IBA sees mixed outlook for aircraft engine values as traffic recovery slows
IBA has reported a mixed outlook for aircraft engine values, as the recovery in air traffic is expected to slow due to the conflict in Ukraine, inflation rates and rising oil prices.
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In a webinar on Emerging Engine Value Trends today, IBA stated that the timeframe it previously forecast for aircraft engine shop visits returning to pre-Covid levels was now likely to be longer.
The number of engine lessors impacted by the Ukraine conflict and sanctions on Russia currently appears limited with those impacted reporting only a handful of engines exposed. According to data from IBA’s InsightIQ platform, the world’s three most prolific commercial aircraft jet engines, the CFM56-7B, CFM56-5B and V2500-A5, currently only have 2.81%, 4.71% and 1.11% respectively of their in-service fleets placed on leased aircraft located in Russia.
In the widebody aircraft sector, aircraft utilisation is steadily improving, but the slowed recovery has continued to depress values of engines powering mature fleets. The GP7200 which powers the A380 has fallen in value by 17.1% over the past year to US$3.725 million, while the GE90-94B which powers many older Boeing 777s has fallen to US$3.1 million.
The exceptions in the mature widebody are the CF6-80C2 and PW4062 engines, which power Boeing 747 and 767 aircraft and whose values have been driven upwards by 27% and 17% respectively as freighter operators battle over limited supply.
New generation widebody aircraft engines are faring better, with recovering or stable values. The Trent XWB (A350) has risen by 1.4% over the past year to US$22.925 million, while the Trent 7000 engine (A330neo) seen a 0.9% rise to US$19.1 million.
By contrast, a strong recovery in narrowbody aircraft utilisation has led to greater value stability for engines powering the mature aircraft types. However, the CFM56-5B market continues to lag behind the CFM56-7B or V2500-A5 which have both benefitted from the US and Chinese domestic market recovery.
The values of aircraft engines powering the new generation narrowbodies are broadly stable, with the LEAP-1A (A320neo) up 0.9% to US$9.375 million over the past year, the LEAP-1B (B737 MAX) up 1% to US$10 million and the PW1127G (A320neo) static at US$9.5 million.