ISTAT Jetrader - Autumn 2023 - 34

APPRAISAL
BASE VALUES AT DELIVERY (2024)
$54.00
$56.00
$58.00
$60.00
$62.00
$64.00
$66.00
$68.00
$70.00
$72.00
A321neo
A321LR
■ Base Value
■ Lease Rate
Source: mba REDBOOK FLEET
The long-term residuals of the aircraft should mainly
depend on the timing and competitiveness of a clean sheet
middle-of-the-market aircraft by Boeing and/or a clean
sheet design from Airbus to meet green initiatives.
notoriously lower-than-anticipated
time-on-wing (TOW) due to their
higher fuel-burning temperatures. At
the time of EIS, both the LEAP and
the GTF faced multiple issues; CFM
faced premature coating deterioration,
the GTF needed a redesigned
knife-edge seal, and both engines
required significant hot section
durability improvements for harsh
environment operation.
With most teething issues behind
the LEAP-1A program, the PW1100G
GTF family has received the majority
of recent media attention but has
retrofittable fixes in place or on
the way. Durability issues include
excessive N2 vibrations, cracking of
the third-stage low-pressure turbine
(LPT) blade, cabin odor and fractures
of the integrated drive generator in
the main gearbox.
An FAA Airworthiness Directive
published in August 2023 requires
removal and inspection of 137
engines built between 2015 and 2021
3 4 * THE OF F I C I AL PUBL I CAT I ON OF ISTAT
(approximately 5% of the total fleet)
due to potential anomalies in the
powdered metal process that could
result in cracks that affect the first
and second-stage hubs in the high
pressure turbine, leading to potential
downtime and repairs.
P&W has also introduced an
improved configuration called the
GTF Advantage, which is due to
enter service in 2024. The engine is
slated to become the build-standard
by 2026. It provides a 1% fuel-burn
benefit over the current-build engines
and greater takeoff thrust, with up
to 8% greater thrust at hot-and-high
airports, and some improvement
to time on wing is expected. The
GTF Advantage configuration is
not retrofittable on the previously
built PW1100Gs but is intermixable
and interchangeable with nonAdvantage
engines.
The A321XLR poses an interesting
question for appraisers, owners, and
investors alike: Is it simply an upgrade
A321XLR
$380,000
$400,000
$420,000
$440,000
$460,000
$480,000
$500,000
to an existing aircraft type, or is it
better classified as its own type due
to its specific capabilities and build
standards, which are not retrofittable?
From mba's perspective, the A321XLR
should be valued as a stand-alone
aircraft with a unique depreciation
curve compared to the A321neo and
LR. With values for the XLR expected
to be at least US$10 million higher
than the A321neo at delivery, and
higher spreads possible depending on
future escalation and BFE options, the
aircraft will initially be attractive to
those buyers that specifically value the
long-range attributes of the aircraft,
which are in high demand right now.
As such, the aircraft is expected to
mainly operate long-haul narrowbody
routes on its first lease, but the
A321XLR offers flexibility to a wider
market, and carriers may plan to use
the aircraft on short- to medium-haul
operations with follow-on leases.
Future Base Value curves for the
aircraft are still under consideration,
with plans to publish in 2H 2023, but
mba expects the premium over the
standard A321neos to narrow as the
aircraft comes closer to the end of its
in-service life. This will likely result in
a steeper depreciation curve for the
XLR over the first 10 to 12 years of
life, while still maintaining a premium
over the neo and LR in the long run, as
demand for the XLR's extended-range
capabilities are likely to decrease as it
moves down the operator chain.
The long-term residuals of the
aircraft should mainly depend on the
timing and competitiveness of a clean
sheet middle-of-the-market aircraft
by Boeing and/or a clean sheet design
from Airbus to meet green initiatives.
With no current direct competition for
the XLR on the market or announced,
the aircraft has considerable
opportunity to maintain strong Market
Values in a market keen to keep up
with growing passenger demand and
green initiatives.
Base Value (US$ Million)
Base Lease Rate (US$)
ISTAT Jetrader - Autumn 2023

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