Lease lengths on legacy singleaisle commercial aircraft are being extended, meaning earliergeneration aircraft are staying in service for longer, according to new research from the International Bureau of Aviation (IBA).
There is, the consultancy says, a “disconnect” between the lengthening lease rates of legacy single-aisles such as Airbus A320ceos and Boeing 737-800s and rising lease values of these aircraft. The consultancy says lower oil prices in recent years compared to earlier this decade “have driven increased demand for later-build A320ceos and 737-800s than was originally anticipated. This is likely [to have] attributed to their proven technologies, giving a steady operational platform, and IBA believes the established reliability of these older models is a contributing factor to the apparent contradiction’. The consultancy highlighted other trends from its research. More singleaisles are now sold with leases, strengthening sales and leaseback pricing means the leasing market “is rich with liquidity”, and lease rate factors (LRFs) are decreasing. In 2013, IBA says, a new A320ceo had an LRF in the region of 0.71%, but now the figure is nearing 0.50%.
More leasing opportunities on older equipment due to increased demand and competition among lessors are also boosting the market, says IBA. On widebodies, IBA says discounts from manufacturers on clean-sheet aircraft such as A350s and 787s as they seek to secure widebody market share “will increase pressure on values and lease rates further down the road”, although Jonathan McDonald from IBA’s Commercial Intelligence team said the residual values of lease aircraft “are expected to remain buoyant”. IBA also said it is seeing more 777-300ER secondary market activity. Mark Broadbent
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