Appraisal firm sees little impact on Classic values from A330neo

With apparent momentum building for the launch of the Airbus A330neo, widely expected at the Farnborough Air Show, the appraisal firm Collateral Verification Tuesday issued a note expressing the likely affect on values of the A330 Classic.

Impacts to values on the in-production Airbus A320 and Boeing 737 families was a widespread concern when the Big Two moved to re-engine these aircraft types.

Airbus and Boeing each defended the values of the in-production models, saying that until the re-engined aircraft in service reach about half of the installed base of the current models, values of the latter shouldn’t be negatively impacted. We’ll see if this is the case, with the A320neo entering service next year and the 737 MAX in mid-2017. But if this theory holds, then the same should be true for the A330 Classic.

The values of the Classics have emerged as a worry going forward. Market forces believe Airbus will have to hold the line on pricing the A330neo, foregoing much if any of a premium for the new airplane. Airbus has promoted the Classic as the less expensive alternative to the higher priced, newer technology Boeing 787, and from the IATA AGM earlier this month in Doha, John Leahy, COO-customers for Airbus, called a low-cost A330neo “unbeatable” in economics.

Collateral Verifications doesn’t believe there will be much of an impact on Classic residual values. The company writes:

Over the last several months, the A330NEO has been a big part of the industry discussions. Although not yet launched, it seems more and more apparent that this may be announced in the near future. Due to this, many of our clients have approached us to find out how this may impact residual values of the existing A330 fleet. Based on the historical data we have collected on the A330-300 and Boeing 767-300ER, we have compared the impact of the A330-200 when it first entered service. Although not 100% similar to the introduction of an A330NEO, it does provide some guidance as to the potential impact of newly introduced aircraft to other in-production aircraft. The value impact on the A330-300 and the Boeing 767-300ER was about ~5-7% over their normal rate of depreciation which was not that much different from the impact on the 737 classics when the 737NG was introduced. As with any other older generation aircraft, the real value impact will be during a downturn. A330s and B767s dropped in value by 15-25% after 9/11 and dropped in value by 15-35% after the financial crisis. Overall, the initial impact of the A330NEO should not be greatly significant, unless the aircraft enters service during the next downturn.



3 Comments on “Appraisal firm sees little impact on Classic values from A330neo

  1. I believe the A-330NEO will be launched at the FAS. What effect the NEO will have on the CLASSIC secondary market values will not be determined for some time, unless the NEO gets hundreds of orders in the next year, or so. The jury is still out on the secondary market values of the A-320CLASSIC and B-737NG, each with their reengined versions having thousands of orders. The same is true for the B-777X vs. the B-777CLASSICs, which has a few hundred orders and commitments.

  2. So if you have to sell the A330 NEO cheap to make it viable is there a market for it? And do you undercut the A350 that is a premium and ……

    • I guess Airbus has no problems with selling cheap NEOs instead of expensive XWB as long as the profit for the NEO is higher;-) I even expect Airbus might allow customers to downgrade some of their A350 orders to NEOs.

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