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  • Shaking Out the Airbus and Boeing 2024 Delivery Numbers

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Max Kingsley-Jones, Head of Advisory, Cirium Ascend Consultancy

    Delivery volume for the mainline commercial aircraft types in 2024 was down over 10% year-on-year, amid production issues that blighted Boeing from early January. A deeper dive into the 2024 numbers in context with recent years highlights how OEM market share was impacted. It is also interesting to scrutinise how the geographical distribution of shipments compared last year, and how engine OEM delivery share has been evolving on the A320 family.

    Cirium data shows that a total of 1,094 Airbus and Boeing commercial passenger and freighter aircraft were delivered in 2024 (to airline and financial customers), compared with 1,233 in 2023. At the start of last year, our expectations were that the two OEMs’ combined shipment volume could be up 20% above 2023 (i.e. ~1,500 aircraft). Airbus had originally intended to deliver 800 aircraft but in June reduced its forecast to 770 amid ongoing supply-chain snags. Toulouse ultimately achieved a total of 766 deliveries (761 if non-commercial variants and customers are excluded).

    Boeing refrained from providing any delivery guidance throughout 2024 as it grappled first with the repercussions on its production rate of the Alaska 737 Max accident and subsequently the machinists’ strike. In the end, Boeing shipped 333 commercial aircraft, a third less than 2023.  As the chart below shows, Boeing’s share of deliveries versus Airbus plummeted last year to only 30% – its lowest since the 2019-2020 period when Max deliveries were suspended.

    Ahead of any OEM guidance for 2025, Cirium is projecting deliveries will reach the 1,500-mark originally expected in 2024. Airbus could see its deliveries rise by up to 15% or more, while Boeing is expected to recover its shipments volume and move back towards a share of around 40%. But much will depend on supply-chain and regulatory progress this year.

    Airbus/Boeing Commercial Aircraft Deliveries and Market Share – 2018-2025*

    Source: Cirium Core; note: passenger/freighter deliveries to commercial operators/financial institutions; *2025F is Cirium estimate prior to any OEM guidance

    From a geographical perspective, airlines across the entire Asia-Pacific region took the largest number of deliveries in 2024 (384 aircraft), although with China split out, Europe is elevated to the top slot with 317 shipments.

    The chart below illustrates the total 2024 volumes by region and the share they accounted for of each OEM’s deliveries. European airlines took the largest chunk of Airbus’s deliveries, while North America was the biggest market for Boeing (29% of its shipments).  The revival of 737 Max deliveries to China in 2024 after an almost five-year hiatus ensured Boeing’s volumes to this crucial market made a solid return. The 737 accounted for 47 of the US OEM’s 53 shipments to China last year, with the total representing a fifth of all Boeing’s 2024 deliveries.

    Airbus/Boeing 2024 Delivery Volume and Share by Region

    Source: Cirium Core; note: passenger/freighter deliveries to airline operators only

    Pratt & Whitney has been under intense pressure as it sought to tackle the well-documented GTF issues. CFM has also had to address issues which have impacted production. So it is interesting to assess how the two rivals’ share of the A320 market has been evolving since before Covid when deliveries of the GTF/A320neo were still in their early days.

    A320 Family Deliveries by Engine OEM and Market Share – 2018-2024

    Source: Cirium Core; note: deliveries to commercial operators/financial institutions

    Although A320neo family deliveries increased 5% last year, the number powered by the PW1100G actually reduced slightly, while CFM’s share rose significantly. As shown in the chart, engine OEM delivery share shifted from parity in 2023 to CFM taking a 54% last year. 2023 marked the high-/water mark for P&W’s share of A320 deliveries in recent times.

    In overall terms, P&W’s share versus CFM of single-aisle aircraft deliveries rose in 2024 to 37%, from 34% in 2023, as CFM volumes were affected by declining 737 Max shipments and P&W saw more A220 deliveries. P&W also powered an additional 47 commercial deliveries in the regional jet sector last year – the PW1900G-powered E-Jet E2.

  • Advanced Air Mobility – Snapshot January 2025

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Sara Dhariwal, Senior Aviation Analyst, Lead Appraiser – Helicopters & AAM, Cirium Ascend Consultancy

    The year 2024 was a mixed bag for the Advanced Air Mobility industry. Whilst some great advances were made by China’s EHang, the European OEMs faced challenges leading to the first high profile insolvency filings.  To date, the Cirium team has registered order commitments for 26 different eVTOL OEMs. There are undoubtedly more out there. Consolidation among the vast number of competing companies appears inevitable, as they strive to position themselves as a frontrunner to operate in civil capacity.

    Data coverage includes:

    eVTOLs – Urban Air Mobility (UAM)

    The eVTOL – UAM sector has generated the most activity in the market both in terms of the number of aircraft in development, and commitments received to date. Since the last update in October 2024, the sector has attracted 711 new order commitments. The space now has a total of just under 12,000 order commitments captured by Cirium Fleets Analyzer. Eve Air Mobility and Vertical Aerospace continue to lead the sector with 2,950 and 1,552 commitments respectively.

    Source: Cirium Fleets Analyzer, as of 31st December 2024. *Volocopter filed for insolvency 26th December 2024

    The global market for eVTOLs shows a varied regional distribution. Between the last update in October 2024 and 31st December 2024, APAC surpassed North America as the region with the most orders at a total of 3,914 taking a 32% share.

    Source: Cirium Fleets Analyzer, as of 31st December 2024

    Source: Cirium Fleets Analyzer, as of 31st December 2024

    European eVTOL OEMs Face Challenges

    Early 2024, the eVTOL (electric vertical takeoff and landing) industry gained momentum when Chinese company EHang reported successful completion of the first series of passenger carrying commercial demonstration flights by its EH-216S pilotless electric aircraft. The aircraft achieved certification by the Civil Aviation Administration of China (CAAC), in quarter four of 2023. The company continued to make progress throughout the year and in November 2024, the OEM reported it had also completed debut passenger flights in Thailand.

    Cirium Fleets Analyzer has registered 42 deliveries of the EH216 – 27 to Wencheng County Transportation Development Group, ten to Xishan Tourism and five to Shenzen Boling Holding Group – all for Sightseeing/Tourist usage.

    Meanwhile, the European eVTOL industry faced some turbulence primarily linked to certification and funding challenges –  

    • Volocopter – In June 2023, German-based Volocopter, along with Paris Airport operator Groupe ADP and the French Civil Aviation Authority, had announced their plan to offer eVTOL services to the general public during the 2024 Summer Olympics. It would make Paris the first European city to embrace this novel mode of transportation and was greatly anticipated right up until the event. However, certification issues hindered the plans, resulting in only demonstration flights taking place.

    In a major blow, Volocopter filed for insolvency proceedings in Germany on December 26, 2024.

    • Rolls Royce –  In November 2023, renowned UK-based engine OEM Rolls-Royce had announced its electric flight division was up for sale, as the company prioritized improving profits in its established jet engine business. A year later, in October 2024, Rolls-Royce declared the closure of its electrical business after failing to secure a buyer.
    • Vertical Aerospace – Following the divestment of Rolls-Royce’s electric flight division, UK-based Vertical Aerospace faced the challenge of finding a new engine partner. Despite this setback, the company remains determined and insists that they are on track, with ambitions remaining high. As reported on Cirium Dashboard in November 2024, under a new plan dubbed ‘Flightpath 2030’, Vertical intends to deliver at least 150 aircraft to customers by 2029 and break even in cash terms in 2030.

    The OEM reportedly reached a rescue deal in 2024, with its biggest creditor, US-based Mudrick Capital, obtaining a 70% stake in the business.

    At the start of January 2025, Vertical Aerospace announced it had become “the second company in the world” to achieve piloted thrustborne flight maneuvers with a full-scale vectored thrust eVTOL aircraft.

    • Lilium – Lilium stood out among eVTOL OEMs for debuting on US stock exchanges after merging with special purpose acquisition companies (SPAC), also known as “blank check companies.”

    The OEM secured substantial commitments and funding, with some reports claiming a valuation at $3.3 billion at its peak. In July 2024, the OEM announced one of the largest commitments in the eVTOL sector—an agreement with Saudia Group in July 2024 to acquire up to 100 eVTOLs.

    However, in November 2024, following an unsuccessful bid to secure a further loan of EUR100 million from the German Government, Lilium’s principal German subsidiaries applied for self-administration proceedings. On Christmas Eve 2024, the OEM announced they had secured a buyer by a little-known entity called the Mobile Uplift Consortium, reportedly from Europe and North America. This acquisition preserves almost 80% of Lilium’s workforce.

    While setbacks and challenges have plagued European eVTOL manufacturers, the industry as a whole continues to evolve.

    However, undoubtedly the eVTOL industry will continue to face significant hurdles primarily relating to certification and funding, but also market positioning and scale of manufacturing.

    In addition, many eVTOL OEMs rely heavily on government funding, which could be affected by geopolitical uncertainty as countries prioritize higher budgets for defense, potentially impacting incentives for electric aircraft.

    The BBC raised the following question in an article published 15th November: “Given all the uncertainty and expense, you may wonder why investors put money into new electric aircraft in the first place”. Bjorn Fehrm, with a background in aeronautical engineering and ex-combat pilot for the Swedish Air Force, replied:  “No one wanted to miss out on the next Tesla.”

    Business Electric – Multi-Engine

    In the business electric sector, there was a little less turbulence.

    Electra’s EL-2 Goldfinch hybrid-electric short takeoff and landing (eSTOL) marked the first flight of an electric aircraft with a pilot onboard at NASA’s Langley Research Centre in July 2024. The eSTOL has received almost 1,350 order commitments, including from notable clients like the helicopter lessor Bristow Group. However, the identities of the majority of the source of order commitments remain undisclosed.

    Aura Aero’s ERA have the second most order commitments at a total of 570. The OEM signed a co-operation agreement with Airbus Protect in May 2024. According to the OEM’s press release, by committing to the PAC, “Aura Aero will receive technical advice services from EASA, whilst helping to draft the generic elements to set the foundations of the future formal product certification basis”.

    Meanwhile, Sweden’s Heart Aerospace unveiled its first full-scale X1 demonstrator of the company’s regional 30-passenger ES-30 aircraft and will fly this in 2025. The ES-30design has been revised into a hybrid-electric aircraft. The  ES-30 has just over 530 order commitments.  

    Source: Cirium Fleets Analyzer, as of 31st December 2024

    The Cirium Ascend Consultancy AAM team will continue to provide valuable insight to the market. We would be pleased to hear any thoughts, comments or feedback you may have, so do not hesitate to contact us.

    Sara Dhariwal
    Lead Appraiser, Helicopters & AAM

    YIRU ZHANG

    Yiru Zhang
    Senior Valuations Analyst

    Eric Tamang
    Valuations Analyst

  • Cirium Ascend Consultancy Lands 10th ‘Appraiser of the Year’ Title

    London, 14 January 2025: Cirium Ascend Consultancy, part of the world’s most trusted source of aviation analytics, Cirium, has once again landed Airline Economics’ prestigious title of  ‘Appraiser of the Year’ at an award ceremony last night.

    This marks the tenth win for Cirium Ascend Consultancy, demonstrating its unparalleled expertise within aviation consultancy and underlining its unwavering commitment to excellence, transparency and accuracy.

    The annual award was presented to Rob Morris, Global Head of Cirium Ascend Consultancy, at the Airline Economics Aviation 100 Global Leaders Awards 2025 in Dublin, Ireland, which celebrates the best companies, individuals and transactions in the aviation finance and leasing sector.

    2025’s landmark win makes it the first time a single firm has won the title 10 times, recognising Cirium Ascend Consultancy’s invaluable insights that have shaped the strategies of key players in the industry.

    Voters of this year’s award praised Cirium’s accurate, timely, and insightful aircraft appraisals that have provided the valuations and analysis needed to understand market outlook, evaluate risks, and identify opportunities.

    Rob Morris, Global Head of Cirium Ascend Consultancy, said: “As we start 2025, we are humbled to have been named ‘Appraiser of the Year’ for the tenth time, reaching an impressive milestone in our history. Winning this prestigious accolade not only symbolises the trust and confidence our industry has in us, but is a tribute to the Ascend Consultancy team’s dedication and commitment throughout 2024. We have continued to strive for excellence, offering clients independent and transparent insights in a volatile year for OEMs, lessors, and the wider supply chain.”

    Cirium Ascend Consultancy’s contributions extend beyond appraisals, encompassing various aspects of aviation analytics such as risk management, asset tracking, and sustainability evaluations. The firm’s innovative solutions, including CO2 emissions benchmarking and fuel consumption analysis, reflect its commitment to supporting the industry’s transition towards a more sustainable future.

    With worldwide teams, and the industry’s largest team of ISTAT/ASA certified appraisers, Cirium Ascend Consultancy is poised to further drive industry analysis and improvement in 2025.

    To find out more about Cirium Ascend Consultancy visit cirium.com/analytics-services/ascend-consultancy

    For Cirium media inquiries please contact media@cirium.com

    About Cirium Ascend Consultancy
    Cirium Ascend Consultancy, a division of Cirium, offers market-leading expertise to help inform and drive successful strategies in the commercial aviation industry. With a global team of seasoned consultants and analysts, Cirium Ascend Consultancy delivers comprehensive data, expert insights, and tailored services that directly impact strategic investments and open avenues for growth in aviation.

    About Cirium 
    Cirium® is the world’s most trusted source of aviation analytics. The company delivers powerful data and cutting-edge analytics to empower a wide spectrum of industry players. It equips airlines, airports, travel enterprises, aircraft manufacturers, and financial entities with the clarity and intelligence they need to optimize their operations, make informed decisions, and accelerate revenue growth. 

    Cirium® is part of LexisNexis® Risk Solutions, a RELX business, which provides information-based analytics and decision tools for professional and business customers.  The shares of RELX PLC are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX. 

    For more information, follow Cirium® on LinkedIn or visit cirium.com.

  • Do Airline Dreams Come True? Part 1

    Ascend Consultancy has been providing values insights for six decades. Meet the Ascend Consultancy team.

    Richard Evans airline consultant
    Richard Evans airline consultant
    Richard Evans – Senior Aviation Analyst, Cirium

    Richard Evans, Senior Consultant, Cirium Ascend Consultancy

    READ PART two OF, Do airline dreams come true?

    As we commence 2025, the story is that every airline is desperate for new aircraft to meet growth or to replace older aircraft, or both. Many have very ambitious expansion plans. It seems an opportune moment, then, to consider how often airlines achieve goals for rapid expansion, and the factors that might help realise their dreams.

    For this analysis, the fleet and backlog data includes passenger single-aisles and twin-aisles, from all manufacturers.

    The airlines with the largest backlogs today are shown below, and then contrasted with the position a decade ago.

    They are a mixture of the largest carriers, with a higher share of replacement demand, and airlines in fast-growing developing countries.

    As at the end of 2024, there were 13,800 aircraft on order for airlines, compared to a total fleet of 23,600 passenger aircraft. Therefore the backlog-to-fleet ratio is around 0.58:1. Note that the order total includes just over 1,000 aircraft that are for unannounced airline customers, many of which are likely destined for Chinese carriers and lessors. Ten years ago, the fleet stood at 17,300, with a firm backlog of 10,300 aircraft. The ratio was therefore almost identical to today, at 0.59:1.

    Chart 1: Firm Order Backlog at December 2024

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis

    It is obvious that most of these airlines have backlog-to-fleet ratios well above the industry average, with several well above one. Thus, they have sufficient aircraft on order to replace the entire fleet in service today, or to support huge growth. Three of the listed carriers are based in India, which Cirium Ascend Consultancy expects to be the fastest growing market over the next 10-20 years, as discussed in previous thought leadership. Three are the major Chinese carriers, who have relatively small announced backlogs. The four largest US airlines are present, with quite modest backlog-to-fleet ratios between 0.28 and 0.69, plus low-cost carrier (LCC) Frontier Airlines, with a ratio of 1.19.

    Wizz Air Group has the most ambitious plans, with a backlog-to-fleet ratio of 1.34.

    Europe is represented by the three major LCCs, plus the Lufthansa Group. Within these, Wizz Air Group has the most ambitious plans, with a backlog-to-fleet ratio of 1.34. In contrast, Ryanair has a relatively small backlog, and is planning on slower growth over the next few years. Turkish Airlines, including its subsidiary Ajet, has the seventh largest backlog.

    There are two Middle East carriers in the ranking. These are Emirates, and Saudia Group (including its LCC subsidiary Flyadeal). Although outside the top 20, the combined order backlogs for Qatar Airways, Riyadh Air, Flydubai, Air Arabia, Etihad and Flynas now amount to nearly 700 aircraft, leading to concerns about future overcapacity in the region.

    The remaining three carriers are in Southeast Asia, and are primarily seen as LCCs. Their order backlogs have largely been in place since before Covid, and have seen several deferrals and order restructurings.

    A review of these airlines and the history of the Gulf connector airlines may be useful to understand the context of airline ‘mega-orders’ and the nature of rapidly-growing markets.

    The situation a decade ago was not altogether different to today. IndiGo is there, and has seen its fleet more than quadruple since 2014, from 88 to 382 aircraft. The four US Majors were listed, as were two of the Chinese ‘Big 3’, the Lufthansa Group, and Turkish Airlines. There were two airlines in Latin America, not represented today. This market has seen considerable upheaval and airline bankruptcies during Covid.

    Chart 2: Firm Order Backlog at December 2014

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis

    What stands out is Lion Air and AirAsia Groups had the largest backlog in 2014, in terms of aircraft units. They had backlog-to-fleet ratios of 3.54 and 2.03 respectively, in anticipation of huge market growth. Both companies, but especially AirAsia had plans to grow their brands across the region, using JVs or minority stakes in multiple countries. 

    The second highest ratio was Norwegian, which had similar ambition to break out of Norway to expand across Europe, and to launch long-haul services.

    It is well-documented how the latter plan brought the airline down, but it also struggled to compete with the bigger players.

    The three Gulf carriers were all present in the table in 2014. At the time, Emirates, Qatar and Etihad had a combined fleet of 450 aircraft, with 685 on backlog. Flydubai, since merged into the Emirates Group added a fleet of 88, with 127 on order. Thus, the combined backlog-to-fleet ratio was around 1.5, signifying how each carrier aimed to continue growing rapidly.

    Case Study – Emirates

    Emirates had a fleet of 219 passenger aircraft in 2014, being easily the largest of the Middle East airlines. It had grown rapidly, and its hub at Dubai International Airport (DXB) was seen as becoming full around 2015-2020. Dubai had announced plans for a massive new airport, now known as Dubai World Central – Al Maktoum International (DWC) in 2005. Construction started in 2007, with the first freight service landing in 2010, and the passenger terminal in 2013.

    The original DWC plan envisaged it becoming the hub for Emirates by 2018, with an eventual capacity of 150 million passengers and six runways.

    This was to support plans to grow the airline to a fleet of 500-600 aircraft.

    Things changed in 2011, however. It was decided to expand DXB to handle 90 million passengers. DWC growth was slowed, with it set to support Emirates switching its hub around 2025 instead. DXB handled 87 million passengers in 2023, and will exceed 100 million in 2025. However, DWC expansion is back on the rails, with the June 2024 announcement that it will replace the city’s existing gateway by 2034. All operations will move to the new airport, with plans for passenger facilities capable of handling 260 million passengers a year.

    Chart 3: Emirates Fleet and Backlog 2000-2024

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis

    So, what has all this meant for Emirates and its competitors? The airline’s fleet has hardly grown since 2015, after having trebled in the preceding 10 years. Covid-19 had a major impact, with Emirates relying on long-haul international traffic. Airframer issues have impacted its plans too, with Airbus unwilling to further develop the A380, and Boeing suffering interminable delays on the 777X. It has been able to expand capacity somewhat, by use of larger aircraft.

    Airlines often plan on the basis of growing faster than the market average. Airline A may plan on  gaining market share, or capturing more transfer traffic. However, so might Airline B and Airline C. The Middle East has not seen rapid GDP growth over the past decade, and remains geo-politically unstable. However, collectively, airlines were successful in building transfer hubs and also stimulating some local traffic and inbound tourist visitors. The success of Dubai led to Qatar and Abu Dhabi aiming to replicate this, with Bahrain and Oman looking to expand too. Today, Saudi Arabia is investing heavily in promoting itself and its airlines seek to expand rapidly.

    Back in 2013, as well as Emirates’ plan to double its fleet, Etihad wanted to triple its fleet by 2026, and Qatar was looking ahead to the 2022 World Cup. LCC competition was expanding from Air Arabia, and locally Flydubai was independent of Emirates.

    Chart 4: Middle East Airline Fleet Expansion 2014-2024

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis, selected airlines

    Source: Cirium Fleets Analyzer, Cirium Ascend Consultancy analysis, selected airlines

    Perhaps the biggest threat was to come from Turkish Airlines. It has a huge home market, offers shorter elapsed times from Europe to much of Asia, Africa and the Middle East, and was building airport capacity. Turkish Airlines had a fleet of 231 aircraft in 2013, and had just placed orders for 212 new aircraft. Its long-term plan was a fleet of 421 aircraft in 2021. It has largely achieved this. Despite some setbacks, it had a fleet of 440 by January 2024, when it outlined a Group plan to reach 950 aircraft by 2033.

    Emirates has also seen growing competition from Indian and Chinese carriers on the Europe-Asia market, but has perhaps benefitted from capacity reductions from other Asian airlines, such as Thai, Malaysian, and Garuda.

    This example shows how much can change in 10 years. External shocks and local economic upsets have played a part, but competition with other hubs, with other existing airlines, and the entry of new LCCs have all affected growth plans, with the result that many aircraft on order in 2013-14 have never been delivered. Plans must adapt, and Emirates has certainly been successful in doing this, including co-ordinating better with Flydubai. The Emirates Group delivered a solid profit in 2024, in contrast to many Middle East airlines, showing that rapid growth and shiny new planes do not necessarily go hand-in-hand with market success.

    In the second part of this Team Perspective, we will discuss Southeast Asia, and consider what other factors influence order backlog developments.

  • Australian Embraers on the Rise

    Chris Seymore aviation market analysis
    Chris Seymore aviation market analysis

    Chris Seymour, Head of Market Analysis, Cirium Ascend Consultancy

    The Virgin Australia Regional Airlines (VARA) order for eight Embraer E190-E2s in August represents a new turn in the Australian mining Fly-In Fly-Out (FIFO) market. For decades this market has relied on the use of older, used aircraft for low utilisation operations. These new aircraft will be used to replace its remaining Fokker 100s.

    Western Australia is a key region for mineral extraction (including iron ore, nickel-copper and gold) and there are numerous mining sites in the outback, which rely on air connections to fly workers in and out, usually to Perth. An example is Christmas Creek Mine, which operates a Fokker 100 daily on a 1 hour 40min flight from and to Perth. Airstrips can have paved or unpaved runways with usually just an apron and minimal facilities.

    These FIFO flights mainly use regional jets, with some Airbus A319/A320 and De Havilland Canada Dash 8 operations as well.

    Large Passenger Regional Jet Fleet in Australia

    Large passenger regional jet fleet in Australia

    Source: Cirium Core

    The large-sized regional jet fleet in Australia has grown from around 80 a decade ago to over 100 today. They are used on a mix of scheduled services and regular FIFO charter contracts. The Fokker 100 has been the core of this fleet, operated by  Alliance Airlines, Network Aviation as well as VARA. The fleet peaked at 56 during 2018 but is down to 43 now., mainly as VARA has reduced its fleet from 21 aircraft to seven. Network Aviation, owned by Qantas and operating as QantasLink on scheduled and charter routes, operates 14, alongside Airbuses and one E190.

    Indeed, Australia has become an important market for used E190s.

    Alliance, which uses 21 Fokker 100s and 10 Fokker 70s, has been active in building its E190 fleet, having acquired 67, first with ex American and Copa aircraft. It is in the process of taking 30 ex-JetBlue aircraft by mid-2026 from AerCap. Not all of these will enter service, as it has been selling some surplus airframes and engine cores, after harvesting for engines and spare parts. Alliance currently has 30 in service and operates both FIFO and for QantasLink, with Qantas having a part share in the carrier.

    National Jet Express has also expanded its E190 fleet to seven, having replaced its BAe 146s.

    The Australian market continues to provide opportunities for more E190s as Fokker 70/100 replacements, while the introduction of the E190-E2 may indicate a good long-term future for newer generation aircraft too.

  • Airline Financials & Schedules: What Do They Reveal?

    Richard Evans airline consultant
    Richard Evans airline consultant
    Richard Evans – Senior Aviation Analyst, Cirium

    Richard Evans, Senior Consultant, Cirium Ascend Consultancy

    Most of the largest airlines have reported their quarter three (Q3) results over the past few weeks. These numbers are, by definition, backward looking, but the commentary around the press releases is usually informative about the market environment in general, with some useful data on the near-term outlook.

    A few words of explanation about the below chart. The airlines listed are the 10 largest in each region, by revenue, that issue quarterly or bi-annual results in a timely manner. The figures are operating margin (EBIT), with the colours showing the change in relation to the same period in 2023. At the bottom, there is a simple arithmetic average of the 10 airlines’ results, with the colour giving a rough guide to how healthy this profit level is. It is worth remembering that, historically, airlines have exhibited very slim profit margins. According to IATA, the best year for airline profits was 2015, with an operating margin of 8.5%. It forecasts 2024 to achieve 6% margin.

    Latest Airline Financial Results Show a Mixed Picture

    Latest airline financial results

    Source: Airline announcements, Cirium Core, Cirium Ascend Consultancy analysis. * unweighted Airlines: Green = better than same period last year, Red = worse, Amber = within +/- 1%. Regional averages: Green = >7%, Amber = 1-7%, Red = <1% or loss making

    At first glance, the chart looks poor, with the majority of airlines being ‘red’. Several major airlines mentioned increased costs as being a contributory factor. In Asia, Singapore Airlines reminded that 2023 was an exceptional year, being the year of ‘rebound’ post-Covid, marked by very high passenger yields.

    The US market generally saw lower margins than elsewhere, but there were major contrasts within the results.

    In particular, the low-cost airlines struggled, with overcapacity and resultant yield pressures generally.

    This trend has been brought to a head with the Chapter 11 filing for Spirit Airlines, which will remove some excess capacity – more of which later.

    European airlines had also seen extremely high profitability in summer 2023. Things look worse this year, but the results are actually good when compared to historic averages. Note that SAS emerged from bankruptcy protection in August, and has not filed results for recent quarters.

    In China, one might expect to see better profits, given the strong traffic recovery this year, and the recovery in international travel. However, the combined operating margin of the ‘Big 3’ state-owned airlines was just 1-2%. These airlines give no commentary on the market conditions in their stock exchange filings, but it is presumed that profitability is not their number one priority, with the rebuilding of capacity and networks being more of a driver. Anecdotally, it also appears they are poor at yield management and slow to react to market pressures.

    Despite some headwinds in Q3, several airlines made more positive statements about the outlook for winter 2024-2025.

    In Asia, several pointed to strong forward bookings, and the continued recovery in international traffic. European airlines also generally made upbeat comments on bookings and passenger demand. The story in the US is a little different, with airlines pointing to better capacity management, with several having lowered their capacity growth plans, or even decided to cut year-on-year seat kilometres (ASKs).

    The second chart shows Cirium forward schedule data for the coming season, comparing the latest schedule to that in place back in July. The US market has been highlighted, where capacity plans have been cut significantly, led by the low-cost sector. This includes adjustments made at JetBlue, Southwest Airlines and Spirit. The latter had already announced the removal of 23 A320ceo family aircraft from the fleet in a deal with GA Telesis.

    Airline Capacity Plans for Winter 2024-2025

    Airline capacity plans for winter 2024-2025

    Source: Cirium schedules data

    Back in July, global capacity for Q4 was up 8.5% over 2023. This has now fallen to 6.5%, even though the July forward schedule still had some airlines with incomplete data. The US airlines have driven this change, as well as those in Latin America. US capacity in December 2024 was due to expand by 6.3% year-on-year, but this has now been cut by more than half, with the latest schedule only up 2.8% over 2023. The accompanying table summarises US airline capacity, by carrier. All carriers except Southwest and Allegiant have cut growth plans, but the absolute figures for December now show a marked contrast between the three largest airlines and the low-cost sector.

    US Airline Capacity Growth (December 2024 vs. December 2023)

     December 2024 ASKs (as at July)December 2024 ASKs (as at November)
    United9.7%6.0%
    American8.0%4.1%
    Delta9.8%6.3%
    Southwest-5.2%-5.1%
    Alaska9.4%2.9%
    JetBlue-0.7%-1.3%
    Spirit-0.2%-17.8%
    Frontier15.1%2.1%
    Allegiant15.7%16.2%

    Slower capacity growth is undoubtedly a positive for airlines over the coming quarters. Some of this is due to the continued issues with Pratt & Whitney GTF-powered aircraft, where the stored fleet of over 600 A320/A321neos would add around 1.5% to global capacity if they were fully utilised. This, combined with a lack of new deliveries by Boeing, is certainly a factor in airlines’ plans at present, but may provide a bonus for airline investors as we enter 2025.

  • Is 2024 the Year of the Aircraft “Power Surge”?

    Lalitya-Dhavala
    Lalitya-Dhavala

    Lalitya Dhavala, Valuations Manager, Cirium Ascend Consultancy

    As we race towards the end of the year, I’ve examined how values and lease rates for spare engines have evolved in 2024, and what has driven the significant movements in this market.

    Overall, Market Values for engines that power narrowbody aircraft have risen by around 12.3% over the last five-year period (on a fleet-weighted average basis). With the demand for single-aisle passenger aircraft rebounding post the pandemic, coupled with expensive new materials and high inflation on OEM list pricing, new-generation engine values have strengthened. Further, as the engine shop visit turnaround times increased, attention has turned to the green time remaining on the previous-generation engines that could be deployed into service, thereby increasing the value of maintenance on these engines as well as the asset market value. Lease Rates have exhibited strong increases as well over the last five years.

    Meanwhile, values for engines powering other asset classes such as regional jet, regional turboprop and widebody have not yet returned fully to pre-pandemic levels (on a fleet-weighted average basis).

    In the regionals sector, demand has been slower to trickle through; and on the twin-aisle sector, OEMs tend to tie in list prices with comprehensive engine maintenance programmes, coupled with lower utilisation on twin-aisles meaning fewer spares are needed. Widebody engine Lease Rates, however, have risen over the last few years and surpassed their pre-pandemic levels.

    values for engines powering other asset classes such as regional jet, regional turboprop and widebody

    Source: Cirium Core, Ascend Consultancy analysis

    Looking more closely at the key single-aisle associated engines over the last year, we can observe the correlation between Values and Lease Rates for previous-generation powerplants (CFM56-5B, -7B, V2527) rising strongly on the back of more modest increases or stability in the Values and Lease Rates of the new-generation engines (PW1127G, Leap-1A and Leap-1B). A notable exception here is the PW1127G, where Lease Rates saw increases of up to 30% as a result of the scale of the powder-metal contamination issues resulting in the wide-scale aircraft grounding (564 A320neo family aircraft stored) and the removal of an average of around 1,100 engines throughout 2024.

    Fleet-weighted percentage increase over 1 year

    Source: Cirium Core, Ascend Consultancy analysis

    Turning to the twin-aisle sector, there is less correlation between the technology of the engines. Rather, the notable increases in both Market Value and Market Lease Rates have been on the engines that support the Airbus A330ceo or the Boeing 777-200LR/300ER platforms, both of which have seen substantial improvement in their values in 2024.

    As long-haul traffic recovered in 2024, these workhorses of the twin-aisle segment have proven the preferred choice for airlines re-deploying this capacity.

    In addition, both aircraft types offer conversion potential to freighter configuration, increasing the demand for spare engines. Of the A330 engine choices, although the GE CF6-80E1 has shown the largest increases this year, it trails behind both the Pratt & Whitney PW4168 and the Rolls-Royce Trent 772 when compared to pre-pandemic levels, with only the latter engine seeing its values and lease rates higher than pre-pandemic due to these engines typically having more green time available, with several examples still on their first run.  

    Fleet-weighted average percentage increase over 1 year

    Source: Cirium Core, Ascend Consultancy analysis

    The increase in the value of maintenance particularly, for the engines that power single-aisles, has led us to increase our expectations for their longer-term values as well. In fact, our analysis of the depreciation of the value of the engine overhaul and life-limited part stack has shown that these are falling less rapidly than before, and consequently we made several changes to how much we depreciate these into the future. For key single-aisle engine types such as the CFM56-5B, CFM56-7B, and the IAE V2500-A5, depreciation through their Phase 2 (stable phase) has been reduced to 4% per annum, resulting in stronger residual values for the Airbus A320ceo and Boeing 737NG platforms they power. Furthermore, engine OEMs have advised that the technological improvements that are in development currently are expected to be retrofittable. Therefore, such engines are now not expected to see their values decline prematurely due to replacement by a more efficient version of the same engine.

    To find out more about how these affect aircraft values and lease rates, or to find a similar summary of our aircraft values, please join the Cirium Ascend Consultancy webinar on 12 December where I will be joined by Rob Morris and George Dimitroff to take stock of this year and look ahead to 2025. In the meantime, if you enjoyed this analysis, please take a moment to consider voting for us as your Appraiser of the Year; you can cast your vote here.

  • Will Growth in Cargo Demand Drive More Freighters in China?

    Yuanfei Zhao (Scott) Aviation Analyst
    Yuanfei Zhao (Scott) Aviation Analyst

    Yuanfei Zhao (Scott), Senior Aviation Analyst, Cirium Ascend Consultancy

    On the back of growth in global trade, especially the booming e-commerce, and continuing capacity constraints on maritime shipping, international cargo market is showing strong growth in 2024 again. According to IATA’s figures, demand for air freight rose by 11.4% in August, representing the ninth consecutive month of double-digit year-on-year growth, with overall levels reaching heights not seen since the record peaks of 2021. Just one month later, IATA’s figures shows that air freight rose again by 9.4% in September, representing the 14th consecutive month of growth.

    According to Cirium’s tracked utilization data, in terms of tracked number of departing freighter aircraft, tracked aircraft number has increased by 32% globally between the first 10 months of 2024, over the same period of 2019.

    For the top 10 ranking air freight markets, China’s growth leads the way with 85% growth, followed by United Arab Emirates at 48% and Hong Kong SAR at 45%. as shown in the below chart. The United States is still the largest air freight market with growth of 28%. The United Kingdom is the only country that has declined at -2% in the top 10 list.  

    commercial widebody & single aisle freighters

    Source: Cirium Core, commercial widebody & single aisle freighters

    China as the global manufacturing centre, benefits hugely from the surge in e-commerce demand given the country’s dominating position in global trade and export, which therefore has led to the booming of its air freight sector. However, China’s current dedicated cargo fleet especially the widebody fleet seems to be lagging the pace in which international trade demand has been grown and appeared to be not matching the country’s status as a global manufacturing centre.

    Various comments have gone around in the market recently, about that there are plenty of widebody freighter requests in Asia, especially in China/Hong Kong.

    The logistics companies are eager to get more space, but the operators cannot offer enough capacity which has consequently driven up shipping prices.

    To understand the magnitude of Chinese carriers’ freighter capacity supply shortfall towards the above mentioned situation, number of tracked outbound freighter aircraft from China by domestic carriers is assessed below, and is compared with number of tracked outbound freighter aircraft by foreign carriers from China.  

    commercial widebody & single aisle freighters

    Source: Cirium Core, commercial widebody & single aisle freighters

    As shown in the above chart, number of tracked outbound freighter aircraft by domestic freight carriers has been more than doubled during the first 10 months of 2024, compared with the pre-pandemic level.

    During this period, according to Cirium’s fleet data, China’s freighter fleet (including both narrowbody and widebody) has grown from just less than 160 aircraft in 2019 to around 230 in 2024, with widebody freighter fleet grown from less than 50 aircraft to around 90.

    The growth of domestic freighter fleet seems to be fast but is such growth enough to fulfill the demand?

    As shown in the below chart, when compared with the above chart, number of tracked outbound freighter aircraft from China by foreign freight carriers is 126% more than domestic freight carriers.

    In addition, when compare with pre-pandemic level, number of tracked outbound freighter aircraft from China by foreign freight carriers has grown by 51% after the pandemic.

    commercial widebody & single aisle freighters

    Source: Cirium Core, commercial widebody & single aisle freighters

    In the short term, the outlook for air cargo market is positive, with businesses replenishing inventories in preparation for the year-end festive season. In the longer term, if China can withhold its position as the global manufacturing centre as well as sustaining the robust development momentum of its e-commerce sector, despite the challenges it also faces with ongoing geopolitical tensions with other countries and regions which may impact China’s export and international trading, the country will need to further expand its domestic freighter fleet power especially in the widebody category as a means to compete with foreign operators for dominance in the local market.

    Nevertheless, persistent OEM delays and supply chain disruptions continue to pose challenges to carriers in acquiring either new freighters or converted freighters.

    This requires domestic carriers to have a long-term strategic vision in terms of anticipating future growth needs, and decisively place orders with OEMs to lock in earlier future delivery slots before OEMs’ slots are filled by orders from other carriers.

    Chinese carriers currently have around 10 remaining orders for the current generation 777 freighters, but no orders have been placed yet for the new A350F and 777-8F. The latter two types have a combined orderbook of well over 100 aircraft to date, and deliveries are expected to only begin after 2026 and 2028 respectively.

    Cirium Ascend Consultancy’s recent webinar on the freighter market is available to view on demand. WATCH NOW.

  • Advanced Air Mobility – Snapshot October 2024

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Eric Tamang
    Eric Tamang

    Eric Tamang, Valuations Analyst, Cirium Ascend Consultancy

    Towards the end of the year, the advanced air mobility (AAM) market reflected the changing seasons with a gradual cooling, influenced by spiking interest rates and the rising cost of capital. Yet, in the face of these headwinds, the number of commitments recorded in Cirium’s database increased to over 14,815 as of 11 October 2024, with over 900 secured since our last update in July 2024.

    eVTOLs – Urban Air Mobility (UAM)

    The eVTOL – UAM sector has generated the most activity in the market both in terms of the number of aircraft in development, and commitments received to date. Since the last update in July 2024, the sector has attracted 416 new order commitments. The space now has a total of slightly over 11,000 order commitments captured by Cirium Fleets Analyzer. Eve Air Mobility and Vertical Aerospace continue to lead the sector with 2,900 and 1,550 commitments respectively.

    Source: Cirium Fleets Analyzer, as of 11th October 2024

    The global market for eVTOLs shows a varied regional distribution, with strong order commitments in North America (4,686), Asia-Pacific (3,903) and Europe (1,938), driven by differing levels of technological advancement, regulatory backing and investment interest.

    Source: Cirium Fleets Analyzer, as of 11th October 2024

    Certification Issues Delay Demonstration

    There have been a number of exciting announcements where we hoped to see the AAM sector take off. One such instance was the Paris Olympics, where Volocopter intended to operate an air taxi service, but this did not happen due to delays in certification of the aircraft’s engines.

    Another much anticipated event is the 2025 World Expo in Osaka, where there were plans to operate flying taxis.

    However, all four operators (Japan Airlines, ANA Holdings, Marubeni and SkyDrive) have cancelled these plans due to safety certification delays, and the operators are still planning to conduct demonstration flights without passengers.

    So What Are the Different Aspects That Need Certification?

    Governing bodies like EASA, CAA and FAA collaborate with aircraft manufacturers to develop a set of regulations that guarantee the safety and airworthiness of an aircraft throughout its design, production, and modification phases. Manufacturers are required to carry out extensive testing programmes to demonstrate compliance with these standards.

    eVTOLs are a new type of aircraft with technologies and concepts that have never been certificated before. As such, authorities are collaborating with manufacturers to write the rulebook on eVTOL certification.

    According to David Solar, head of general aviation and vertical take-off and landing at EASA, the certification process for an eVTOL propeller differs from that of a conventional aircraft.

    The design of the propeller is tailored to the specific aircraft configuration, considering factors such as the aircraft’s objectives and the transition from vertical to horizontal flight.

    Manufacturers must evaluate loading conditions, perform fatigue tests, and demonstrate that the propeller is suitable for flight.

    In addition, the different flight paths of cargo and passenger aircraft could result in different certification requirements. Cargo aircraft operating outside of cities can have lower security standards, but more stringent requirements could apply to passenger aircraft and cargo operations over congested areas.

    Another aspect to certify is the use of modern electric powertrains. One major challenge is balancing battery energy density with payload capacity. The battery’s weight affects the propulsion required to keep the aircraft airborne, ultimately impacting range performance. Advances in battery weight-to-power ratio and aerodynamic efficiency are crucial for improving eVTOL performance.

    Last but not least are certification of the infrastructure needed to support the operation of these aircraft such as the airspace and vertiports. With vertiports being scattered around the city, the impact of noise could be detrimental. As for airspace, these aircraft would utilise low attitude airspace which is already quite congested in certain cities with general aviation aircraft. Ensuring proper airspace management and separation could be a challenge.

    Rolls-royce to Divest Electric Engine Division

    Engines for eVTOLs will be provided by specialist engine manufacturers rather than the aircraft OEM, following the same model as traditional aircraft designs. In the market, there are several electric engine suppliers, including both traditional engine OEMs and new entrants.

    Towards the end of 2023, Rolls-Royce, a high-profile engine OEM, announced that it was open to offers from prospective buyers for its Electrical engine division.

    However, at the end of September 2024, Rolls-Royce made an announcement stating that it had elected to shut down its electrical propulsion unit called Rolls-Royce Electrical. This decision came after failing to find a buyer for the business, according to Aviation Week.

    As a result of this development, UK-based Vertical Aerospace’s VX4 is now left searching for alternative options since Rolls-Royce was its chosen engine partner. Despite this setback, Vertical Aerospace insists that they are still on track to meet the CAA certification timeline which has been revised from 2024 to either 2025 or 2026.

    According to Aerospace Global News reports, Rolls-Royce’s decision to divest from its electrical propulsion unit is “driven by their need to readdress their balance sheet and focus on investments with short- and medium-term returns”. This suggests that Rolls-Royce anticipates any returns in the electric space will be a long-term prospect, which begs questions such as –

    • Will there be a domino effect, with more similar announcements of divestment or changes in strategy, from other major players within the industry? Such announcements could have cascading effects on the overall landscape of electric aviation, including the eVTOL sector.
    • Will the announcement affect investor confidence in the electric aviation industry? Investor sentiment plays a crucial role in the growth and development of emerging industries, and any shifts in sentiment may have repercussions on funding and future investments.
    • Will this divestment announcement alter the competitive dynamics within the eVTOL industry? It could create gaps or opportunities that other companies or new entrants may seek to fill. New partnerships or collaborations could also emerge as companies reevaluate their strategies and seek alternative solutions.

    Time will be the ultimate judge of how sentiments regarding this divestment will resonate across the eVTOL industry.  

    Business Electric – Multi-Engine

    In the business electric sector, Electra’s eSTOL has received almost 1,350 order commitments, including from notable clients like the helicopter lessor Bristow Group. However, the identities of the majority of these order commitments remain undisclosed. Aura Aero’s ERA holds second place with 570 order commitments. Heart Aerospace’s ES-30 follows in third place with over 530 order commitments after the ES-19 programme was cancelled and switched to the ES-30.

    Most order commitments

    Source: Cirium Fleets Analyzer, as of 11th October 2024

    The Cirium Ascend Consultancy AAM team will continue to provide valuable insight to the market. We would be pleased to hear any thoughts, comments or feedback you may have, so do not hesitate to contact us.

    Sara Dhariwal

    Lead Appraiser – Helicopters & AAM

    Ascend analyst Tim Chun Hing Li
    Ascend analyst Tim Chun Hing Li

    Tim Chun-hing Li

    Aviation Analyst

    YIRU ZHANG
    YIRU ZHANG

    Yuri Zhang

    Senior Valuations Analyst

    Eric Tamang
    Eric Tamang

    Eric Tamang

    Valuations Analyst

  • The Resurgence of Regional Aircraft: A Market Analysis

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Solayappan-Ganesaan
    Solayappan-Ganesaan

    Solayappan Ganesaan, Aviation Consultancy and Valuations Intern, Cirium Ascend Consultancy

    The latest webinar, Regional Aircraft: Is the Market Bouncing Back? hosted by Cirium Ascend Consultancy, sheds light on key developments in the turboprop and regional jet market. Alex Vathylakis, principal valuations analyst, Arjan Meijer, president and chief executive of Embraer Commercial Aviation, and Ron Baur, president of Azzora, formed the panel, which was moderated by Delphine Wermeister-Levert, senior account manager. The panelists arrived at the following conclusions:

    • In the US regional jet market, there is a noticeable shift from 50-seater aircraft to 70-seaters, but no imminent scope clause changes on the horizon that might drive this shift further towards even larger aircraft.
    • MRO bottlenecks continue to pose challenges for regional turboprops as well as regional jets.
    • The focus of Embraer on the E195-E2 shows the OEM’s intention to expand in the small narrowbody segment and to compete with aircraft types such as the A220-300.
    • Secondary market values of turboprops are trending up, and this trend is also observed for the E190/195-E1s.

    Single-aisle jets are leading the global recovery in the aviation industry post-pandemic. While regional jets and turboprops have initially experienced a faster recovery in terms of utilisation, it has significantly slowed in the past two years.

    Regional Turboprops

    A common challenge currently faced by regional turboprops is MRO bottlenecks, resulting in a significant portion of the fleet being stored, and with only a very small number of ready-to-go aircraft available for sale or lease. In terms of flights tracked, the ATR 72-600 remains in growth mode as the only in-production regional turboprop today. Utilisation of the ATR 72-500 and Dash 8-400 has stagnated below 2019 levels, which, apart from the MRO challenges, can be attributed to part-outs and freighter/firefighter conversions respectively over the past four years.

    The outlook for the turboprop fleet varies by region, with all regions except Africa witnessing a decrease in fleet size. Africa stands out as the region that has fuelled growth by acquiring used aircraft.

    A notable observation is the absence of new orders for turboprops in the North American market, particularly in Canada. In the USA, passengers have long eschewed the use of turboprops in favour of regional jets, but in Canada, airlines may soon look to implement measures to address an aging turboprop fleet issue.

    Shifting the focus to OEMs, ATR is still yet to benefit from its monopoly (as DHC no longer manufactures new aircraft), but they do have a stable orderbook for three to four years as they look to renew aging fleets and enter new markets.

    Leasing activity in the regional turboprop market is influenced by an MRO bottleneck, resulting in a significant number of aircraft awaiting transition and placement. Concurrently, data from Cirium’s Fleets Analyzer indicates that some lessors have offloaded a considerable number of turboprops, mainly Dash 8-400 from their portfolios. Consequently, there is upward pressure on Market Lease Rates in the near future.  

    Regional Jets

    Smaller regional jets, such as the CRJ 100/200 and E145s, have experienced a significant increase in storage of aircraft, primarily due to the departure of several US operators from these fleets. Additionally, challenges like pilot shortage and the difficulty to overhaul the engines have driven the 50-seater aircraft out of the market due to the function of aircraft age. As a result, tracked flights for these aircraft have remained 60% below the levels recorded in 2019. Consequently, many operators have shifted their focus to 70-seater medium regional jets as a more favourable alternative in the scope clause compliant market (Scope clause in the USA, negotiated by pilot unions, limits regional aircraft to a maximum of 76 passengers and introduces a cap to the number of regional jets operated on behalf of major US airlines).

    The E175s have surpassed 2019 utilization levels, driven by two primary factors: increased deliveries of E175 aircraft and very low storage rates.

    This positive trend is expected to continue as the US heavy aircraft market anticipates ongoing demand for new aircraft, underscored by American Airlines’ order for 90 E175s, which may even replace the earlier models of the E175. This development highlights the role of medium regional jets in addressing the gap left by the retirement of the 50-seater fleet while US Scope Clause is not expected to change any time soon.

    With regards to the E2 GTF issues, storage rates are comparatively lower at 16%, in comparison to the storage rates of 22% for A220s and 36% for A320neos powered by GTF engines.

    Orders indicate a potential upward trend comparable to levels seen in 2018 as demand for more efficient and larger capacity regional jets continues to shape the regional aviation market.  If “crossover” types are included, it can be seen that interest has picked up and that competition has stimulated the wider 150 seat segment.

    Several factors contribute to this trend. Ron Baur notes, “The narrowbody market is sold out, and the E2 jets provide a cost-effective alternative to add frequency and open up new markets,” similar to what Scoot has accomplished. Additionally, the E2 offers a 25-30% reduction in trip costs and similar seat costs compared to smaller narrowbodies, according to Arjan Meijer.

    Lease Rates

    Much like most flight paths converge at a major hub, the market review naturally leads us to an analysis of Market Values and Market Lease Rate changes for regional jets over the past few years.

    The fleet weighted Market Value change for the ATR 75-500 is currently about 10% lower than pre-Covid levels. In contrast, the ATR 72-600 appears to be recovering well.

    However, the Dash 8-400 still has significant ground to cover, despite its very low availability. Ready-to-go aircraft in this category command a premium, but this price gap is expected to narrow in the coming months.

    The values for E175s remain stable, and this type continues to enjoy a dominant position in the market. On the other hand, the CRJ-900 has seen its value still significantly below pre-Covid levels, driven by softer demand. The E190 and E195 remain slightly lower than their pre-Covid values but show a slow but steady recovery, as noted by the transaction data gathered by Cirium (increases, especially in Market Lease Rates, were announced after the webinar in our October value review).

    The fleet-weighted Market Lease Rates for the ATR 72-500 have surpassed pre-Covid levels while the ATR 72-600 is showing signs of resilience, with current deals being negotiated north of the $100,000 mark – an amount not seen in the past four years in the secondary market. The Dash 8-400 reflects a similar trend with a slight lag.

    In contrast, the E2 and A220 have shown Market Lease Rates improvements of around 10% compared to pre-Covid levels, indicating a positive demand for these aircraft while the new types are also naturally less volatile.

  • The US Market Overview: Airlines

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Yinan-Qin
    Yinan-Qin

    Yinan Qin, Senior Aviation Analyst, Cirium Ascend Consultancy

    PART THREE OF THREE – READ PART ONE: TRAFFIC AND PART TWO: AIRCRAFT ABS

    Q2 Financial Performance of US Airlines

    Given that major airlines will issue their Q3 results around the end of October, we are currently focusing on 2024 Q2 results to take a brief look at the financial performance of airlines in the United States.

    US airlines EBIT

    Source: Cirium Core, Airlines 2Q24 Financials

    The majority of the selected US-based airlines experienced moderate revenue increases during the second quarter of 2024, with year-on-year growth ranging from 2.0% to 6.9%.

    However, overall revenue growth momentum slowed compared to the same quarter last year due to softening yields and the slowing of passenger traffic growth from its recent Covid recovery to a longer-term mature market trend.

    JetBlue and Spirit Airlines in particular experienced revenue declines, blaming the intensified competition on domestic routes from market “overcapacity” and high sensitivity to passenger yields in their low-cost carrier (LCC) markets. Both airlines outlined a plan to cut underperforming routes, focus more on core leisure markets and enhance ancillary revenues.

    When it comes to profitability, six of the seven selected US airlines reported positive EBIT with only Spirit reporting losses.

    However, EBIT margins for most airlines narrowed compared to 2023 as most faced higher operating costs, driven primarily by increased labour costs due to new post-Covid contracts for pilots and cabin crew, as well as increased maintenance and fuel expenses associated with increased capacity and expanded fleet size.

    US airlines gross debt
    Leverage (Net Debt / TTM EBITDAR)
     AmericanUnitedDeltaSouthwestSpiritJetBlueAlaska
    23Q23.7x2.4x2.7x-1.3x25.3x3.1x1.6x
    24Q26.1x2.1x2.2x-0.6x717.7x-33.2x1.3x

    Source: Cirium Core, Bloomberg, Airlines 2Q24 Financials

    Several airlines continued their efforts to strengthen their balance sheets, achieving a year-on-year decline in gross debt by consistently paying down their obligations. However, JetBlue and Spirit saw an increase in gross debt. Leverage ratio measured by net debt/ Trailing Twelve Month (TTM) EBITDAR declined for most airlines while Spirit’s leverage ratio soared due to an increase in net debt position.

    On the other hand, Southwest reported a net cash position of $893 million as of June 2024 with substantial liquidity on hand, resulting in a negative leverage ratio.

    The negative leverage ratio position for JetBlue is, however, due to its deteriorated operating results in the first quarter of 2024, which led to a negative TTM EBITDAR. It is critical for carriers to enhance or maintain liquidity positions to rebuild their balance sheet and continue funding near-term aircraft deliveries.

    It is worth mentioning that Spirit’s financial health deteriorated substantially among the selected US airlines. According to Cirium Fleets Analyzer, Spirit is the largest US carrier operating an Airbus A320neo fleet equipped with PW1100G engines (116 out of 217 total aircraft), and the carrier grounded 20 aircraft per month on average during 2024. Although the carrier will receive $150 million to $200 million in credits as compensation from Pratt & Whitney for the full year 2024, this has largely disrupted the carrier’s operation since the onset of the GTF powder coating issue. While the airline failed to return to profitability and generate stable operating cash flow, its liquidity significantly diminished as a result of mounting debt obligations, extensive lease payments and pre-delivery payments. Additionally, the termination of the Spirit-JetBlue merger worsened the situation and left Spirit careening towards an unavoidable liquidity shortfall. As of June 2024, Spirit’s debt maturity schedule showed $1.3 billion in debt principal obligations (40.2% of total long-term debt outstanding) due by the end of 2025. According to a report by the Wall Street Journal on 3 October 2024, Spirit was in talks with its bondholders over the terms of a potential Chapter 11 filing. On the same day, Spirit’s stock price plunged by approximately 40%.

    Near Term Outlook and Countermeasure

    In 2024, US airlines are encountering increasing challenges in both revenue generation and cost management. Cash flows are under significant pressure due to tight profit margins, rising capital expenditure, heightening labour cost and potential spikes in fuel prices. Consequently, US airlines highlighted the near-term plan on the following aspects to weather the industrial headwinds:

    • Adjusting capacity to align with demand expectations: For example, American has scaled down its planned capacity growth, with a 3.5% increase for the second half of 2024. Delta also anticipates a decelerating capacity growth for the same period.
    • Rationalising route networks to improve yields: LCCs such as JetBlue and Spirit are eliminating less profitable routes and prioritising those with higher demand and yields. Additionally, American and Delta are expanding their transatlantic routes in summer 2025 to tap into the potential of this market segment.
    • Implementing effective cost-cutting initiatives: US airlines are focusing on reducing labour costs and fuel expenses to restore profit margins. While employee contract renegotiation is unlikely in the near future, airlines may right-size overhead and non-crew positions to reduce discretionary spending. Additionally, airlines may also need to develop fuel hedging strategies to mitigate the higher volatility in fuel prices amid the Middle East conflicts.
    • Strengthening balance sheet and deleveraging to enhance financial resilience: Carriers remain committed to paying down debt obligations and refinancing existing high interest debt structures. Take the big three airlines for example: American Airlines reduced its total debt by $1.8 billion during the first half of 2024 and highlighted its goal to reduce total debt by $15 billion by the end of 2025. Delta repaid $2.1 billion in debt in the first half of 2024, targeting a return to investment-grade ratings. United Airlines reported $6.2 billion in debt repayment in its six-month cash flow statement to reduce the airline’s interest burden in the years ahead.

  • The US Market Overview: Aircraft ABS

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Yinan-Qin
    Yinan-Qin

    Yinan Qin, Senior Aviation Analyst, Cirium Ascend Consultancy

    PART TWO OF THREE – READ PART ONE: TRAFFIC AND PART THREE: AIRLINES

    The aviation asset-backed securities (ABS) market has encountered considerable challenges during and since Covid-19, further exacerbated by geopolitical conflicts and a relatively gloomy global economic outlook. These factors have collectively led to the downgrade of several ABS portfolios and a silent ABS market in the past two years, with a total of less than five portfolios issued in 2022 and 2023.

    After two years of market stagnation, lessors are now cautiously re-entering the market. In the first nine months of 2024, six new ABS portfolios were issued. Four of these consist purely of passenger aircraft, while the two PKAIR portfolios are essentially loan pools. The basic information of these portfolios are as follows:

    Note: *No information available for this tranche from Bloomberg Source: Cirium Core, Bloomberg

    Several Key Changes Observed Between Current Market vs Pre-pandemic Market

    Covid-19 has altered investor’s risk appetite with respect to airlines and aircraft, with an emerging preference for airline with robust credits and assets with higher liquidity. Comparing the four 2024-issued portfolios with those from 2019 within Cirium’s watchlist, there has been a notable shift towards next-gen aircraft. As more airlines upgauge and modernize their fleets with newer generation aircraft for better fuel efficiency and operational performance, lessors are naturally following this trend and building portfolios that feature these advanced aircraft.

    Single-aisle aircraft remained the dominant type in the new 2024 portfolios, representing 94% of the total asset pool measured by aircraft count.

    Popular variants continue to be the Boeing 737 Max 8, Airbus A320ceo and A320neo. On the twin-aisle side, all variants in the asset pool are newer generation aircraft, including the 787-9, A330-900neo and A350-900. This contrasts with the 2019 market where the A330-300 and 777-300ER were popular options.

    With regard to aircraft operating regions, lessees based in Asia-Pacific, Europe and North America were the top three in 2019 while Latin American lessees have become the largest market segment in the 2024 portfolio. There are no aircraft operating in Russia due to sanctions, while exposure to the Chinese market has declined significantly in 2024. This reflects investor concerns about the stagnant Chinese economy and increasing political tension between the USA and China.

    Coupon rates have inevitably increased for comparable tranches to reflect the higher interest rate environment. For instance, examining Carlyle’s ABS portfolio over the last couple of years reveals that the tranche A coupon rate has risen from around 4.0% (AASET 2019-1, AASET 2019-2, AASET 2020-1) to over 6.0% (AASET 2022-1, AASET 2024-1). Additionally, the tranche structure has been simplified with limited subordinate tranches and E notes issued after 2022.

    Overall, it is quite evident that the market preference is now leaning towards single-aisle, advanced technology younger aircraft with limited exposure to secondary market deals.

    Meanwhile, investors require higher yields during the post-pandemic period to mitigate the risk associated with higher interest rates and market volatility.

    Near-term ABS Market Outlook

    The ABS market has shown several positive signs that have further improved investor confidence. Meanwhile there is robust recovery in global traffic, an undersupplied market and an increasing presence of newer generation aircraft driven by fleet modernisation. Additionally, airlines have shown improved financial performance, bottom-line growth and balance sheet deleveraging, which have enhanced their credit ratings since the pandemic.

    More importantly, a confirmed interest rate drop will further enhance the market.

    The recent Federal Reserve interest rate cut of 50 basis points (rather than the expected 25 basis points) reflects improvements in inflation and employment rates and indicates lower likelihood of a tightening monetary market again. This reduction in interest rates will increase margins in asset pricing. Therefore, an increase in aviation ABS portfolios is anticipated in the future, although a return to levels seen pre-pandemic is unlikely in the near term. Investors are expected to re-enter the market cautiously, focusing more on asset quality than quantity.

  • Cirium Unveils Aircraft Maintenance Tracking & Projection Tool

    Cirium Ascend’s new Ground Events analytics tool is set to revolutionize the aviation aftermarket by providing the first truly global view of historical and projected aircraft maintenance events using satellite-based flight tracking.

    Ground Events, the latest addition to the Cirium Ascend portfolio, provides MROs, OEMs, aircraft parts suppliers and airlines with the ability to generate comprehensive analytics which includes market share trends, turnaround times to derive strategic insights on markets for airframe maintenance, cabin retrofits and aircraft paint work.

    The solution’s easy access to data makes Ground Events a powerful tool, helping users better understand aircraft maintenance events. Businesses such as MRO providers can analyse market share, forecast future ground events, and improve cost efficiency.

    Mehmet Erdogan
    Mehmet Erdogan

    “We collaborated with the market, including a major European OEM, to launch a first-of-its-kind solution which pinpoints when the last maintenance check actually occurred and predicts future events based on this. It’s our mission to support the industry to inform their analysis of aircraft maintenance and better plan for future checks and events, saving significant time and costs,” said Mehmet Erdogan, VP of Ascend.

    Cirium’s Ground Events tracks aircraft locations and dates on the ground, along with maintenance contract details, to analyze why a commercial aircraft has been grounded for seven or more consecutive days. It also offers insights into historical maintenance patterns and usage trends, allowing for future maintenance projections at the tail number level.

    In accessing Ground Events users can select from a range of maintenance events such as C-checks, Heavy checks, strip/painting, retrofits and/or a combination of any of the above for a customizable search over a chosen date range.

    The results can then be filtered by a variety of different fields such as operator, MRO provider, location, aircraft and engine data. The results are then displayed in an easily digestible format of tables and charts that can be compared to historical data and exported as required.

    The tool enables businesses to analyze the data to precisely place aftermarket services and parts where they are needed, understand maintenance patterns of different aircraft types, identify retrofit opportunities and overall, optimize how aircraft are being utilized.

    Ground Events shows, for example, that FedEx Express, a global delivery service company, permanently retired 22 Boeing 757s between March and May 2024 for fleet modernization. This anticipated the supply chain issues involving heavy maintenance for the 757 which peaked from Q2 2021 to Q1 of the following year, with a decline in fleet size and flight hours by the end of 2022.

    Similarly, the tool shows over 450 Airbus A330-200/300s are expected to undergo C or Heavy maintenance checks during the next eight quarters. For this, Cirium tracked nearly 650 A330ceos undergoing checks with 47 MRO providers in the past two years.

    Ground Events uses detailed data on aircraft maintenance from around 57,000 ground events dating back to 2018 to help predict trends and upcoming peaks and troughs in demand.

    It integrates proprietary fleet maintenance intelligence and satellite-based flight tracking to ensure precise locations and dates of aircraft on the ground. The data is supported by a team of fleet data experts and flight data analysis to ensure accurate and up to date information is shared, with an average of 2,700 updates per week.

    Find out more about Cirium Ascend Ground Events, and access a demonstration video of the tool.

  • The US Market Overview: Airline Passenger Traffic

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Yinan-Qin
    Yinan-Qin

    Yinan Qin, Senior Aviation Analyst, Cirium Ascend Consultancy

    PART ONE OF THREE – READ PART TWO: AIRCRAFT ABS AND PART THREE: AIRLINES

    US Market Traffic Overview

    Passenger traffic

    Source: Cirium Core

    Airline passenger traffic in the US market has seen a robust recovery post-Covid and through 2023, with key segments such as US-Europe, US-Latin America and domestic US fully rebounding and surpassing capacity from the same month in 2019. In contrast, the recovery of trans-Pacific routes remains sluggish with volume still significantly below pre-Covid levels as of today.

    One factor contributing to this slow recovery is the heightened political tensions between US and China – one of the main markets in Asia contributing 31% of total flights in 2019. These tensions have created unfavorable market conditions, dampening travel demand between the two countries and perhaps making routes unprofitable for US carriers. According to the Cirium SRS Analyzer, the number of US-China direct flights original-destination (OD) pairs declined by 57.8% from 64 in 2019 to 27 in 2024. Meanwhile, the number of flights dropped from over 11,600 in 2019 to below 3,800 in 2024, marking a 67.4% decrease. It is reported that American Airlines, Delta Air Lines and United Airlines requested another extension from the US Transportation Department (DOT) in September 2024 for unused flights frequencies on routes connecting China to avoid losing those routes.

    Another factor to consider is that the US in-service twin-aisle fleet has hardly grown since 2019. Flights between the US and China require approximately two widebody aircraft just to service a single daily frequency.

    Considering that US carriers have redeployed a lot of capacity formerly serving China to other markets in the last five years, and also retired some older aircraft during Covid, and considering slow deliveries of 787s and A350s, the US carriers wouldn’t have the necessary aircraft anytime soon to return to their full, pre-Covid China timetable even if they wanted to and the demand existed. In light of this, we do not expect US-China capacity to return to pre-Covid levels in the short-to-medium term.

    US-based Airlines Fleet Overview

    Source: Cirium Core

    The current passenger fleet operated within the US market has grown from just over 6,200 aircraft in September 2019 to almost 7,000 in September 2024, reflecting a 2.3% CAGR. Meanwhile, the stored fleet ratio has declined from a peak of 51.9% in April 2020 to 8.6% as of September 2024, albeit still being 2.8 percentage points higher than pre-Covid levels. Both single-aisle and twin-aisle fleets maintained a below-average storage rate while turboprops and regional jets experienced a more sluggish recovery primarily due to a shortage of pilots and flight crews. The rise in inactive single-aisle aircraft since early 2024 is attributed to the temporary grounding of 47 Boeing 737 Max 9s following the door plug incident in January 2024 and A320neo GTF engine issue, which has grounded a monthly average of 32 US-operated A320neos equipped with PW1100G engine over the past nine months, most of which are from Spirit’s fleet. This situation is expected to persist until at least 2026 when the engines can be inspected, and any necessary parts can be replaced.

    Overall, the size of the current fleet in the American market is expected to continue growing, with 2,586 aircraft on order and 798 aircraft on option as of September 2024.

    The growth will be at a slower pace due to a stagnant production ramp-up from major OEMs, stemming from supply chain challenges and labour strikes (particularly at Boeing). The ongoing GTF engine issue will further exacerbate the under-supplied market dynamic in the near-term. However, on a positive note, the constrained supply should continue to underpin lease rate strength.