January’s Aircraft Report: the Fokker 50

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

The Fokker F50, the successor of the F27 Friendship model, was produced during a 10-year period between 1987 and 1997.

The Fokker Aircraft company built two prototypes and flew the first F50 in December 1985. It received Dutch certification in 1987 and was first handed over to Deutsche Lufttransport-Gesellschaft (DLT) of Germany.

Production ceased in 1996, after Fokker went into liquidation following the failure of an agreement between German stakeholder Dasa and the Dutch government on a proposed recapitalisation.

The F50 has a capacity of up to 58 passengers. It is powered by two Pratt & Whitney Canada PW125B engines.

Market

Avitas' director of asset valuation Martin O'Hanrahan said although the F50 is now regarded as an older technology turboprop that has long been superseded by more advanced designs, its market remains "somewhat fluid."

"The F50 has longer range than the ATR 42 or the Dash 8-300 models but will be increasingly affected by issues associated with age and obsolescence," he said.

A total of 208 F50s were built until 1997 by the Fokker Aircraft company. This compares with about 586 units for the F27 Friendship models.

According to Flightglobal's Ascend Online database, 185 aircraft remained in the fleet with 51 operators as of January 2012. The F50 fleet consists of 160 passenger aircraft, 14 freighter aircraft as well as 11 utility and military application aircraft. The average fleet's age is 21 years.

A total of 31 aircraft are in storage but half of them are in transition between operators.

The largest market for the F50s is Asia and the Pacific region with a total of 68 aircraft.

Another 66 aircraft are operated in Europe, while Africa and the Middle East regions account for 33 aircraft.

In Latin America and the Caribbean region there are 18 aircraft in operation.

Sweden remains the largest country of operations with a total of 23 aircraft registered. Belgium's VLM Airlines operates the largest fleet with 14 aircraft, followed by Sweden's Skyways with 11 aircraft.

Operators select the F50 as a cost-effective 50-seat aircraft. During the past several years, the South-East Asian region has become a popular market, especially with start-up airlines. Indonesia operates 17 aircraft, Malaysia has five aircraft while a total of nine F50s are registered in Singapore as utility and military application aircraft.

Last year Indonesia's TransNusa Air Services and SKY Aviation each introduced three aircraft.

Both carriers are adding more F50s this year to accommodate a growing passenger demand. TransNusa is taking an aircraft from Aero Condor while SKY Aviation recently purchased two 1992-vintage ex-Avianca aircraft from Mass Holdings and is to acquire a 1993-built F50 from Riau Airlines.

The Ethiopian five F50s were recently purchased by aircraft and engine parts company Fortran Aviation for forward sale to Indonesian start-up Pacific Royale Airways. The 1995/97-vintage fleet will complement the full-service carrier's planned A320 fleet from its Soekarno-Hatta hub.

Papua New Guinea's Travel Air started operations last year with ex-Denim Air and ex-VLM Airlines F50s on lease from AeroCentury. The carrier is acquiring four ex-MASwings aircraft to its fleet.

Demand has also emerged from the Caribbean with Insel Air adding four ex-KLM Cityhopper F50s to its fleet.

The four F50s previously operated by Greece's First Airways are heading to Ukraine's Antonov 24/26 operator, Air Urga.

"A great interior, good performance, low capital costs and comprehensive support committed until at least 2030, are the main reasons why operators have been taking Fokker aircraft," says Fokker Services' business development manager Peter van Oostrum.

Availability is set to increase with Latvian carrier Air Baltic realising its fleet, having opted for their early withdrawal following the introduction of Bombardier Q400s. The carrier, which has nine aircraft on operating leases originally envisioned removing its F50s in 2013. The aircraft are between 21 and 24 years old and are available for sub-lease or wet-lease contracts.

Values and lease rates

The recent activity in the F50 market shows a relatively high level of interest in 50-seat turboprops. The aircraft has benefited from low availability and higher pricing of its competitors, the ATR 42, Dash 8-300 and Saab 2000.

However the major issues for the F50 aircraft, like many ageing aircraft, are the engine and airframe status. The aircraft is certified for 90,000 hours and 90,000 cycles and the landing gear has a 60,000 cycle limit.

During the past year, trading has been concentrated on younger aircraft, which have been bought for cash.

"Pricing has been in the $2.3 million to $3 million zone for younger aircraft that can move to certain juridictions," said a trader.

"A 1992-vintage aircraft with reasonable time in the engines can fetch $2.5 million," said another trader.

Older aircraft trade in the $1- $1.5 million range.

"With over a dozen transactions in the last few months, this shows a higher level of interest from the marketplace, which will bring some added stability to values and lease rates. Buyers and sellers seem to be in agreement with the value and selling price of such aircraft which has allowed for more sales to take place," said Collateral Verifications' vice president of commercial aviation services Gueric Dechavanne.

IBA Group's senior analyst Alice Gondry agrees: "There has been some downward adjustment of Fokker 50 pricing, much of this arising from an increase in the model's availability."

Of the four appraisers, IBA is at the lower end of the pricing range. "Storage is worrying, accounting for 19% of the current fleet and advertised availability accounts for 10% of the current fleet," said Gondry.

However a $200,000-$300,000 price difference between IBA's current market values and current base values, suggests the F50 has potential for improvement.

"The aircraft are trading and finding some placement with third tier operators in Asia Pacific and Africa. Many recent trades and available aircraft have involved models with below mid-time engines and this has resulted in aircraft trading at lower prices," added Gondry.

According to IBA, a 1987-vintage aircraft has a $1 million current market value. Collateral Verifications values the same vintage at $1.23 million while Avitas and MBA current market values are $1.5 million and $1.78 million, respectively.

On a 21-year old aircraft, the gap between the four appraisers narrows. IBA says the current market value is $1.4 million, while the other appraisers are in the $2 million range: $1.9 million for Avitas, $1.98 million for Collateral Verifications and $2.10 million for MBA.

Avitas and MBA have similar quotes for a 1995-vintage aircraft with $2.3 million and $2.46 million, respectively. Collateral Verifications values the aircraft at $2.70 million while IBA's current market value is $1.8 million.

Collateral Verifications values a 1997-vintage aircraft at $3 million, while current market values at Avitas and MBA are $2.5 million and $2.66 million, respectively. IBA has a $2 million current market value for the aircraft. .

Although the F50 market is a seller's market, appraisers are more in agreement on lease rates.

"Lease rates have remained fairly steady with a slight drop for the newer types of about 10%," said Collateral Verifications.

Avitas, Collateral Verifications and IBA expect a 1987-vintage aircraft to lease in the $28,00- $30,000 a month range.

A 1991-vintage aircraft would lease for $36,000 a month for Collateral Verifications, $31,000 a month for IBA while Avitas anticipates a $33,000 -$34,000 range.

A 1995-vintage lease rates ranges between $38,000-$39,000 a month, according to Avitas. IBA's monthly lease rate is $36,000 while Collateral Verifications' has a rate of $42,000 a month.

On a 15-year aircraft monthly lease rates range between $41,000-$42,000 for Avitas. Collateral Verifications' lease rate is $45,000 a month while IBA has $38,000 a month.