Jetrader - January/February 2011 - 14

attempts to settle down, then values would have performed in a way that validates the base/market value concept. This is graphically shown in Chart 4 below.

CHART 4

As is evident from the graphs, volatility is a reality during boom and bust periods no matter what the age of the program is.
On the widebody side, what will be the effect when Boeing eventually manages to overcome the problems that hold the 787 back from world domination? The A350 is only a few years behind and unsettles those that have young A330 aircraft in their ﬂeet. Operating costs aside, the A330 still has much to offer the market, and we don’t see it purely as interim lift. The A350 will be considerably more expensive to buy and have a range that will not be necessary to serve many of the current A330 routes. With the cost of ﬁnancing set to escalate, then what’s better, an aircraft with lower seat mile costs or one which will be more than US$40 million cheaper to buy new? Both work for different reasons. On the narrowbody side, while it is likely that Bombardier intends to compete against the duopoly in the 130 to 150 range, the barriers to market for them will be sufﬁcient to delay the issue for another ﬁve years. Just look at the problems other manufacturers ﬁnd with new technology in a seat category they are familiar with, let alone one outside it. Forget this doom and gloom though; the signs are there that the market is recovering and there is still much to play out before we know what the next technological leap will be.

There is much criticism from non-ﬁnancing sides of the industry who question the reliability and applicability of the base value concept. The argument has always been on how this relates to reality. Only once a full cycle is observed, can the validity of a base value projection provide comfort to those ﬁnancing these assets that values can indeed fall and rise. Stability for the current generation of aircraft is of course to be expected, but it is only a question of time until the scenario encountered for the older generation aircraft applies to these aircraft. Already, there has been much talk of the likelihood of a re-engined A320 and 737NG; likewise the effect of what a stretched C-Series will accomplish should the seat count approach 140 to 150.

24/7 aircraft news and data for the ﬁnance industry
How Finance Pro can help you
p to the inute aircraft nance news

Features of Finance Pro

e the rst to react to new opportunities or threats Analyse the very latest transactions and market trends Monitor competitor activity Find and contact prospects

Learn more about Finance Pro – www.ﬂightglobal.com/ﬁnance
14485745_flight.indd publication of the International Society of Transport Aircraft Trading The ofﬁcial 1

7/20/10 8:19:05 AM

http://www.flightglobal.com

Jetrader - January/February 2011

Table of Contents for the Digital Edition of Jetrader - January/February 2011