Jetrader - Spring 2017 - 44

appraisal

Airbus A340-300

Fred J. Klein
ISTAT Certified Senior Appraiser and
Appraiser Fellow
Aviation Specialists Group, Inc.
Tel: +1 (703) 736-9700
fred@asgroup.asero

As a member of the very active 300-seat
market segment with a range of about 7,300
nautical miles, the A340-300 was designed
to take advantage of the proliferation of
denser long-haul routes where the larger
A380s, 747s, 777-300s and A340-600s were
too large and expensive to be economically
efficient. This route fragmentation started
across the North Atlantic and over time has
spread around the globe. With four engines,
the A340 is not subject to ETOPS restrictions,
but at the same time has double the number
of, albeit smaller, engines to operate, provide
spares for and maintain. Its direct competitor is the twin-engine 777-200ER, which has
considerably better market penetration. As of
late 2016, there were about 150 A340-300s
in the fleet at about 35 airlines compared
to 400 777-200ERs at about 40 operators.
Additional competition is entering this
market segment in the form of three new
technology big twin families, the Boeing 787
and Airbus A330NEO and A350XWB. The 787
family comes in three versions. The -8 at
242 seats is smaller than the -300, entered
service in October 2011 and has about 425
currently in service and on order. The larger
-9 series entered service in mid-2014 and
has similar seating capacity to the -300, but
with about 300 miles more range. Over 550 of
them are in the fleet and on order. Boeing is
now developing the 787-10, which is due to

The A340-300 Market
The A340 family has four models: the
original -200 and -300 and the latergeneration -500 and -600. The initial
A340s, the -200 and -300, were designed
for lower and medium-density long haul
routes, and the -500 is an ultra-long range
machine while the -600 is a high-density
long range airliner. The largest-selling
member of the family, the A340-300 first
flew in October 1991, was certificated in
December 1992 and its deliveries ran from
1993 through 2008.
The A340-300 is a four-engine jetliner
that was designed to have high systems
and operational commonality with other
concurrent generation Airbus aircraft, and
to provide efficient lift on long-range,
medium-to-higher density routes. The -300
series never achieved substantial market
mass, and Airbus announced in late 2011
that all A340 production had been formally
discontinued due to a lack of orders. With
limited market penetration, four engines
and the 777-200ER as a direct competitor, the -300 has been experiencing poor
demand and weak value retention. In addition, new technology twins, some of which
are entering the market or are under development, will further impact its market.

enter service in 2018. It will be larger than
the A340-300 at 330 seats but with less range
at 6,400 nautical miles. All versions of the
787 should offer excellent operating economics and value retention and will be strong
competitors.
The A330NEO family, currently scheduled to
enter the fleet in late 2017, is being offered
in two versions. The -800 is slightly smaller
than the A340-300 at 257 seats and the -900
variant will have 287 seats in typical configuration and about 6,500-nautical mile range.
The A350XWB is offered in three versions,
the -800, -900 and the -1000. The -900, at
325 seats/8,100nm, was first delivered in
late 2014 and competes directly with the
A340-300. Deliveries have been slow due to
supplier delays - in late 2016 only about 30
were in service - but the order book stands
at almost 600 airplanes. ASG believes that
these new technology twins will further impact
already weak A340-300 demand and values.
In summary, the A340-300 is in a very active
and highly competitive 300-seat widebody
market segment. It has faced strong competition from the 777-200ER during its life cycle
and never achieved strong market mass. New
technology jetliners are now entering or are
about to enter its market. As of late 2016, 36
A340-300s, almost one-quarter of the fleet,
was parked. Demand and values have suffered
and ASG expects neither will recover.

A340-300 Current and Future Values assuming 1.5% annual inflation
Manufacture
Year
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

4Q2016
CMV
2017
BV
5.0
part out
5.5
6.0
8.0
7.2
7.0
9.0
8.1
8.0 10.3
9.1
9.0 11.3 10.4
10.0 12.4 11.5
11.0 13.7 12.6
12.0 15.0 13.9
13.0 16.4 15.2
14.0 17.7 16.6
15.0 19.3 18.0
16.0 21.1 19.6
17.0 22.9 21.4
18.0 24.9 23.2
19.0 27.1 25.3
20.0 29.8 27.6

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

6.3
7.3
8.3
9.2
10.6
11.7
12.8
14.1
15.4
16.8
18.3
19.9
21.7
23.6
25.7

5.4
6.4
7.4
8.4
9.4
10.7
11.8
13.0
14.3
15.6
17.1
18.6
20.2
22.0
23.9

4.4
5.4
6.5
7.5
8.5
9.5
10.9
12.0
13.2
14.5
15.9
17.4
18.8
20.5
22.3

3.6
4.5
5.5
6.6
7.6
8.6
9.7
11.1
12.2
13.4
14.7
16.1
17.6
19.1
20.8

2.3
3.6
4.6
5.6
6.7
7.7
8.8
9.8
11.2
12.4
13.6
15.0
16.4
17.9
19.4

2.4
3.7
4.6
5.7
6.8
7.8
8.9
10.0
11.4
12.6
13.8
15.2
16.6
18.1

2.4
3.7
4.7
5.8
6.9
7.9
9.0
10.1
11.6
12.8
14.0
15.4
16.9

2.4
3.8
4.8
5.9
7.0
8.1
9.2
10.3
11.7
13.0
14.2
15.6

2.5
3.8 2.5
4.8 3.9 2.6
6.0 4.9 4.0 2.6
7.1 6.0 5.0 4.0
8.2 7.2 6.1 5.1
9.3 8.3 7.3 6.2
10.4 9.4 8.4 7.4
11.9 10.6 9.6 8.6
13.1 12.1 10.7 9.7
14.4 13.3 12.3 10.9

Source: Aviation Specialists Group, Inc.

44 The official publication of the International Society of Transport Aircraft Trading

2.6
4.1
5.1
6.3
7.5
8.7
9.9

2.7
4.1
5.2
6.4
7.6
8.8

2.7
4.2
5.3
6.5
7.7

2.8
4.3
5.4
6.6

2.8
4.3
5.4

2.8
4.4

2.9
Jetrader - Spring 2017

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