ISTAT Jetrader - Winter 2022 - 43

Current
Market
Value
1.15
Current
Base
Value
1.90
All values in $US millions
Maintenance assumptions: Mature engine older than 4 years in Half-life condition
*Blended 4% Inflation: Assumes 3% annually attributed to labor and shop visit material and 6% annually attributed to LLP CLP increases
market, but that production could
restart at their new facility in Alberta,
Canada, but most likely no earlier than
2025. This protracted " pause " leaves
both engine and airframe owners/
operators in limbo when determining
their future strategy and associated
investment horizon.
Currently, there is good demand
for green-time engines, as it is both
extremely expensive and slow to put
engines through a shop visit. Overhaul
costs, which have been impacted
by PWC's recent 9-11% increase in
catalogue list prices (CLP), are circa
USD 2m. However, as a consequence
of the depressed Dash 8-400 market,
the cost of a shop visit would only
translate into a 60-70% value recovery
if the aircraft were sold in the current
environment. As such, where possible,
shop visits are being avoided or very
carefully managed to mitigate costs.
The majority of the PW150 engines
are enrolled in the Eagle Service Plan
(ESP, a pay-per-hour maintenance
plan) or equivalent, with either
PWC or Standard Aero. While these
types of programs provide definitive
maintenance costs and guaranteed
support, they also severely limit the
ability of an owner to realize a return
in the part-out market, as PWC largely
controls the aftermarket. PWC only
installs new or PWC-approved repaired
parts, and all corresponding shop visit
maintenance must be undertaken at a
PWC-approved shop, of which there are
only three for the PW150.
With the gradual return to service
of the Dash 8-400, PW150 lease rates
have started to tick upwards, with
PWC itself leasing engines from third
parties to cover their own shortfall as
lessors/operators begin to put engines
through shop visits. The number of
engines available for sale in good
technical condition is extremely thin,
and these tend to sell quickly. Most,
however, require repeat inspections or
have impending shop visits, including
a substantial number of engines that
have been stored improperly during the
pandemic. Operators are reluctant to
accept engines in such condition.
Market Values
New engines (excluding QEC) are
estimated to list for around $US5
million but sell in the region of US$2.53
million. Engine values are restrained
by the low market values of the parent
airframe, and unless those substantially
strengthen, stand-alone values of the
PW150 will continue to suffer. Those
lessors with large portfolios of Dash
8-400 are either selling aircraft in an
" as is " condition or committing to the
product and placing engines through
shop visits in the hope that aircraft/
engine values and lease rates improve.
Recent lease rates have been in the
range of $US15,000-25,000 per month,
plus maintenance reserves. Market
Values are likely to remain soft until
De-Havilland provides clarity on the
Dash 8-400 program or robust renewed
demand for the airframe prompts a
substantial and permanent rise in
values and lease rates. A reassessment
by PWC of their control of the market
would also benefit residual values.
This article was written with the assistance of
Rob Kerswell of Fintech.
2023
1.96
PWC PW150A - Fintech Aviation Services Sarl Values at 1 October 2022
Future Base Values at Blended 4% Inflation*
2026
2024
2.00
2025
2.02
2.02
2027
2.02
2028
1.99
2029
1.96
2030
1.91
2031
1.85
2032
1.79
Premier One-Stop-Shop
MRO Solutions Provider
Components Overhaul and repair services
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* WIN TER 2022 * 43
ISTAT Jetrader - Winter 2022

Table of Contents for the Digital Edition of ISTAT Jetrader - Winter 2022
