Jetrader -May/June 2013 - 26

1998 A32-5B4/P / 1998 737-800W - 7B26
freight market demand and the dwindling
interest in continually parting out these
aircraft has had an effect in the numbers
parked up, but both still offer airlines
the chance to serve long-range routes
without the high capital cost and high
buyer furnished equipment depreciation
of a new-build widebody.
It is no surprise that much of the
current demand comes from the established Paciﬁc Rim and emerging Middle

Eastern high-density routes. With some
heavy backlogs out there for many of
the top-tier carriers, lessors have become
more focused on securing sale leasebacks
because there is less competition than for
the narrowbody deals, and it would seem
there is enough to go around. As ever,
reconﬁguration plays an important part
in the risk assessment of any widebody
deal and will cause many to take a more
aggressive stance on depreciation.

The ones to watch will be the ultra-long
range aircraft, which can’t offer the right
seat economics that all airlines are trying
to achieve. As these aircraft are light on
seats in favor of range, the number of passengers willing to stay seated for 18 hours
is insufﬁcient to sustain this market in the
current economic environment. Cheaper
fuel will obviously help, but airlines would
prefer the larger variants.
On the upside, though, it would appear
that the fortunes of those leasing out 767300ERs have improved due to the ongoing
787 saga. However, while lease rates may
have been pushed up slightly in the short
term, values continue to decline along with
anything else that has been technologically replaced.
In the short term, and assuming that
the 787 gets through the pain unharmed,
the widebody sale and leaseback market
will be driven by new deals with tier-one
credits. The A330 will become ever more
difﬁcult to ﬁnance as banks seek to venture
into other types in the interest of diversiﬁcation, while the 777-300ER continues
to dominate.
Over the longer term, however, the
A350, the 787-10 and the subsequent timing
of the 777 replacement will set much of
the widebody scene for the next couple of
decades—unless oil pricing does collapse,
making it more cost effective to get those
747s and A340s back in the air.

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