But, They Admit, It's A Long Road Ahead 

The International Bureau of Aviation (IBA) gave its latest assessment of aircraft valuations, as well as  predictions for future market trends, at the recent 24th Annual Finance & Commercial Aviation Geneva Conference.

IBA joined industry colleagues from across the globe to discuss the current state of the aviation market at the Geneva Conference.  But the real question on everyone's minds was what the future might hold and how long it will be before the market stabilizes? 

Owen Geach, IBA's Commercial Director, and Alice Gondry, Senior Analyst, were prominent speakers at the event. Owen presented IBA's perspective on the current market and gave an update on aircraft values and lease rates during a well attended breakfast seminar, whilst Alice fielded questions on the appraiser panel.  IBA holds the view that the industry downturn has now hit rock bottom and that there are signs of recovery to be seen although it will be some time yet before values return to base rates, let alone the heady heights of 2007. Key highlights from IBA's sessions include:

• Aircraft values have declined across the board - for some aircraft, value reductions have been minor as little trading has actually occurred, but for others values have dropped significantly.
• Current production aircraft have exhibited the smallest value decline, with some out-of-production aircraft values dropping by large margins.
• Most aircraft market values have dropped between 10-20% from base values, and some have fallen even further when considering the market peak in 2007.
• Some poor performing aircraft like the MD80 have seen market values dropped 40% from base alone.
• Banks are reluctant to provide finance other than for new delivery aircraft - and this, together with low passenger numbers, has led to a reduction in deals being completed.
• There have been a large number of lease defaults - and decreasing rental streams.

FMI: www.ibagroup.com