Base value forecast for single-aisles & regional jets

There have been relatively few changes to Base Values for most core aircraft types. This is aided by the fact that the macroeconomic inputs have barely changed, and the slight rise in the assumption for annual fuel cost increase from 1.5% to 1.6% is negligible for most aircraft types. However, we have had to make some changes to the steepness of our forecasts for Boeing 777-300ER, 200LR and Airbus A330 models due to some of the long-term trends we are observing in twin-aisle markets.

Single-aisles and Regional Jets above 100 seats (including freighters)

Airbus A220-100 Current Base Values were increased by 1% across the board in light of its strengthened long-term positioning after the Airbus takeover. Forecast values 10 years out increased by 0.9-2.3% accordingly.

Airbus A220-300 Current Base Values were also increased by 1% across the board in light of its strengthened long-term positioning after the Airbus takeover. Forecast values 10 years out increased by 0.9-2.3% accordingly.

Airbus A318-100 Current Base Values remain unchanged while forecast values 10 years out increased by 3.5% due to a reduction in curve steepness driven by engine commonality and an improved outlook on our CFM56-5B engine future value prospects.

Airbus A319-100 Current Base Values were reduced by 8% at the youngest end as last-off-the-line examples are unable to sustain much of a premium over their older siblings, while the oldest vintages saw a boost of up to 10% due to our improved outlook on CFM56-5B and V2500-A5 residual values. This translates to broadly similar changes to forecast values 10 years out. Sharklet-equipped examples saw similar changes at the new end while the oldest BVs remain unaffected.

Airbus A319-100neo Current Base Values were reduced by 2% as the type’s very few commercial orders are likely to be swapped to larger variants (if they haven’t already) and its main use is likely to be as an Airbus Corporate Jet (ACJ). The type’s Base Values now sit slightly below those of the A220-300.

Airbus A320-200 (5A/A1) Base Values remain unchanged for younger vintages, however older vintages have seen improvements of up to 10% driven by an improved Base Value outlook for the CFM56-5A engine and therefore an improved part-out value. The type’s longevity in service has exceeded our expectations. Base Values of the P2F version remain within 2% of where they were previously (none have been converted yet).

Airbus A320-200 (5B/A5) Current Base Values remain unchanged and changes to forecast numbers are negligible. The same applies to Sharklet-equipped examples and the P2F version (none converted yet).

Airbus A320-200neo Current Base Values remain unchanged and changes to the future value curve are negligible.

Airbus A321-100 Current Base Values remain unchanged at the younger end but were boosted by up to 10% at the older end due to our improved outlook on CFM56-5B engine values. Forecast values 10 years out increased by 13% as a result of this.

Airbus A321-200 Current Base Values remain unchanged and changes to the future value curve are negligible. The same applies to Sharklet-equipped examples and the P2F version for which the first conversions are underway.

Airbus A321-200neo Base Values remain more or less unchanged for both ACF and non-ACF versions (actually a slight correction of -0.5%). We do not have Base Values for the XLR model yet due to its very recent introduction but have a good understanding of its specifications and capabilities and expect to be producing new Base Value curves for this variant within the next few months. What we can say is that the XLR will be treated as a new and separate variant due to its fixed and irreversible structural differences from other A321neo models.

Boeing 717-200 Current Base Values remain unchanged, with a slight 4% improvement to the forecast 10 years out.

Boeing 737-300 Current Base Values remain unchanged, although the steepness of the future value curve was reduced significantly as it is propped up by the value of remaining engine green time that will support the freighter fleet for many years to come.

Boeing 737-300QC and SF Current Base Values saw slight improvements of 1.6% to 3.3% while forecasts 10 years out saw improvements of 6.9% to 8.4% supported by engine green time value.

Boeing 737-400 Current Base Values saw increases of 5% as Market Values have been outstripping Base by a very large margin for a sustained number of years, thanks to demand for the type for freight conversion. Market Values still remain well above Base, but the gap should narrow as we have decreased the steepness of the future value curve significantly for the same reasons.

Boeing 737-400SF Current Base Values saw slight improvements of 1.9% to 5.5% while forecasts 10 years out saw improvements of 8.7% to 9.3%, admittedly from a low starting point, supported by engine green time value. The niche Combi model shifted accordingly.

Boeing 737-500 Base Values increased by 20% from a very low base, although these numbers are becoming increasingly meaningless as the aircraft does not have much “long term economic potential” (as per the ISTAT definition of Base Value), given it is not suitable for conversion. The increase is driven purely by engine values thanks to commonality with the -300 and -400 models.

737-600 Current Base Values saw a notable increase of up to 25% at the older end due to our vastly improved outlook on the CFM56-7B engine type, which in turn boosts part-out values, and this is likely to support healthy aircraft values for the -600 model in the next decade or so. With hindsight we were perhaps too bearish on the type and our previous forecasts did not adequately consider engine and part-out values. Forecast values increase by even greater double-digit percentages although admittedly off a low starting point.

Boeing 737-700 Current Base Values remain unchanged except for a reduction of 3% at the youngest end. Much as with the A319, as the type exits production, we do not see younger vintages being able to sustain much of a premium over older ones. Forecast Values 10 years out vary by +/-3% from last year’s forecast. Boeing 737-700SF Current Base Values were amended accordingly (these are derived from the passenger values plus a conversion cost/conversion value factor).

Boeing 737-800 Current Base Values remain unchanged except for 2014-2019 vintages which were reduced by 0.5-3.0%, on the grounds that as the type exits production, these last examples will find it difficult to sustain as much of a premium over their older siblings as they may have done in the past.

Boeing 737-800SF Current Base Values were amended accordingly (these are derived from the passenger values plus a conversion cost/conversion value factor). Base Values for vintages that are currently being converted and flying remain unchanged.

Boeing 737-900 Current Base Values remain unchanged and the 10-year forecast figures improved by 2.7% due to strengthened engine values and freight conversion potential.

Boeing 737-900ER Base Values remain unchanged.

Boeing 737 Max 7 Current Base Values remain unchanged while forecast values 10 years out saw decreases of up to 6% as the type struggles to gain any traction beyond its main customers Southwest and WestJet. The current grounding does not impact Base Values for the type as forecasts are meant to take a long-term view and assume the aircraft will return to (or in the case of the Max 7 enter) service and will be compliant with all regulatory bodies worldwide.

Boeing 737 Max 8 and Max 8-200 Base Values remain unchanged. The current grounding does not impact Base Values for the type as forecasts are meant to take a long-term view and assume the aircraft will return to service and will be compliant with all regulatory bodies worldwide. It is also too early to speculate on the long-term impact, if any, of the currently dented public perception of the type. Market Values, however, have been revised and commented on separately in this newsletter.

Boeing 737 Max 9 Current Base Values were reduced by 1.3% and forecast values 10 years out moved accordingly. We see the type being unable to maintain much of a premium over the smaller Max 8 and Max 8-200 models due to its less liquid nature and the introduction of the larger Max 10. Once again, as with the Max 7 and 8, the grounding does not affect Base Values which take a long-term view.

Boeing 737 Max 10 Base Values maintain a $2 million premium over the Max 9, however, because the Max 9 Base Values were brought closer to the Max 8, the Max 10 saw some decline as a result. We are more confident in this type than the Max 9, since it has an orderbook of 520 aircraft, already exceeding the size of the current 737-900ER fleet. The current grounding does not impact Base Values for the type as forecasts are meant to take a long-term view and assume the aircraft will return to service and will be compliant with all regulatory bodies worldwide.

Boeing 757-200 Current Base Values saw little change; however, the forecast curve steepness was reduced and as a result, forecast values 10 years out increased by up to 24%, admittedly starting from a low point. We expect continued medium-term demand for the type as a freighter and have also had to improve our outlook on engine values, which drives the above decision to reduce forecast steepness.

Boeing 757-200SF and Combi Current Base Values remain unchanged, with a slight 2.6% improvement to the forecast 10 years out.

Boeing 757-300 Base Values remain unchanged.

Boeing MD-80 and MD-90 Base Values remain unchanged, although these numbers are becoming increasingly meaningless as the aircraft does not have much “long term economic potential” (as per the ISTAT definition of Base Value).

Bombardier CRJ1000 Base Values remain unchanged.

Embraer 190-E1 Current Base Values remain unchanged, although forecast values 10 years out were reduced by 5-10% as we anticipate accelerated retirement of some large fleets in the coming decade.

Embraer 195-E1 Current Base Values were reduced by 2% as the market sees practically no difference in value compared to its smaller E190 sibling. Forecast values 10 years out were reduced by 6-11% as we anticipate accelerated retirement of some large fleets in the coming decade, most notably that of the largest operator Azul. The fleet rollover is already underway.

Embraer 190-E2
Current Base Values were reduced by 2%, effectively cancelling out January’s inflation, due to pricing pressures in the competitive sector and the erosion of premium over the E1 model in a lower sustained fuel price environment. Forecast values shifted accordingly.

Embraer 190-E2 Current Base Values were reduced by 2%, effectively cancelling out January’s inflation, due to pricing pressures in the competitive sector and the erosion of premium over the E1 model in a lower sustained fuel price environment. Forecast values shifted accordingly.

Embraer 195-E2 Current Base Values were also reduced by 2%, cancelling out January’s inflation, due to pricing pressures in the competitive sector for a type sandwiched between the A220-100 and A220-300. Forecast values shifted accordingly.

Fokker 100 Base Values remain unchanged.

Sukhoi Superjet 95 Current Base Values were reduced by 10% while forecast values 10 years out were reduced by up to 27% as the outlook for the type gets bleaker. An abnormally high portion of the fleet is parked, and Western operators of the type have been complaining about poor engine reliability.

Please note we included 100-seat and above types that were formerly under regional jets along with the single-aisle section as there is a continuous spectrum of overlapping products from 100 to 150 seats with four-abreast, five-abreast and six-abreast seating, and it is important to be able to compare them.

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