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by Chris Wills, Head of consultancy operations at Cirium Ascend Consultancy
Recovery from any downturn impacts assets differently, although typical trends are observable. The youngest most liquid assets are generally the ones that benefit more rapidly in an improving market. Having often seen the lowest impact of a downturn – with relatively higher utilization maintained and a smaller portion of the fleet stored – they are typically the quickest to return to normal operational levels.
While Market Values and Lease Rates lag marginally, as the market interprets the evolving supply and demand landscape, they usually follow a trend like that of the operational fleet.
Given recent Value and Lease Rate changes on the A330, the medium twin widebodies are a topical group of aircraft to review. The new Cirium Ascend Value Trends tool provides a quick visualisation of the trends mentioned and particularly the difference between the generations. Of course, there are countless types/age combinations that could be looked at!
To set some context for the types, the percentage of the stored fleet can be seen to rise significantly during each of the past three downturns, with the most recent being the greatest. However, in all cases not only has the newest technology seen the lowest share of the fleet in storage, it has also been the quickest to return to(wards) normal operational levels.
To see the manifestation of these fleet dynamics for the types a look at Lease Rates can be helpful as these tend to lead Market Values.
Comparing across multiple generations can be tricky, but constant age data is a good way to capture trends across long production runs. The first example shows a five-year old aircraft. While this limits what we can see of the recent Lease Rate trends of the 767-300ER it shows how the A350-900 Market Lease Rates declined to a lesser extent compared with the A330-300(HGW). The Market Lease Rates of the A350-900 can also be seen to have recovered quicker. It is clear looking further back at past downturns the Market Lease Rates of the newer generation aircraft of the time have rebounded faster. The 767-300ER vs. the A330-300HGW is very much a case in point when we compare the recovery after 2009. Here the 767-300ER had permanently shifted to a fundamentally lower level while the A330-300HGW had essentially returned to the levels the 767 had experienced at a similar point in its production cycle.
As noted earlier, the first Lease Rate chart doesn’t give a full picture for the recent 767-300ER Lease Rates. Thus, looking at constant nine-year old aircraft, showcases the A330 starting a recovery in Lease Rates ahead of the older type. Not close to the A350 levels and one could expect a stabilisation at fundamentally lower level then we saw post 2009. This is a typical progression for a type as it moves through its production lifecycle, that said, it is clear the A330 is on the up this year for both Market Values and Lease Rates.
In February Cirium Ascend Consultancy announced via our LinkedIn post that Lease Rates for the A330-300(HGW) increased by as much as 19%. In March the lessor idle fleet had almost halved since June 2022 as our Dublin based Analyst Connor Diver highlighted in his video. While most recently my colleague Lalitya Dhavala reported in her update further strong recovery for the A330-300, with Lease Rates increased up to 30% depending on vintage.
If you are interested in an elegant and simple way to compare aircraft types which Cirium Ascend has Values online for the new Value Trends tool is the place to go.
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