Regional Aircraft Markets

Transcription

1 Regional Aircraft Markets 7 th December 2017 Rob Morris, Global Head of Consultancy flightglobal.com/consultancy 1

2 FlightGlobal: Pioneering aviation insight and analytics business Part of a leading data solutions group RELX Group: London, Amsterdam and New York Stock Exchange listed 28,500 employees Market Capital $36.87bn FlightGlobal: 370+ staff 11 offices across the world flightglobal.com/consultancy 2

3 Flight Ascend s unique Value proposition as an appraiser Independent Global team fully objective We do not invest in aircraft and we are not brokers NO conflicts of interest Global perspective with offices in London, New York and Hong Kong Instant access to vast data for research The only Appraiser with globally recognized Fleets, schedules and values databases used by our clients on a day to day basis Unparalleled Historical values data Historical 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 3

4 The Flight Ascend Consultancy Team George Dimitroff Head of Valuations ISTAT Appraiser Rob Morris Global Head of Consultancy Peter Morris Chief Economist Chris Wills Head of Consultancy Ops. ISTAT Sr. Appraiser Joanna Lu Head of Advisory Asia Michael Lapson Senior Analyst ISTAT Appraiser Daniel Hall Senior Analyst ISTAT Appraiser ASA Sr. Appraiser Syed Zaidi Aviation Analyst Chris Seymour Head of Market Analysis Henk Ombelet Senior Analyst Sara Dhariwal Valuations Analyst Richard Evans Senior Analyst Tony Brooks Senior Analyst ISTAT Appraiser Oliver Ford Valuations Analyst Ben Chapman Valuations Manager ISTAT Appraiser Ryan Hammacott Risk Analyst Lionel Olonga Valuations Analyst Thomas Kaplan Valuations Analyst Dennis Lau Aviation Analyst Michael Hui Aviation Analyst David Griffin Senior Analyst ISTAT Appraiser Eva Karagianni Valuations Analyst Luke Smith Valuations Analyst Valerie Bershova Valuations Analyst Vacant Senior Consultant Kevin Ng Aviation Analyst flightglobal.com/consultancy 4

5 Regional Jet Markets Turboprop Markets flightglobal.com/consultancy 5

6 Regional Jets flightglobal.com/consultancy 6

7 Some definition what is a Regional Jet? flightglobal.com/consultancy 7

8 Average 150 regional jet deliveries annually through current demand cycle Annual Deliveries Seat 85-Seat 70-Seat 50-Seat 50 0 Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 8

9 Deliveries predicted to decline marginally before pickup again in next decade Annual Deliveries Seat 85-Seat 70-Seat 50-Seat Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 9

10 Fleet growth has stagnated but mix is changing Passenger Regional Jet Fleet 4,000 3,500 3,000 2,500 2,000 1,500 1, Seat 85-Seat 70-Seat 50-Seat Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 10

11 Fleet trend is predicted to continue Passenger Regional Jet Fleet 4,000 3,500 3,000 2,500 2,000 1,500 1, Seat 85-Seat 70-Seat 50-Seat Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 11

12 Less than 1,000 aircraft in firm order backlog, with 50% scheduled through 2021 Scheduled Deliveries COMAC Sukhoi Mitsubishi Bombardier Embraer TBC Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 12

13 Stored fleet continues to grow but 50-seaters drive volume Stored Fleet at Year End Seat 85-Seat 70-Seat 50-Seat % of Fleet 22.5% 20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0% Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 13

14 Current idle inventory is 828 aircraft Aircraft in Store Seat 85-Seat 70-Seat 50-Seat 38 aircraft included with future lease identified 43 aircraft included with future sale identified Source: Flight Fleets Analyzer, passenger aircraft only, 5 December 2017 Aircraft Age (Years) flightglobal.com/consultancy 14

15 50-seat jets driving lower retirement age Annual Retirements >25 Years Old <25 Years Old Avg Age at Retirement Avg Age at Effective Retirement Average Age at Retirement Source: Flight Fleets Analyzer flightglobal.com/consultancy 15

16 Marked difference between small & larger RJs, wide spread of curves over history 100% Aircraft Retired 80% 60% 40% 20% 0% 2016 Flight Fleet Forecast uses 50% survivor assumption of 17/20 years 50% survivor point has a mean of 20 years, but varies widely by size and type Mean +/- 1SD (all RJs) last 20 yrs End 2010 all RJs End 2015 RJ30-50 End 2015 RJ Source: Flight Fleets Analyzer flightglobal.com/consultancy 16

17 Scope Clause Scope clause is a pilot contract issue Typically restricts the amount of capacity that a mainline airline can pass down to its regional partner Intent is to protect pilot jobs and wage structures in mainline carrier Each airline s scope clause is different but typically restrictions apply around Number of aircraft Seat capacity of aircraft Maximum 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 17

18 Current US Major airlines scope clause flightglobal.com/consultancy 18

19 Scope clause consequence in US Neither MRJ90 nor E175E2 are current scope clause compliant E175, CRJ900 and MRJ70 are current scope clause compliant 81% of current E175 fleet (and 92% of backlog) operates in US; 67% of current CRJ900 fleet operates in US Currently all three Majors (American, Delta and United) are saturated for 76- seaters so no further growth potential No 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 19

20 Relatively fewer RJs managed by operating lessors Operating Lease Portfolio Op Lease Portfolio Share of Fleet 35% 30% 25% 20% 15% 10% 5% 0% Source: Flight Fleets Analyzer flightglobal.com/consultancy 20

21 Operating leasing portfolio is highly concentrated Cumulative value of Portfolio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lessor Rank Source: Flight Fleets Analyzer, passenger aircraft only 50% of fleet by value is managed by only four operating lessors flightglobal.com/consultancy 21

22 Top 20 lessors manage 85% of the global portfolio Manager In Service Storage Order Current Portfolio Portfolio CMV ($mn) Nordic Aviation Capital ,409.6 GECAS ,760.8 Avolon Falko GTLK - State Transport Leasing Company CDB Aviation Lease Finance Sberbank Leasing ICBC Leasing AVIC International Leasing ALM - Aircraft Leasing & Management BoCom Leasing TAT Leasing Services Regional One Inc VEB-Leasing Chorus Aviation Capital GOAL German Operating Aircraft Leasing JetFleet Management Corp TrueNoord Castlelake Aircastle Limited Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 22

23 More than 90% of RJ fleet have CMV < BV Cumulative % of Fleet 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% CMV / BV Source: Flight Fleets Analyzer, passenger aircraft only Single-Aisle Twin-Aisle Regional Jet flightglobal.com/consultancy 23

24 RJ value retention presently better that single-aisle or twin-aisle CMV / Original CMV 110% 100% 90% 80% 70% 60% 50% 100-Seat RJ 150-Seat SA 300-Seat TA 40% 30% Source: Flight Values Analyzer, representative 2005 build aircraft flightglobal.com/consultancy 24

25 RJ values less volatile than other classes. 100-seat RJ 150-seat SA 300-seat TA Source: Flight Ascend Ratings flightglobal.com/consultancy 25

26 .which is reflected in our Asset Ratings 100-seat RJ 300-seat TA 150-seat SA Source: Flight Ascend Ratings flightglobal.com/consultancy 26

27 Turboprops flightglobal.com/consultancy 27

28 Turboprops retain their own market niche Cumulative % of Scheduled Frequencies 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: Flight Schedules Turboprop Regional Jet ,000 1,500 2,000 2,500 Sector Length (km) flightglobal.com/consultancy 28

29 Shape of global turboprop fleet is changing 4,500 Passenger Turboprop Fleet 4,000 3,500 3,000 2,500 2,000 1, Seat 50-Seat 1, Seat Seat Source: Flight Fleets Analyzer, passenger airline Western built turboprops only flightglobal.com/consultancy 29

30 Orderbook reflects shift to larger aircraft Annual Deliveries excludes 30 ATR72 Freighters for FedEx 70-Seat 50-Seat 30-Seat 19-Seat Source: Flight Fleets Analyzer, passenger airline Western built turboprops only flightglobal.com/consultancy 30

31 as does delivery profile Annual Deliveries Seat 50-Seat 30-Seat 19-Seat Source: Flight Fleets Analyzer, passenger airline Western built turboprops only flightglobal.com/consultancy 31

32 ATR dominates the (relatively small) firm order backlog Scheduled Deliveries Others Bombardier ATR TBC Source: Flight Fleets Analyzer, passenger airline Western built turboprops only flightglobal.com/consultancy 32

33 Even fewer turboprops managed by operating lessors but preference is for larger aircraft Operating Lease Portfolio Op Lease Portfolio Share of Fleet Share of ATR72/Q400 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: Flight Fleets Analyzer flightglobal.com/consultancy 33

34 Operating leasing portfolio is even more concentrated Cumulative value of Portfolio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lessor Rank Source: Flight Fleets Analyzer, passenger aircraft only 70% of fleet by value is managed by only six operating lessors flightglobal.com/consultancy 34

35 Top 20 lessors manage 93% of the global portfolio Manager In Service Storage Order Current Portfolio Portfolio CMV ($mn) Nordic Aviation Capital ,025.2 Chorus Aviation Capital DAE Capital Elix Aviation Capital Transportation Partners GECAS Avation PLC Avmax Aircraft Leasing GOAL Aergo Capital ACIA Aero Montrose Global Showa Leasing Co Ltd Skytech-AIC Erik Thun AB Castlelake Doric JetFleet Management Corp Rockton AB Jetstream Aviation Capital Source: Flight Fleets Analyzer, passenger aircraft only flightglobal.com/consultancy 35

36 TP value retention is best of any asset at present CMV / Original CMV 110% 100% 90% 80% 70% 60% 50% 40% 100-Seat RJ 150-Seat SA 300-Seat TA 70-seat TP 30% Source: Flight Values Analyzer, representative 2005 build aircraft flightglobal.com/consultancy 36

37 Asset Ratings also reflect better value outlook Source: Flight Ascend Ratings flightglobal.com/consultancy 37

38 Summary & conclusions Regional jet and turboprop markets are smaller / more specialised than singleaisle commodities There are several specific market categories within these markets Some assets display better residual value retention and lower volatility Operating leasing is relatively lower penetrated Reflects lower volume market More specialised market knowledge / asset management skills required Opportunity knocks? flightglobal.com/consultancy 38

39 Rob Morris Head of Consultancy +44 (0) (0) flightglobal.com/consultancy 39