August Aircraft Report: The Bombardier CRJ-200

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

The CRJ market sees some signs of stabilisation at last. The aircraft has been heavily impacted by the high fuel prices over the past three years as well as retirements in the US market.

History

The 50-seat CRJ-100/200 series were based on the Canadair Challenger design, which was purchased by Canadair from Learjet in 1976.

The wide fuselage of the Challenger suggested early on to Canadair officials that it would be straightforward to stretch the aircraft to accommodate more seats. Although a 24-seat version failed to launch Bombardier began studies for a larger configuration aircraft, leading to the formal launch of the Canadair Regional Jet programme in spring 1989.

The first of three development machines for the initial CRJ-100 performed its first flight in May 1991. It received type certification in late 1992.

The CRJ-100 is a stretched 5.92 meters (19 feet 5 inches) aircraft, with fuselage plugs fore and aft of the wing, two more emergency exit doors, plus a reinforced and modified wing. It features CF34-3A1 turbofans.

Bombardier offered three versions: the CRJ-100 standard followed by the CRJ-100ER variant with 20% more range and the CRJ-100LR model with 40% more range.

The CRJ-200 series are identical to the CRJ-100s except for its engines, which were upgraded to the CF34-3B1 model.

Market

As at 30 April 2011, Bombardier had sold a total 226 CRJ-100s and 709 CRJ-200s. Some CRJ-100s have been upgraded to the -200 model with the -3B1 engines.

According to Flightglobal's Ascend database there are 803 CRJ-200s currently in operations. An estimated 721 aircraft are in service while 82 aircraft are reportedly in storage or in transit between operators. The average stored fleet age is 12 years.

At least 30 aircraft are parked but today there are about 55 aircraft available in the market place. One leasing source predicts availability will increase to 60 aircraft by the end of the year.

"When large numbers of CRJs began to enter service in the mid-1990s, many of them were put on 16-year leases, which means that a very significant number of these aircraft will be coming off lease over the next several years," comments Avitas Director - Asset Valuation Martin O'Hanrahan.

According to him, this will most likely lead to a sharp spike in availability unless new markets for the type can be developed quickly or that the aircraft can find new roles such as corporate shuttles or small package freighters. "Bombardier has been very creative in building new applications and expanding the market penetration for the CRJ-200s in recent years," he adds.

Bombardier Asset Management is remarketing about 10 CRJ-200s including five ex-JetLite aircraft, two Alma de Mexico models, one Mesa Airlines aircraft as well as two SkyWest aircraft.

The CRJs, like the ERJ-145s, have suffered from heavy fleet concentration in North America.

Most Mesa aircraft are predicted for part out.

Comair has cut its CRJ fleet by 20 aircraft over the past year. The Delta's wholly-owned subsidiary unveiled a major restructuring entailing slashing its fleet from 110 Bombardier CRJ aircraft to 44 by the end of 2012. "However most leases are still running and the aircraft are in operation," says a source. According to Ascend, the regional carrier operates 48 CRJ-100ERs, 14 CRJ-200s, 15 CRJ-700s and 13 CRJ-900s. But a total of five CRJ-200LRs have leases expiring towards the end of November.

SkyWest Airlines is believed to be talking about one to two years lease extensions on its some of its fleet, according to one leasing source. "The US carriers still need to feed the hub and the CRJ aircraft they already operate is the most logical aircraft," he comments.

PSA Airlines could add more aircraft through a contract with US Airways while Air Wisconsin is adding some aircraft.

"The low ownership cost and rentals would still be attractive to some niche players in the North American market. But the scale is very limited," comments Ascend analyst Matthew Taussing.

O'Hanrahan says the CRJ-200ER market remains soft and for the active fleet there is a serious issue of concentration. "The top three operators of CRJ200ER/LRs - SkyWest Airlines, Pinnacle Airlines and Atlantic Southeast Airlines - account for 45% of all aircraft in current use. The fleet is also very concentrated geographically with 76% of all aircraft based in North America and another 15% in Europe."

Some CRJs have found passenger applications in Mexico, Russia and the CIS as well as pockets in Africa over the past few years.

"They [CRJs] are ideally suited for high-yield routes with thin traffic flows. The operator base is also beginning to diversify, with a large number of operators, each having single digit fleets, which helps remarketing potential," says Taussing.

"The CRJ has now been entering a new market phase, where new developing markets, such as India, Russia, Eastern Europe, Central and South America, Africa, and China are starting to take aircraft in limited numbers, as their infrastructures further develop and require smaller aircraft for higher yield routes," says Collateral Verifications VP - Commercial Aviation Services Gueric Dechavanne.

The level of activity emerging from the Russian market has been significant over the past five years and there could be up to 80 aircraft, or 10% of the CRJ-200 fleet in operation by the summer 2012.

UTair continues to tap the market for the CRJ-200 model. A year ago, it announced plans to introduce up to 15 ex-Lufthansa Cityline CRJ-200LR aircraft and signed an agreement with the Cypriot-based entity PL Panorama for seven-year operational leases. CAO understands that the Russian carrier could add up another 10 aircraft.

In May, Aircraft Leasing & Management arranged the sale of four ex-Comair 2000/01-vintage CRJs to Sky Swallows, a Bermuda-based company. Sky Swallows placed the four aircraft on lease Rusline.

Last month, AviaAM Leasing acquired eight Bombardier CRJ-200s that were previously operated by Eurowings. AviaAM Leasing says it has signed a letter of intent for five-year on operating leases and is looking at more aircraft. The leasing company predicts a robust secondary market demand for CRJs in Russia and the CIS as carriers replace their old fleets.

Values and Lease Rates

The market for the Bombardier CRJ-200 model is stabilizing as the 'best' aircraft are cleaning up.

"Market values and lease rates very unlikely to ever rise again. Values may see further softening, with newest aircraft worst hit as the premium for newer vintages gets smaller over time," says Taussing who market lease rates range from $45,000 to $80,000 for 1992 and 2006 vintages, respectively.

In the first quarter of last year the CRJ-200s were trading between $75,000 and $90,000 a month.

While European Aviation Safety Agency aircraft are commanding a premium over the Federal Aviation Administration compliant aircraft lease rates in the $60,000 range on the lower side according to one leasing source.

O'Hanrahan says a 1992-vintage CRJ-200ER leases between $40,000 and $50,000 a month while a 11-year old aircraft has a $62,000 and $72,000 lease rate. A 2006-vintage model would lease between $77,000 and $87,000 a month.

Dechavanne says market lease rates are stable, ranging from $42,500 to $77,500 for 1992 and 2006 vintages, respectively.

Gondry says a 1997-vintage CRJ-200LR leases around $50,000 a month while a 11-year old aircraft has a $60,000 monthly lease rate. A 2006-vintage model would lease between at around $80,000 a month.

In the last 12 months, Collateral Verifications has seen values drop for the type by about 10%. "Based on the current environment and risk averse financial institutions, there has been very little appetite for many in buyers to purchase these aircraft but the leasing market has been fairly active as the demand continues to be stable for the type from many developing markets. We expect this trend to continue for the foreseeable future with the expectation that values will stabilize in the next 6-12 months as the availability of aircraft continues to diminish," says Dechavanne.

According to him, a 1992-built aircraft has a market value of $3.6 million while an 11-year old aircraft is valued at $5.2 million. Dechavanne values a 2006-built aircraft at $6.7 million.

The CRJ-200ER/LR market values dropped by 18-24% at the start of the third quarter of 2011, according to Taussing and now stand between $3 million for 1992-built and $6.6 million for 2006-built aircraft.

According to O'Hanrahan, a 1992-built aircraft has a market value of $2.1 million while an 11-year old aircraft is valued at $4.2 million. Dechavanne values a 2006-built aircraft at $7.3 million.

The highest transaction recorded this year was $8 million for a CRJ-200, CAO understands but sales vary $1 million around the $5 million to $6 million mark, says a trading source.

Gondry says a 2006-vintage -LR model has a current market value of $7.9 million, while a 2003-vintage aircraft has a CMV of $6.6 million. A 1997-vintage aircraft has a CMV of $4.2 million.

"Values are following the negative trends experienced by the CRJ-100 and the high fleet concentration in the United States does not help remarketing prospects. Storage levels are rising and part-out is now a viable option in some cases. Specification and maintenance condition are major value determinants and there are also pockets of demand in emerging markets, such as CIS, in the secondary market," says Gondry.