The recovery of India's traffic is approaching 2019 levels, and recent commitments from US carriers suggest a positive outlook for the Indian airline industry. However, major OEMs are facing production constraints, which are causing some airlines to explore alternative options such as wet-leasing aircraft for high season routes, extending leases on existing aircraft, and delaying retirements. This is different from the situation in 2020.
In terms of aircraft values and leases, this article provides a comparison of market values and lease rates for 10-year-old aircraft, as of the beginning of 2020, the beginning of 2022, and the present time. The values and lease rates assume that the aircraft are off-lease and available at each point in time. In this mid-life sector of the fleet inventory, the maintenance condition and the ability of an aircraft to remain or return to service economically will determine the specific value or lease rate of each individual aircraft.
As the winter season comes to a close and spring approaches, PBH terms and "low start" contracts are becoming less common in the market, and full fixed rentals are preferred. The volume of stored aircraft has masked the true number of usable, ready-to-go aircraft that are available, and values and lease rates for many active aircraft have improved as a result. Those that can return to service will do so, with some being converted into freighters. The permanent retirement of older and less suitable aircraft, coupled with the return to service of young and mid-life assets, and the slow delivery rate of new aircraft, are all contributing to reducing the excess inventory.
The values provided in this article reflect lease-free aircraft and what might be achievable based on prevailing market conditions. ISTAT definitions apply. The data is for comparative and trend observation purposes, and for more detailed appraisal and valuation information, readers are advised to contact the Ishka team.
In other news, Castlelake has repaid in full its $355 million 2015 ABS (CLAS 2015-1R) a year ahead of forecast using cash flow from leases and proceeds from selling assets. This is the fifth aircraft ABS that Castlelake has fully repaid or refinanced, suggesting a wider recovery in aircraft lease rentals and trading. Additionally, Air India's Letter of Intent to order up to 500 aircraft was split between Airbus and Boeing, with Airbus set to provide 250 aircraft and Boeing set to provide 220 aircraft. The first 25 B737 MAXs are reported to be due for delivery in the second half of 2023.