Tue, Apr 20, 2010
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.
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