30 Mar 2017

Thought Leadership: ISTAT Americas Wide Body Market

In the seventh of our Thought Leadership series Ameya Gore AVP-Asset Management attended the ISTAT Americas conference in San Diego and discusses the Wide Body Market. Wide Body Market (what ISTAT says):

• It is very much evident that the Wide Body Market is dominated by the A330 and B777 at the moment with the A350 and B787 catching up now.
• The prospect of A330-NEO and B777-X were discussed but they are the future prospects to the existing wide body products and hence only time will tell how they perform.
• The A380 market is softening and the 747-8 is still not the most comparable product to compete with the A380 market.
• The wide body secondary market is expected to be mildly soft as well due to the costs involved in transitioning the assets from the current lessee to the next lessee and therefore trading of assets in that segment is expected to be lower. The CMVs of these assets are also expected to be impacted due to the current financial market situation - cash being available at cheaper rates, lease rate factors being in the range of 0.68% (down from 0.82%), financing available from multiple sources.

Ameya Gore commented “Completely agree with these views. Not much left for imagination as the current fuel prices are driving consumption of the B777 and A330 products more compared to the A380s. The B787 and A350 programs are also doing well. The 4 engines XL Wide Body aircraft may see a return in demand only if the fuel prices again spike up to the 2009 recession time levels. But that may further prove to be counterproductive as the 2 engine variants will still find more demand due to the reduced operating costs. It will be interesting to see how the A380s cope up with the market pressure from B777, A330, B787 and A350 programs.” Acumen Aviation © 30 March All Rights Reserved.