Jetrader - Winter 2015 - 45

appraisal

Airbus A320-200

Fred Klein, President
ISTAT Certified Senior Appraiser
Aviation Specialists Group Inc.
Tel: 703-736-9700
Fred@ASGroup.aero

Overview

and, in 2017, will rise to 50. Boeing has also
raised its single aisle rate to a current 42
per month and will go to 52 by 2018. Both
manufacturers have indicated they could
take production rates higher. Demand for
new, fuel-efficient jetliners has remained
strong even in the face of falling jet fuel
prices, but if it should slacken, there is
the possibility of oversupply. Second, the
A320 is no longer cutting-edge technology. It entered service in 1988 and, while
there have been considerable technological
advances over the years, airplanes delivered
from the late 1980s into the mid-1990s with
the V2500-A1 and CFM56-5A engines are
very difficult to place and have suffered
permanent value impairment.

The Airbus A320-200 entered service in
1988, and since that time has built very
substantial market share in the active 150seat jetliner segment. In mid-2015, almost
3,700 were in the fleet with more than 250
operators and 800 of the classic CEO model
on order. An updated version, the A320neo
(new engine option), is scheduled to enter
service in late 2015 and its sales have also
been very strong. Over the long term, with
its strong market penetration, broad user
base and large family (the A318/319/321),
the A320 should afford its owners average to above-average utility and future
value retention.

Market Environment

Competitive Outlook

The reader should, however, note several
caveats. First, in the face of very large
order books, both Airbus and Boeing have
materially increased their single aisle jetliner production rates over the last few
years. Airbus's 2012 production rate was
38 single aisle aircraft per month. It currently stands at 42 airplanes per month

The third factor is the upcoming introduction of new technology jetliners in the
150-seat market segment. In late 2010,
Airbus started offering the A320neo, which
had its first flight in September 2014 and
is currently scheduled to enter service in
late 2015. It will be available with the new

generation Pratt and Whitney geared turbofan engine and the CFM LEAP-X engine and
promises to offer considerably improved
operating economics. Airbus has been
aggressively marketing this jetliner and
as of mid-2015 had orders for more than
3,000 A320neos.
In August 2011, Boeing announced the
competing new generation 737MAX, which
will also offer substantially improved operating economics and fly the LEAP-X engine.
Scheduled for service entry in 2017, about
2,800 MAX orders have been received.
These new generation airplanes will have
an effect on long-term values of current
generation jetliners, but that will probably
not occur until the new aircraft have built
up some mass in the market. As the first
neo deliveries are scheduled for late this
year and the MAX not until 2017, that may
take some time.
After recovering from the downturn in
2008, operating lease rentals for the A320
showed some softening starting in 2011 but
have firmed in the last two years and have
been stable during 2015.

A320-200 Values as of October 2015
Build Year
1989 - 1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

Current Market
Value
2.5
5.3
7.2
8.7
9.7
10.8
11.8
13.0
14.1
15.2
16.5
18.0
19.7
21.7
23.5
25.5
27.4
29.4
31.6
33.9
36.3
39.2
43.5

Current
Base Value
part out
8.1
9.0
9.9
10.8
11.8
12.9
14.0
15.2
16.5
17.9
19.4
20.9
22.5
24.3
26.1
28.1
30.1
32.3
34.6
37.0
39.5
43.5

2016

2017

2018

Future Base Values at 2.0% Inflation
2019
2020
2021
2022

2023

2024

2025

7.5
8.3
9.1
10.1
11.0
12.1
13.1
14.3
15.5
16.9
18.3
19.7
21.3
23.0
24.8
26.6
28.6
30.7
32.9
35.3
37.7
41.6

6.8
7.6
8.5
9.3
10.3
11.2
12.3
13.4
14.6
15.9
17.2
18.6
20.1
21.7
23.4
25.3
27.2
29.2
31.3
33.6
36.0
39.8

6.2
7.0
7.8
8.6
9.5
10.5
11.5
12.5
13.7
14.9
16.2
17.6
19.0
20.5
22.2
23.9
25.8
27.7
29.8
32.0
34.3
37.9

5.6
6.3
7.1
8.0
8.8
9.7
10.7
11.7
12.8
13.9
15.2
16.5
17.9
19.4
21.0
22.6
24.4
26.3
28.3
30.4
32.6
36.2

2.9
3.7
4.5
5.2
6.0
6.8
7.7
8.6
9.5
10.5
11.5
12.7
13.8
15.1
16.4
17.9
19.4
21.0
22.7
24.5
26.4
29.5

2.3
3.0
3.8
4.6
5.3
6.2
7.0
7.8
8.8
9.7
10.7
11.8
12.9
14.1
15.4
16.8
18.2
19.8
21.4
23.1
25.0
28.0

2.3
3.1
3.9
4.7
5.4
6.3
7.1
8.0
9.0
9.9
10.9
12.0
13.2
14.4
15.7
17.1
18.6
20.2
21.8
23.6
26.5

4.9
5.7
6.5
7.2
8.1
9.0
9.9
10.9
11.9
13.1
14.2
15.5
16.8
18.3
19.8
21.4
23.1
24.9
26.8
28.8
31.0
34.4

4.3
5.0
5.8
6.6
7.4
8.3
9.2
10.1
11.1
12.2
13.3
14.5
15.8
17.2
18.6
20.2
21.8
23.5
25.4
27.3
29.4
32.7

3.7
4.4
5.1
5.9
6.7
7.5
8.4
9.3
10.3
11.3
12.4
13.6
14.8
16.1
17.5
19.0
20.6
22.2
24.0
25.9
27.9
31.1

The aircraft values stated herein are the product and the property of independent third-party sources, and ISTAT neither approves nor endorses the
information contained herein or the use thereof for any purpose whatsoever.
Aircraft specifications: Max Takeoff Weight 169,000 lbs, Engines CFM56-5B4 or IAE V2527-A5
Maintenance assumption: new aircraft is full-life transitioning to half-life at four years old.
Jetrader  *  Winter 2015 45
Jetrader - Winter 2015

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