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Economic Outlook
Signals
• Oil
• Interest Rates
• GDP
• World Trade
• USD
Regional Forecast
• Europe
• North America
• China
• Latin America
• Asia Pacific
• World
2016 2017
Pax Traffic remains steady
Source: IATA
• Passenger traffic growth up at 7.9% in February,
• Whilst economic signals look poor for China, service industry business growth continues to hold.
• Once again, India remains on top. Fastest growing economy and >20% YOY growth and growing
• Domestic Japanese & Brazilian market remains under pressure.
• Russia recovered well in March after loss in January
The Impact on the Aviation Cycle
Demand trends
• Pax traffic
• Freight traffic
• Yield
• Load Factors
• Orders
Supply factors
• Deliveries
• Parked
• Secondary market
• Economic life
Single Aisle
• Slow orders for 2016
• Oil may shift focus
• Fewer lessor orders with more bias
towards operators that haven’t bought yet
• Expect keener pricing from Boeing to
steady 737MAX market share
• Availability Falling
• Storage Falling
• Lease Rates under pressure – will leak
into pricing
• Market remains liquid across all ages,
but…. At a price
Sale & Leasebacks
Sales with leases attached
Lease Rate Factors
OEM pricing
Lease Term Lengths
Extensions
Potential New OrdersA320 family Operators Fleet Backlog
AMERICAN AIRLINES 363 138
CHINA EASTERN AIRLINES 250 0
EASYJET 249 174
CHINA SOUTHERN AIRLINES COMPANY 238 0
AIRASIA 174 306
JETBLUE AIRWAYS 159 87
UNITED AIRLINES 153 0
LUFTHANSA 151 126
TAM - LINHAS AEREAS 134 0
BRITISH AIRWAYS 131 35
DELTA AIR LINES 129 79
AIR CHINA 128 0
AIR FRANCE 122 3
LATAM AIRLINES GROUP 112 78
INDIGO 108 426
VUELING 106 58
UNDISCLOSED 104 676
TURKISH AIRLINES 103 100
SICHUAN AIRLINES 100 0
AIR CANADA 94 0
AEROFLOT RUSSIAN AIRLINES 87 0
SPIRIT AIRLINES 85 81
ALITALIA 79 0
SHENZHEN AIRLINES 78 0
WIZZ AIR 67 144
AVIANCA 67 136
AIR INDIA 66 0
AIR BERLIN 65 3
Potential New OrdersB737 family Operators Fleet Backlog
Southwest Airlines 599 248
Ryanair 351 223
United Airlines 312 139
American Airlines 271 134
China Southern Airlines 147 25
Delta Air Lines 141 62
Air China 138 22
GOL Transportes Aereos 134 71
Hainan Airlines 128 9
Xiamen Airlines 125 37
Alaska Airlines 129 60
WestJet 114 70
Lion Air 108 240
Shandong Airlines 90 13
Shenzhen Airlines 86 7
Turkish Airlines 92 86
SAS 85 0
Garuda Indonesia 80 50
Virgin Australia 74 45
COPA Airlines 76 70
China Eastern Airlines 76 43
Jet Airways 70 75
Qantas 67 0
Shanghai Airlines 72 0
Norwegian Airlines 59 130
Considerations – Single Aisle
• New generation engine technology reliability & reserve rates
• Economic life debate continues
• Premium of neo/MAX ‘v’ ceo/NG
• Developing economic market softness
• Lease rate factors under pressure
• Shorter lease term economics
• Order bubble
• Lots of interior flexibility but will it lead to marginalised fleets
• Ramp ups on the way
Values & Rates – Single Aisle
• A320-200
• A319-100
• A321-200
• A320neo
• A320 Classics
• 737-800
• 737-700
• 737-900ER
• 737 MAX 8
• 757-200s
• 737 Classics
Other Asset comments
• Turboprops Storage rising, regional distress, falling lease rates & values
• Regional Jets Storage rising, demand remains strong for specific types, a lot of new
aircraft technology coming
• Twin Aisle Storage rising, A330 production line bridged, 777 still has some way to
go. Softness in placing speculative orders – challenged by low oil price.
Appetite remains intact on financing for new deliveries to good credits
• Freighters Out of production large freighters still in turmoil, narrowbody demand
rising
What’s coming up…
• Economy – weak growth on the horizon – generally uneasy
• Traffic – on the up, LFs holding steady, freight struggling
• Airlines – great revenue for some, strong USD squeezing profits
• Developing economies dependant on oil – airline bankruptcies ahead
• OEM Challenges: Ramp-ups, market share
• Lessors – sales in the pipeline, falling LRFs, increasing competition & new accounting
rules