Posted November 27, 2008 11:23 AM
By Jake Reppert
Widebody Values Over the Last 12 Months
Overview
Much like with our previous analysis of narrowbodies, this feature looks at the 767-300ER and A330-200 widebody aircraft, and compares their percentage decreases in value. For the 2008-built aircraft values, the graphs show a decrease in value since January 2008, while the 2000-built aircraft decreases run through to the latest values (as of November) and are based on the October 2007 values, so as to keep them in line with the narrowbody data from two weeks ago.
Widebody Market
We generally notice that widebody values are more susceptible to downturns than narrowbody values, however this time around we’ve seen widebody values hold out slightly longer than Narrowbodies, with the A330-200 and 767-300ER only recently catching up with the percentage value drops witnessed in the 737-800 and younger A320 family aircraft. The initial resilience in widebody values can probably be traced back to the Asian crisis of 1997, since when there has been a chronic under-ordering of widebodies due to lessons learnt from bad investments made in the past, and the fact that they are perceived to be a higher investment risk. As a result there has been a shortage of good quality wide-bodied aircraft over the last 5-7 years. That said, the problems of the aviation industry have shifted from a cost crisis (driven by fuel) to a demand crisis, driven by a weakening global economy. For the first time in years, widebody availability has started to loosen up, with A330s, some older 777-200s and some A340s becoming available for sale, lease or sub-lease as carriers try to control capacity. This has had an impact on values. Lack of finance for new aircraft has also played its part.
A330-200 Values
The A330-200 held up well through the first ten months of 2008, with the first major reduction in Market Values coming in November. The type has its newer technology, right sizing, and a broad operator base to thank for its value resilience. 787 delays were also helping in the first half of this year, although the bankruptcy of charter operator XL, as well as ongoing problems with demand in India, have made some A330s available on the market.
767-300ER Values
A year ago 767 values were well above Base levels, thanks to 787 delays, growth in the international long-haul market, and the lack of availability of widebody lift. However, there are now 36 767-300ERs in storage (6-7% of the fleet), and as airlines cancel routes the 787 delay is no longer a major concern. Lack of finance is also hampering deals from being done, and with some aircraft being on the market for prolonged periods, asking prices are having to be reduced further.
Much like the narrowbody values graph the key trend here is that newer technology aircraft are beginning to see declines more in the line of the older technology aircraft, something we didn’t see when the central problem was fuel cost, but began showing up when the problem became economic worries (and softening in demand).
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