with sample monthly lease rates in (USD,000) based on oldest to newest airframes for many common models.
Stitch From United States of America, joined Jul 2005, 26946 posts, RR: 83 Reply 15, posted (1 year 10 months 1 week 2 days 9 hours ago) and read 12819 times:
Quoting erikgnoha (Reply 14): Are these dry lease rates or wet lease rates?
LAXintl From United States of America, joined May 2000, 22237 posts, RR: 51 Reply 16, posted (1 year 10 months 1 week 2 days 9 hours ago) and read 12762 times:
Quoting lightsaber (Reply 9): Do you have a link so that I may educate myself better on the transition of cargo to dedicated freighters from belly cargo? I'm under the impression that belly cargo was doing better than is apparently the case.
Sure there is lots of stuff out there.
You can read the Airbus, Boeing and IATA forecast which all call for solid demand of pure freighter aircraft.
Due to a tripling in traffic levels and the preference
among airlines and shippers for dedicated freighter
service, the freighter fleet will increase by more than
two-thirds, from 1,755 to 2,967 airplanes. Although
1,282 airplanes will be retired, 2,494 airplanes will
be added to the freighter fleet by 2029.
A shift toward widebody freighters will result in a
fleetwide increase in average freighter airplane payload,
which accounts for the disparity between growth in
demand for cargo services and fleet growth. Well
over half of all additions to the fleet will be in the
widebody (medium and large freighter) categories.
Asian markets will lead global growth and underscore the value of the 747 freighter asset.
- Approximately 80% of airfreight from Asia is carried on maindeck freighters
In addition here are some quotes from various presentations.
US Air Transport Association: While lower deck, or belly space, on commercial passenger carriers provides approximately half of all international air cargo movement in and out of the U.S. This heavy usage of commercial passenger carriers capacity will be insufficient in the years to come to support expected air freight demand against a relatively flat industry capacity. Coupled with 100% cargo security screening requirements, the demand for pure freighter aircraft, particularly medium and large widebodies will dominate air cargo markets to provide the critical lift for US international air trade.
International Air Cargo Association: Declining Availability of Belly Space
Air cargo operations are increasingly separating from passenger airline operations.
Currently, 55 percent of US air cargo carrying capacity is in the bellies of passenger aircraft.
Use of belly space is decreasing, while use of dedicated all-cargo aircraft is increasing.
This change can be attributed to the following reasons:
• Increased market share held by the integrated express carriers
• Freight forwarder preference to enter into deep business relationships with all-cargo operators
• Higher passenger load factors, leaving less space/weight for cargo
• Reduced average fleet size by airlines including increased use of smaller regional jets
• Growing security restrictions
While there is likely to be a continued market for the passenger airline belly cargo, most projections
indicate strong growth for integrated carriers along with dedicated freighter operators while
seeing a continued decline for air cargo traveling on commercial passenger airlines, particularly
in the US market.
Lufthansa: Intercontinental markets worldwide where the percentage of capacity provided by freighters, as opposed to passenger aircraft bellyholds, was likely to increase over the next five years.
Specifically, said Andreas Otto, Lufthansa Cargo's executive board member for product and sales, the freighter share of the total cargo intercontinental capacity on was projected to rise from 73 percent in 2010 to 77 percent in 2015, with the bellyhold share dropping commensurately from 27 percent to 23 percent. In North-Asia origin markets particularly, the capacity requirement will be significantly greater than the potential growth in belly capacity," he explained.
Quoting TSS (Reply 10): I seem to remember seeing a photo of one with a huge cargo door, complete with windows, on the port side.
Quoting bjorn14 (Reply 12): Any valuations on the E135. I know its difficult with 30 of them sitting at IGM but anything would be helpful.
Well due lack of transactions, the below estimate is probably quite generous. Unless planes move soon, they probably are not worth much more than scrap/parting value.
ERJ135ER – $3.7 – 5.2M, $40-50,000
Quoting Stitch (Reply 13): So the economics over the long term likely favor the 777F.
Unless you can use a 747-8F.
Actually in fairness to the 747-400, having had a business relationship with a major 747 freighter operator, the 747-400F does still have a very compelling business case. The model especially now has relative low acquisition cost, more flexible ops (no ETOPS headache), and better mix of cargo (777 has both DG and sizing limitations) capability.
Quoting erikgnoha (Reply 14): Are these dry lease rates or wet lease rates?
They are for finance and operating leases.
Wet lease is a whole other ball game that is usually price in per block-hour rates.
[Edited 2011-08-14 13:34:22]
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LAXintl From United States of America, joined May 2000, 22237 posts, RR: 51 Reply 18, posted (1 year 10 months 1 week 1 day 13 hours ago) and read 12361 times:
I regularly get a compiled report, but it seems the data crunching originated from these guys - http://www.ascendworldwide.com/
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Stitch From United States of America, joined Jul 2005, 26946 posts, RR: 83 Reply 19, posted (1 year 10 months 1 week 1 day 12 hours ago) and read 12257 times:
scarebus03 From Ireland, joined Apr 2005, 295 posts, RR: 2 Reply 20, posted (1 year 10 months 1 week 1 day 10 hours ago) and read 12164 times:
I see the B737-300 has a lower lease rate of $105k p.m. I view that as very high for the lower end older models. My experience thus far is that they are going for as little as $70k p.m.
LAXintl From United States of America, joined May 2000, 22237 posts, RR: 51 Reply 21, posted (1 year 10 months 1 week 1 day 7 hours ago) and read 12036 times:
As I mentioned in my initial posting, 737-300 pricing has seen a recent resurgence as more parked inventory has found second homes.
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A388 From Netherlands Antilles, joined May 2001, 9130 posts, RR: 13 Reply 22, posted (1 year 10 months 1 week 13 hours ago) and read 11790 times:
Interesting read LAXintl but what are your sources for those lease rates and market values? You mention transactions, but which transactions and by whom? I'm interested in knowing the details on how these lease rates and market rates are obtained and/or determined. Please let me know.
EDIT: I see your posts with your source info, thanks but if you have more detailed information, that is always welcome of course!!!
A388 From Netherlands Antilles, joined May 2001, 9130 posts, RR: 13 Reply 23, posted (1 year 10 months 1 week 13 hours ago) and read 11766 times:
Quoting LAXintl (Reply 16): Quoting Stitch (Reply 13):
So the economics over the long term likely favor the 777F.
Unless you can use a 747-8F.
Actually in fairness to the 747-400, having had a business relationship with a major 747 freighter operator, the 747-400F does still have a very compelling business case. The model especially now has relative low acquisition cost, more flexible ops (no ETOPS headache), and better mix of cargo (777 has both DG and sizing limitations) capability.
Good observations and also thank you very much for your qoutes on how full freighters are expected to increase compared to passenger belly cargo.
A388 From Netherlands Antilles, joined May 2001, 9130 posts, RR: 13 Reply 24, posted (1 year 10 months 1 week 12 hours ago) and read 11714 times:
LAXintl,
Do you also have the same data for the previous months and a comparison to last year's valuation and lease rates? That will be interesting to see.
A388
25 LAXintl: Feel free to compare prices in previous postings. Aircraft Values, And Lease Pricing –Christmas 2010 (by LAXintl Dec 22 2010 in Civil Aviation) 2010
26 LAXintl: A sign of things to come for the A340 - Per AW&ST August 22 print edition A340 Dismantling Candidate The Airbus A340-300 is the top disassembly pi
27 Stitch: I think the only real option for continued operation is as a VIP bird where operating costs are not so important since the flight hours are low. I ex
28 lightsaber: Since LAXintl has already replied, I'll just note I'm pleasantly surprised by the strength of the revival. If the C-series does well, I expect 733 le
29 corernagh14: A340-300 – $20.0 -59.7M, $275-580,000 and what do we know about the A340 500 and 600 models from your sources ?
30 Stitch: For a 2008 delivery A340-500HGW: USD 73 to USD 88 million. For 2006 delivery A340-600: USD 58 to USD 70 million.
31 corernagh14: For a 2008 delivery A340-500HGW: USD 73 to USD 88 million. For 2006 delivery A340-600: USD 58 to USD 70 million. many thanks for this input
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I expect freight will continue its shift towards a greater fraction going belly cargo. 
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