Regional Aircraft Markets - aviationnews-online.com · 2017-12-07 · flightglobal.com/consultancy...
Transcript of Regional Aircraft Markets - aviationnews-online.com · 2017-12-07 · flightglobal.com/consultancy...
flightglobal.com/consultancy
Regional Aircraft Markets7th December 2017
Rob Morris, Global Head of Consultancy
1
flightglobal.com/consultancy 2
FlightGlobal: Pioneering aviation insight and analytics business
RELX Group:London, Amsterdam and New York Stock Exchange listed28,500 employeesMarket Capital $36.87bn
FlightGlobal:370+ staff11 offices across the world
Part of a leading data solutions group
flightglobal.com/consultancy 3
Flight Ascend’s unique Value proposition as an appraiser
Independent Global team – fully objectiveWe do not invest in aircraft and we are not brokers – NO conflicts of interestGlobal perspective with offices in London, New York and Hong Kong
Instant access to vast data for researchThe only Appraiser with globally recognized Fleets, schedules and values databases used by our clients on a day to day basis
Unparalleled Historical values dataHistorical Market values from 1965
Access to industry Tier 1 participants Clients are Airlines, all the top lessors, the major banks involved in aviation finance, MROs, OEMs, regulatory bodies
flightglobal.com/consultancy
The Flight Ascend Consultancy Team
4
Rob MorrisGlobal Head of Consultancy
Peter MorrisChief Economist
Chris SeymourHead of Market Analysis
Henk OmbeletSenior Analyst
Richard EvansSenior Analyst
Chris WillsHead of Consultancy Ops.ISTAT Sr. Appraiser
Tony BrooksSenior AnalystISTAT Appraiser
Ben ChapmanValuations ManagerISTAT Appraiser
Lionel OlongaValuations Analyst
Ryan HammacottRisk Analyst
Joanna LuHead of Advisory Asia
Thomas KaplanValuations Analyst
Dennis LauAviation Analyst
Michael HuiAviation Analyst
VacantSenior Consultant
Kevin NgAviation Analyst
Sara DhariwalValuations Analyst
Eva KaragianniValuations Analyst
Oliver FordValuations Analyst
Luke SmithValuations Analyst
Valerie BershovaValuations Analyst
George DimitroffHead of ValuationsISTAT Appraiser
Michael LapsonSenior AnalystISTAT AppraiserDaniel HallSenior AnalystISTAT AppraiserASA Sr. AppraiserSyed ZaidiAviation Analyst
David GriffinSenior AnalystISTAT Appraiser
flightglobal.com/consultancy 5
Regional Jet MarketsTurboprop Markets
flightglobal.com/consultancy
Regional Jets
6
flightglobal.com/consultancy 7
Some definition – what is a Regional Jet?
flightglobal.com/consultancy 8
Average 150 regional jet deliveries annually through current demand cycle
0
50
100
150
200
250
300
350
400
Ann
ual D
eliv
erie
s
100-Seat85-Seat70-Seat50-Seat
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 9
Deliveries predicted to decline marginally before pick-up again in next decade
0
50
100
150
200
250
300
350
40019
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
1820
1920
2020
2120
2220
2320
2420
2520
26
Ann
ual D
eliv
erie
s
100-Seat85-Seat70-Seat50-Seat
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 10
Fleet growth has stagnated but mix is changing
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,00019
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
17
Pass
enge
r Reg
iona
l Jet
Fle
et
100-Seat85-Seat70-Seat50-Seat
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 11
Fleet trend is predicted to continue
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,00019
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
1820
1920
2020
2120
2220
2320
2420
2520
26
Pass
enge
r Reg
iona
l Jet
Fle
et
100-Seat85-Seat70-Seat50-Seat
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 12
Less than 1,000 aircraft in firm order backlog, with 50% scheduled through 2021
0
20
40
60
80
100
120
140
160
180
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 TBC
Sche
dule
d D
eliv
erie
s
COMACSukhoiMitsubishiBombardierEmbraer
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 13
Stored fleet continues to grow but 50-seaters drive volume
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
20.0%
22.5%
0
100
200
300
400
500
600
700
800
900
Stor
ed F
leet
at Y
ear E
nd
100-Seat85-Seat70-Seat50-Seat% of Fleet
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 14
Current idle inventory is 828 aircraft
0
20
40
60
80
100
120
1400 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 30+
Airc
raft
in S
tore
Aircraft Age (Years)
100-Seat85-Seat70-Seat50-Seat
Source: Flight Fleets Analyzer, passenger aircraft only, 5 December 2017
38 aircraft included with future lease identified43 aircraft included with future sale identified
flightglobal.com/consultancy 15
50-seat jets driving lower retirement age
0
5
10
15
20
25
30
0
20
40
60
80
100
120
Aver
age
Age
at R
etire
men
t
Ann
ual R
etire
men
ts
>25 Years Old<25 Years OldAvg Age at RetirementAvg Age at Effective Retirement
Source: Flight Fleets Analyzer
flightglobal.com/consultancy 16
Marked difference between small & larger RJs, wide spread of curves over history
Source: Flight Fleets Analyzer
0%
20%
40%
60%
80%
100%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Airc
raft
Ret
ired
Mean +/- 1SD (all RJs) last 20 yrs End 2010 all RJs End 2015 RJ30-50 End 2015 RJ70-100
50% survivor point has a mean of 20 years, but varies
widely by size and type
2016 Flight Fleet Forecast uses 50% survivor
assumption of 17/20 years
flightglobal.com/consultancy 17
Scope Clause
Scope clause is a pilot contract issueTypically restricts the amount of capacity that a mainline airline can pass down to its regional partnerIntent is to protect pilot jobs and wage structures in mainline carrierEach airline’s scope clause is different but typically restrictions apply around
Number of aircraftSeat capacity of aircraftMaximum take-off weight of aircraft
Scope can change by negotiation but pilots need a lot of convincing to accept change as they zealously protect contract conditions in airlines which are typically highly unionised
flightglobal.com/consultancy 18
Current US Major airlines scope clause
flightglobal.com/consultancy 19
Scope clause consequence in US
Neither MRJ90 nor E175E2 are current scope clause compliantE175, CRJ900 and MRJ70 are current scope clause compliant81% of current E175 fleet (and 92% of backlog) operates in US; 67% of current CRJ900 fleet operates in USCurrently all three Majors (American, Delta and United) are saturated for 76-seaters so no further growth potentialNo changes are expected to scope clause in next contract round (at least)Only opportunity for more 76-seaters will be for replacement of existing aircraft
flightglobal.com/consultancy 20
Relatively fewer RJs managed by operating lessors
0%
5%
10%
15%
20%
25%
30%
35%
0
200
400
600
800
1000
1200
1400
Ope
ratin
g Le
ase
Port
folio
Op Lease PortfolioShare of Fleet
Source: Flight Fleets Analyzer
flightglobal.com/consultancy 21
Operating leasing portfolio is highly concentrated
Source: Flight Fleets Analyzer, passenger aircraft only
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71
Cum
ulat
ive
valu
e of
Por
tfolio
Lessor Rank
50% of fleet by value is managed by only four
operating lessors
flightglobal.com/consultancy 22
Top 20 lessors manage 85% of the global portfolioManager In Service Storage Order Current Portfolio Portfolio CMV ($mn)Nordic Aviation Capital 126 23 18 149 2,409.6GECAS 208 131 5 339 1,760.8Avolon 44 5 49 808.5Falko 51 8 59 521.1GTLK - State Transport Leasing Company 21 5 9 26 452.4CDB Aviation Lease Finance 20 20 20 378.9Sberbank Leasing 23 2 25 376.2ICBC Leasing 19 40 19 372.6AVIC International Leasing 18 18 284.5ALM - Aircraft Leasing & Management 11 11 236.9BoCom Leasing 10 10 236.7TAT Leasing Services 14 14 199.5Regional One Inc 20 22 42 198.9VEB-Leasing 11 3 14 188.1Chorus Aviation Capital 8 2 10 177.4GOAL German Operating Aircraft Leasing 10 10 167.4JetFleet Management Corp 16 16 134.1TrueNoord 7 7 130.6Castlelake 14 14 127.4Aircastle Limited 6 25 6 125.0
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 23
More than 90% of RJ fleet have CMV < BV
Source: Flight Fleets Analyzer, passenger aircraft only
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150%
Cum
ulat
ive
% o
f Fle
et
CMV / BV
Single-AisleTwin-AisleRegional Jet
flightglobal.com/consultancy 24
RJ value retention presently better that single-aisle or twin-aisle
Source: Flight Values Analyzer, representative 2005 build aircraft
30%
40%
50%
60%
70%
80%
90%
100%
110%
2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CM
V / O
rigin
al C
MV
100-Seat RJ150-Seat SA300-Seat TA
flightglobal.com/consultancy 25
RJ values less volatile than other classes….
Source: Flight Ascend Ratings
100-seat RJ
150-seat SA
300-seat TA
flightglobal.com/consultancy 26
….which is reflected in our Asset Ratings
Source: Flight Ascend Ratings
100-seat RJ
150-seat SA
300-seat TA
flightglobal.com/consultancy
Turboprops
27
flightglobal.com/consultancy 28
Turboprops retain their own market niche
Source: Flight Schedules
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
0 500 1,000 1,500 2,000 2,500
Cum
ulat
ive
% o
f Sch
edul
ed
Freq
uenc
ies
Sector Length (km)
TurbopropRegional Jet
flightglobal.com/consultancy 29
Shape of global turboprop fleet is changing
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,50019
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
17
Pass
enge
r Tur
bopr
op F
leet
70-Seat50-Seat30-Seat19-Seat
Source: Flight Fleets Analyzer, passenger airline Western built turboprops only
flightglobal.com/consultancy 30
Orderbook reflects shift to larger aircraft
0
50
100
150
200
250
300
350
Ann
ual D
eliv
erie
s
70-Seat50-Seat30-Seat19-Seat
Source: Flight Fleets Analyzer, passenger airline Western built turboprops only
2017 excludes 30 ATR72 Freighters for FedEx
flightglobal.com/consultancy 31
…as does delivery profile
0
50
100
150
200
250
300
350
400
450
Ann
ual D
eliv
erie
s
70-Seat50-Seat30-Seat19-Seat
Source: Flight Fleets Analyzer, passenger airline Western built turboprops only
flightglobal.com/consultancy 32
ATR dominates the (relatively small) firm order backlog
0
20
40
60
80
100
120
2018 2019 2020 2021 2022 TBC
Sche
dule
d D
eliv
erie
s
Others
Bombardier
ATR
Source: Flight Fleets Analyzer, passenger airline Western built turboprops only
flightglobal.com/consultancy 33
Even fewer turboprops managed by operating lessors but preference is for larger aircraft
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
200
400
600
800
1000
1200
1400
Ope
ratin
g Le
ase
Port
folio
Op Lease PortfolioShare of FleetShare of ATR72/Q400
Source: Flight Fleets Analyzer
flightglobal.com/consultancy 34
Operating leasing portfolio is even more concentrated
Source: Flight Fleets Analyzer, passenger aircraft only
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
1 6 11 16 21 26 31 36 41 46 51
Cum
ulat
ive
valu
e of
Por
tfolio
Lessor Rank
70% of fleet by value is managed by only six
operating lessors
flightglobal.com/consultancy 35
Top 20 lessors manage 93% of the global portfolioManager In Service Storage Order Current Portfolio Portfolio CMV ($mn)Nordic Aviation Capital 208 46 35 289 3,025.2Chorus Aviation Capital 41 2 43 685.6DAE Capital 39 1 9 49 658.4Elix Aviation Capital 61 21 82 593.2Transportation Partners 32 32 495.4GECAS 25 1 10 36 363.4Avation PLC 15 5 5 25 306.8Avmax Aircraft Leasing 38 46 84 291.0GOAL 17 17 215.8Aergo Capital 16 16 192.1ACIA Aero 21 1 22 114.0Montrose Global 25 2 27 113.2Showa Leasing Co Ltd 10 10 103.7Skytech-AIC 9 9 99.1Erik Thun AB 16 9 25 92.6Castlelake 15 4 19 81.6Doric 6 6 67.7JetFleet Management Corp 10 9 19 65.8Rockton AB 17 2 19 62.9Jetstream Aviation Capital 26 10 36 61.9
Source: Flight Fleets Analyzer, passenger aircraft only
flightglobal.com/consultancy 36
TP value retention is best of any asset at present
Source: Flight Values Analyzer, representative 2005 build aircraft
30%
40%
50%
60%
70%
80%
90%
100%
110%
2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CM
V / O
rigin
al C
MV
100-Seat RJ150-Seat SA300-Seat TA70-seat TP
flightglobal.com/consultancy 37
Asset Ratings also reflect better value outlook
Source: Flight Ascend Ratings
flightglobal.com/consultancy 38
Summary & conclusions
Regional jet and turboprop markets are smaller / more specialised than single-aisle “commodities”There are several specific market categories within these marketsSome assets display better residual value retention and lower volatilityOperating leasing is relatively lower penetrated
Reflects lower volume marketMore specialised market knowledge / asset management skills required
Opportunity knocks?
flightglobal.com/consultancy 39
Rob MorrisHead of Consultancy
+44 (0)20 8564 6735+44 (0)7730 [email protected]