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The Airbus A320 continues to face downward value and lease rate pressure. The increase in availability from recent bankruptcies combined with higher production rates
most likely mean that this trend will continue in the near term.
The A320 celebrated the 25th anniversary of its maiden flight earlier this month.
Since it first took to the skies in February 1987, the A320 has reached some impressive milestones. It has grown a considerable family of its own, stretching from the smaller A318 to the larger A321, and has managed to become the backbone of many airline fleets across the continents.
The A320 presented a number of features that, at the time, were revolutionary in commercial aircraft, such as digital fly-by-wire flight control systems and side stick controls. This forced the rest of the industry to follow suit in order to keep pace and while Boeing came up with its arch-rival, the Boeing 737 Next Generation, while McDonnell Douglas narrowbodies went into a commercial decline from which they will never recover.
The A320 entered regular service in March 1988 with Air France as its first operator. The A320 Family has racked more than 8,300 orders, with nearly 5,000 delivered and in service, by far Airbus' most successful aircraft programme.
The collapse of Air Australia earlier this month placed another six A320s onto the market. Air Australia operated a fleet manufactured between 1991 and 1993 powered by CFM56-5A3 engines.
Air Australia is the sixth A320 operator to ceased operations since March 2011.
About a year ago, Kuwaiti carrier Wataniya Airways stopped operations after running into financial trouble. It operated a fleet of seven aircraft, manufactured between 2008 and 2010, equipped with CFM56-5B4/3 engines. ALAFCO leased Wataniya three A320s, which were later placed with VietJet Air. AerCap's three aircraft fleet was placed to InterJet last summer. ILFC's single A320 was placed on lease to RAK Airways last August.
Russian low-cost AviaNova ceased operations last October. Its four A320 fleet, powered by V2527-A5 engines, has yet to be placed. Two 1996/97-vintage aircraft are owned by ILFC, the remaining two, built in 2002 and 2003, are owned by Aviation Capital Group.
Last November, Dutch charter carrier Amsterdam Airlines ceased operations and the two 1993/95-vintage A320s powered by V2500s were returned to ILFC. Both aircraft are still available.
UK charter airline Astraeus had a fleet of Boeing 737s and 757s as well as one A320 aircraft when it ceased operations early in the winter. The 1991-vintage A320 aircraft with CFM56-5A1 engines has now been parted out.
Spanair stopped operations in late January. The Spanish carrier operated a 29-aircraft fleet with 13 A320s from ILFC, two 2001-vintage A320s from Itochu AeroTech Corp as well as two A320s subleased from SAS. RBS Aviation Capital (through the Airspeed-2007 securitization) had one 2004-vintage aircraft while FLY Leasing had 2003-vintage A320 on lease through May 2013.
The ILFC's owned aircraft were manufactured between 2000 and 2005. The majority of them were on lease through 2016 and 2017. The longest lease period was to April 2018, while the shortest was through April 2014.
The Spanair situation definitely did not help what was already a weak lease market for used A320s, according to one leasing source.
"The impact to the A321 model may not be as severe since there were only four aircraft available. This compares to 24 A320s parked and available with 19 more joining the crowd from Spanair making it 43 total," he commented.
In comparison, the 737-800 available fleet is estimated around 10 aircraft, after Malév released three aircraft earlier this month.
"Expectations are for the Spanair aircraft returns to be sorted out fairly quickly. If they are not it will only further dilute realized payments against claims for Spanair unsecured creditors. While one expects aircraft to be returned fairly quickly, it will take some time for this volume of aircraft to be reabsorbed into airline operations," the leasing source added.
Flightglobal Finance Pro understands that seven ex-Spanair A320s are about to be placed with one operator in Europe.
According to Flightglobal's Ascend Online database, there are 2,767 A320s currently in service with an estimated 130 aircraft now in storage.
According to Ascend, the A320 stored fleet is increasing but more than half are 5A/A1 variants, which will be increasingly difficult to return to service. The remainder of idle inventory has been stored for an average of only eight months, so majority of these are probably cycling through between leases.
The CFM56-5A powered population accounts for 325 aircraft and 44 of them, or 18% in storage.
Of the 99 V2500-A1 engine powered fleet, an estimated 24 aircraft are in storage, or 24% of its population.
Another 23 stored A320s have CFM56-5B engines out of a 1,268 aircraft population.
The V2527-A5-powered fleet accounts for 1,075 units, or 38.9% of the total A320 fleet. There are 39 -A5 powered A320s in storage, or 3.6% of the -A5 powered fleet.
Source: Flightglobal's Ascend Online database, Feb 2012
CMVs and lease rates
Availability of V2500-powered Airbus A320s has further risen with the AviaNova, Astraeus and Spanair ceasing operations over the past few months.
Since all were on operating lease this creates potential for short-term pressure on market lease rates.
New A320s are being placed in the mid-$300,000 a month, compared with high- $300,000 quotes for the 737-800 model, but some transactions have been much lower.
Flightglobal Finance Pro is aware of a new placement in Asia at $275,000 a month while a future 2012 delivery has been negotiated at $315,000 a month, also in Asia.
One leasing source said that rates on new A320s can be below $250,000 per month if the lessee will assume the floating rate risk. According to him, lease rates are in the upper $200,000 on a fixed basis.
Collateral Verifications' vice president Commercial Aviation Services Gueric Dechavanne expects to see a further drop in lease rates based on some of the shorter term leases that may be done in the near-term to keep these aircraft flying. "Unless demand exceeds the level of supply that OEMs can provide, this trend may become permanent for older aircraft but that is still somewhat difficult to determine due to the instability of the current environment," he said.
The sale and leaseback market has also been aggressive lately with airlines looking to get deals at 0.8% lease rate factor. On a new 2012 delivery, Flightglobal's Finance understands that the operating lessor offered $41 million for the aircraft and a monthly lease of almost $400,000. However the airline asked for more than $45 million with the same lease rate.
Two years ago sale and leasebacks on new deliveries were in the $36 million and $39 million range with leases into the $320,000 to $350,000 range per month.
Specifically 2011-vintage -A5 powered A320s trade in the $295,000 a month range for Ascend, $310,000 for Collateral Verifications and $340,000 a month for IBA.
At the lower end, one can expect less than $90,000 a month for oldest -A5 powered vintages. One trading source expects lease rates for a 1993-vintage at $75,000 a month.
A 2000-vintage A320 has a $140,000 a month lease rate according to leasing sources while a five to six years model would be placed at $200,000 to $230,000 a month.
IBA says a 2005-vintage has a monthly lease rate of $270,000. Collateral Verifications has a $220,000 monthly lease rate while Ascend is at $205,000 a month.
IBA says a 2001-vintage has a monthly lease rate of $220,000. Collateral Verifications has a $180,000 monthly lease rate while Ascend is at $165,000 a month.
A 1997-vintage aircraft has a monthly lease rate of $170,000. Collateral Verifications has a $165,000 monthly lease rate while Ascend is at $125,000 a month.
Current market values range from $7 million for early V2527-A5 engines powered aircraft to $10 million.
"Values of the newest and oldest A320s have remained relatively stable over the last year with increased pressure observed for the middle-aged aircraft as financing becomes more difficult," commented IBA Group's senior analyst Alice Gondry.
With the introduction of new technology aircraft in this segment there is an obvious concern that rates could suffer in the near to medium term.
"The massive backlog will take another seven years to clear so IBA is of the opinion that the introduction of the A320neo will only have an effect on values once the new engine option reaches a sizeable in-service fleet," she added.
Dechavanne says the introduction of the A320neo will most likely have an impact on the long-term residual values but in his view, this will not be realized until the NEO reached a mature production cycle. "There are still too many unknowns to fully understand how the next generation single-aisle products will impact the current generations of aircraft," he commented.
A 2001-vintage is valued at $17.1 million for MBA, $20.6 million for IBA, $16.2 million for Ascend and $17.9 million for Collateral Verifications.
For a 2005-vintage aircraft, IBA is the highest at $26.4 million, while MBA has the lowest quote with $20.6 million. Ascend has a $23.2 million current market value. while Collateral Verifications has $24.4 million.
IBA says a 2011 delivery has a $39 million current market value but a $41.6 million base value. Ascend has a $39.1 million current market value for a 2011-vintage aircraft while Collateral Verifications and MBA have $35.6 million and $36.8 million, respectively.
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Originally written on Fox Sports | Last updated 11/16/12
The San Antonio Spurs on Thursday night learned firsthand one of the most surprising truths of this still-early NBA regular season: The team that Carmelo Anthony wrought by sheer will, ego and self-interest is a force to be reckoned with. In battling back from an 11-point, fourth-quarter deficit, on the road and against one of the league's best teams, Anthony's Knicks cemented the fact that their start -- now 6-0 -- is no mirage. The Knicks' 104-100 win in San Antonio was their best of the season despite having won every other game by at least 10 points, including a 20-point drubbing of Miami to kick off the season. That's right: Carmelo Anthony, having spent the past two seasons turning two teams upside down in order to refashion them in his own image -- an image in which he is the star, the shooter, the bright light around which all others orbit -- has shown those like me who scoffed at his need for control and his my-way-or-no-way-at-all sensibility, that perhaps he knew exact...
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We did learn from the past.
On Sunday evening in Cynthiana and Harrison County, it was obvious that we all were having flashbacks from the 1997 flood.
As rain continued to fall, families in the west side of town could be found looking out front doors, loading special belongings into cars, watching the river waters creep into Rev. Ross Park and remembering an earlier flood 13 years ago that swept away everything from so many people.
It was also evident that county, city and law enforcement officials had taken some notes after March 1997.
•Kellie Marie Grubbs and JJ Nicholsto marry on July 3 at 4:30 p.m. at Indian Creek Christian Church. A reception will be held at the Cynthiana Country Club.
•Katheryn Elizabeth Boaz and Benjamin McDowell Royse to be married at Southern Hills United Methodist Church on Aug. 28, 2010, at 5:30 p.m. A reception will follow at Red Mile.
* Cynthiana News, June 6, 1867 - "The county of Harrison is entitled to three scholarships in the 'Agricultural College' located in Lexington, we believe. It is a concern we know little about and care to know less. It is time that the Legislature of Kentucky cease making appropriations for the advantage of a certain few. The people of this county have paid taxes enough for the benefit of a few nabobs." (nabob - person of great wealth)
Sole Ownership - Cash Deed for Kentucky: Secretary of Housing and Urbin Development to Larry Kearns and Patricia Kearns, Lot 18 - Block G of the Western Hills Subdivision (131 Western Hills), $65,000.
Steven C. Judy and Sherry A. Judy to Brent Cockrell and Stacia Cockrell, Parcel 1-A - 16.638 acres on Paris Pike (US 27), $75,000.
General Warranty Deed: DGS Development, LTD to Chasity Wooten, Parcel 5 - Hinton Road Farms, $49,500.
Rhonda Drake and Gale Drake to Theresa A. Marx, property in Harrison County, $40,000.
Philip Morris International Management SA (PMIM SA), a subsidiary of Philip Morris International Inc., has awarded an educational scholarship to David Barnes of Berry, Ky. Barnes will attend Bluegrass Community Technical College and then the University of Kentucky and plans to study crop science. He is the son of Jeff and Connie Barnes of Berry, Ky.
I held close to many assumptions before I became a reporter.
Assumption #1: Police officers spend their time eating donuts and drinking coffee.
Assumption #2: Firefighters pass the work day by posing for calendar shoots and playing with Dalmatian dogs.
Unfortunately, as a society, we have painted these pictures of law enforcement officials that are not true.
Whenever anything bad happens in Cynthiana (think car accident, house fire, person trapped on a roof, etc.), I tend to see the same people.
On July 5, a High Moisture Haylage field day will be presented on the farm of Greg McCauley. Michelle Simon, UK summer intern, will be presenting information on wrapping haylage at the correct time to increase the quality of the product, information on new possibilites for producers, and information on hay temperatures and curing time. Dr. Ray Smith, University of Kentucky Forage Specialist, will be the guest speaker.
These are the summers that I am glad I have maintained a growing succulent collection for outdoor containers.
It has been dreadfully hot this year and spending all my time watering containers is not my idea of fun.
If we removed the Ohio Valley humidity factor, this summer would be like a Zone 9, Mediterranean climate with pop-up thunderstorms.
Harrison County High School Class of 1960 will have its 50th reunion on July 17 with social time from 5-6:30, dinner at 6:30 at the Cynthiana Country Club. For more information call 859-234-1306.
The Morrison reunion will be held July 10 from 11 a.m. to ? at the Scott County Park in the outdoor shelter. Bring a dish, drinks, etc., and enjoy a day of memories. For more information call 234-8746.
To the editor:
Harrison County Recreation Board of Directors and its Director Rick Chasteen, along with their employees of River Road Park, deserve recognition and commendation for their outstanding efforts in revitalizing the baseball fields and facility. Not many weeks ago, the park's renovation was stricken with nature's effects and it was doubtful that activities could begin in a timely manner. However, with hard work and dedication of park employees, and many Harrison County citizens, the youth baseball and softball programs were able to begin on time.
Copyright © 2015
The Cynthiana Democrat is your source for local news, sports, events, and information in Cynthiana, KY and the surrounding area.


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