ISTAT Jetrader - Spring 2020 - 45

Forecast Half-Life Base Values - 1.5% p.a.
Vintage CMV

CBV

2021

2022

2023

2024

2025

2026

2027

2030

2031

2032

2033

2019

44.50 44.50 41.45

38.74

36.17

33.72 31.38

29.18

26.98 24.89 22.92 21.02

19.19

17.60

16.21 14.84 13.55

2015

35.49 34.79 32.43 30.22 28.01 25.91 23.93 22.02 20.18

18.57

17.13

15.73

14.41

13.17

12.03

10.86 9.78

2011

26.65 25.74

23.80 21.93

13.15

12.03

10.89 9.85

8.86

7.92

7.03

6.18

2007

20.24 18.71

17.28

15.90 14.59

10.03 9.04

8.09

7.20

6.35

5.54

4.78

4.05

3.35

2003

14.87

13.65

12.52

11.41

10.38 9.40

8.48

7.60

6.78

5.99

5.24

4.53

3.22

3.22

2.55

1.89

1999

11.11

9.79

8.88

8.02

7.21

6.44

5.71

5.02

4.37

3.74

3.12

2.52

1994

7.47

6.30

5.63

5.00

4.40

3.83

3.29

20.13

18.53 17.09

15.69

13.36 12.22 11.09

14.37

2028

2029

Vintage

Market Lease Rates - 000s

Engine Type

In Service

Split

2019

268-325

CFM56-5A

174

4%

2015

233-292

2011

200-252

CFM56-5B

2,467

57%

2007

170-222

V2500-A1

49

1%

2003

140-177

1999

112-141

V2500-A5

1,616

38%

1994

77-94

in addition to the part-out market and
finally moving into the conversion sector.
As of 2 December 2019, there are a total
of 4,279 passenger configured A320ceo
aircraft either active, parked or in
storage, while around another 10% have
already been removed from service.
China Eastern is by far the largest
operator with 180 in service, followed
by easyJet, JetBlue, IndiGo and China
Southern, each with fleets between 117169 units. In all, 244 operators actively
operate the A320ceo, supported by
practically all the lessor community that
doesn't specialize in other markets.
Competitively, the A320ceo has
always faced the 737 in some variation,
and the closest rival remains the 737800, of which Boeing has delivered
around 5,171 examples in all variants
since 1998, with the final passenger
variant delivering December 2019. As of
2 December 2019, the fleet contained
4,899 in service passenger configured
737-800s (active/parked/stored). The
737-800 is slightly larger than the
A320ceo but predominantly used on

2034

2035

In Service = Active, Parked, Stored

the same sectors in the same markets.
In terms of values and lease rates, the
737-800 has tended to edge past the
A320ceo partially due to size, but also
influenced by having only one engine
OEM versus two for the A320ceo. Since
January 2016, the A320ceo has faced
a new competitor in the shape of the
A320neo with over 830 operating and
over 3,150 in backlog.
Naturally, we expect the improved
performance of the A320neo will erode
value performance for the A320ceo
over time (much like the MAX should
do to the 737-800 once the issues
are resolved), as both economic and
environmental pressures force the pace
of replacement. Over the last few years,
however, prolonged lower fuel pricing
coupled with a mistrust of technical
reliability for new designs has meant
that operators have been reluctant to
part with their trusted A320ceo and
737-800 aircraft. Consequently, as
leases extend, pricing for A320ceo
aircraft has remained firm despite
declining lease rates. With zero MAX

aircraft in service, the same effect is
even more pronounced for the 737-800.
Ultimately, both the A320ceo and
737-800 will be fully replaced by the
neo and MAX variants, and values and
lease rate performance will reflect that,
with larger value drops experienced
in periods of weakening demand and
slower recoveries occurring as neo
and MAX delivery rates step up to
satisfy demand. Over its long history,
the A320ceo has already endured
at least three market cycles, but if
enough replacement aircraft are in
service for the fourth cycle, recovery
will be difficult. Traditionally, pricing
will narrow toward the oldest in the
fleet, but with so much technical
variation centred on engine upgrades,
we may see better recovery for the
most efficient aircraft that can operate
more reliably and economically than
older variants. The replacement cycle
has a long way to go, but the balance
of demand, production rates, reliability
improvements and fuel price will
be paramount.
Jetrader

* SPRING 2020 * 4 5
ISTAT Jetrader - Spring 2020

Table of Contents for the Digital Edition of ISTAT Jetrader - Spring 2020
