HOTR: Lease rates, aircraft values continue to plunge/Update

Update: Ishka advises that its starting comparison point in the chart below should have been January, not July. This changes the rate of value and rent decline appreciably.

Aug. 19, 2020, © Leeham News: Aircraft values and least rental rates for selected 5-year old aircraft fell in a six week period, some dramatically.

Ishka, a UK-based appraisal firm, estimates that current market values fell between 9% to 25% in the short period.

The Boeing 777-200LRF value fell the least. Values of the Boeing 777-300ER fell the most.

Airbus A330-300 lease rates dropped a staggering 45% in six weeks, Ishka reports—for a 5-year old aircraft.

 

 

24 Comments on “HOTR: Lease rates, aircraft values continue to plunge/Update

  1. I don’t have the numbers from 6 weeks ago, but Scott offered the numbers from 17 July, so 24 days ago and that doesn’t look bad.

    Values for A320ceo, A330-300 and 777-2LRF are stable and did not fall.
    Values for 737-800, 737-900ER and A321ceo fell only little bit.

    Lease rates for 8 of the 12 planes are stable too.
    Only E190LR, 737-800, 737-900ER and 777-2LRF fell.

    The monthly lease rate for the A330-300 with $0.29m is 0.54% of its $54m value. This 0.54% is the lowest percentage of all 12 planes, this means leasing companies have many in stock. The next low lease rate vs value has the A350-900.
    If Emirates want to be more competitive because they are asking for a 777X delivery timeline, they could instead retire older 777 and lease A350-900.

  2. “Aircraft values and least rental rates for selected 5-year old aircraft fell in a six week period, some dramatically.”

    Are there five-year old A330neo in the leasing market?

    • No, though you might stretch it to start of early while being built back in 2014.

    • No, the first delivery of the A330-900 was in 2018.

      The 787-9 could be listed, but maybe there is no sale or lease data. First delivery was in 2014.

    • “Are there five-year old A330neo in the leasing market?”

      I would suspect they build a spreadsheet and they have plane models and ages as variables, they know the relativities between planes of different sizes and capacities. As a new data point comes it adjusts the values.
      A brand new plane leasing sets the bench mark for that model . Very popular planes would have plenty of data , other planes are more like rough estimates.
      Like real estate some people may pay over or under the estimate depending on their circumstances.

    • Curiously,
      What would the CMV and MLR rates be for a brand new delivery hours 787-8

      • @Nickola: Before COVID, 787-8 was selling for $115m or less and lease rate in the $800k range, according to market intelligence.

        • January value for the 787-8 was $92m, that’s 80% of $115m. Isn’t it very expensive?
          $800k lease seems better, but for 5 years the lease would be $48m. Depends what is included in the lease but $48m for 5 years is even worse.

  3. As Grubbie and Leon pointed out the MLR change in the table is over 8 months and the change from the most recent table in Leehamnews is small.

    But….

    If the CMV column headings are correct (and my guess is no, they’re not, column 1 should be 1 Jan like MLR) then that is a dreadful 6 weeks!

  4. I see Boeing has started using a new name for its re engineered 737 series
    Its now the maxjet
    “Boeing appears to have started quietly dropping the “Max” from its 737 Max aircraft in the wake of recent air disasters, instead referring to a 737-8.

    The new name has hitherto been used only internally at Boeing and emerged when the company put out a statement on Wednesday to announce it had won its first order for the grounded 737 Max aircraft this year. Poland’s Enter Air SA agreed to buy up to four variants of the jet.
    https://www.theguardian.com/business/2020/aug/20/boeing-737-max-plane-new-name-poland-enter-air

    Hardly a seismic shift but it suggests the ‘Max’ has evolved

    • I believe that is wrong, they are dropping MAX and referring it to its model, -7/8/9/10

    • I suspect the Guardian reporter saw the 737-8 reference as a rebranding effort, not recognizing the series-size numerical naming convention. Collectively they are still the MAX generation of aircraft, that hasn’t changed.

      I frequently see predictions that Boeing will rebrand the MAX to avoid public stigma. Calhoun has said they won’t and I would tend to agree it wouldn’t accomplish anything. Reporting would then refer to it as the “former MAX”, so the name wouldn’t go away. But people tend to see things in terms of what they believe or want to happen.

      • Doesn’t look like a full rebranding but clearly de-emphasizing “MAX” and emphasizing the traditional “737” brand instead.

        Here is the latest press release:
        https://boeing.mediaroom.com/news-releases-statements?item=130724

        Here is a pre-grounding press release:
        https://boeing.mediaroom.com/2019-02-27-Boeing-Vietjet-Announce-Order-for-100-737-MAX-Airplanes

        Both have about 15 references to “737” but the older one has 18 references to “MAX” while the new one has five.

        The MAX brand is badly damaged by now so I am completely not surprised by the focus on the 737 brand instead.

        • I think this is an example of the trend I mentioned. If we are counting the number of references to the word “MAX”, we are hoping for a specific outcome. But if the term “MAX” is still being used, there is no effective rebranding.

          The estimate of public intelligence here is pretty low. Nobody would be fooled by a rebranding, and every opportunity to remind the public of the original “MAX” name would be taken. So it would have little if any effect, and would more probably convey the notion that Boeing is attempting rehabilitation by artificial means.

          The only path to rehabilitation for the MAX is by safely returning to service. So that is the substantial goal, rather than an unsubstantial shift in naming.

          • @Rob, am not hoping, merely observing how the Boeing marketing team is presenting the aircraft now. I am merely an interested observer.

            So, no, not rebranded. But, yes, the emphasis is clearly now on “737” rather than “MAX”.

      • Big difference between a re-brand and quietly dropping a moniker. Calhoun is not what I think of as a poster child for integrity .

        I would agree that your last line applies to you.

        Being a former mechanic/technician/engineer, my DNA was solid for fact, you can’t get machinery to spin with smoke and mirrors. If you are successful in the mechanical/electrical/electronics area (and I was) you deal in facts and reality.

        It does tend to keep you up at night though.

        Granted I am not generally categorized as people, cyborg comes to mind.

        • If Boeing drops the “MAX” naming definition of the current 737 series, I will agree. But there is no evidence of that occurring at present. The Boeing web site still prominently features the MAX series, specifically as the MAX, as it always has.

          In this case an incorrect press understanding is being blown out of all proportion to the truth. That is no surprise, as the same thing has happened throughout the MAX saga. But if common sense prevails, it’s apparent that no real benefit would occur from a rebranding, for the reasons I gave.

          • The web site has not been updated, quite possibly since before the grounding. That is correct.

            But the marketing communications have shifted to reduce the emphasis on “MAX”. And those communications will be very much approved by the corporate marketing team.

          • If you have evidence of this as an official Boeing act or position, please share with us.

            If not, I think it’s reasonable that references were made to the aircraft model number, which is 737-8, as well as references to the generation as the MAX. The FAA often refers to it this way as well in their documentation. Just as they often refer to a model of the earlier generation as 737-800, also with the designation NG.

            Boeing is on record as not wanting to rebrand the MAX. There is nothing here to suggest otherwise. No change in their marketing materials or web site. No statement to the contrary. Nor would there be any intelligent reason to do so. So I think this is a product of overactive imaginations.

          • Rob,

            Yes, I do agree … it’s quite possible that the people who write Boeing press releases have overactive imaginations!

    • If Boeing wanted to get away from the name “MAX”, why did they mention it 5 times in the press release? That looks just like desperately making up a story where none is.

  5. This morning, Saturday, August 22, MSP looks fairly busy, much more than the previous few months. Maybe we’ve past the trough of declining air travel…

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