July’s aircraft report: the Airbus A319

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

The Airbus A319-100 model, a shortened version of the successful A320 aircraft, is celebrating its 14th year in service in 2010.

It was launched at the 1993 Paris air show on the back of a six-aircraft order with lessor ILFC placed in 1992.

The aircraft flew for the first time in August 1995 and received European JAA certification and entry into service with Swissair in April 1999.

The aircraft did not have the best start. No orders were recorded for more than a year after it hit the market. However, a 34-aircraft order from Air Canada in April 1994 finally kicked off the programme. This was followed by North American sales with 109 aircraft for US Airways and 50 sales to Northwest Airlines and 200 options. The A319 enjoyed three good years of sales between 2005 and 2007, with 206, 253 and 185 aircraft, respectively. In 2008 and 2009, it logged 90 orders.

Airbus offers the A319 in two commercial passenger versions:

* the A319, which typically seats 124 passengers in a two-class configuration. Airbus offers a single-class specification cabin lay-out at 134 passengers but EasyJet operates the aircraft in a 156-seat configuration. The aircraft has a range of 3,700 nautical miles with full passengers.

* the A319 Long Range (LR) variant, with the two additional fuel tanks integrated on the rear of the cargo belly, give the aircraft with loads, an autonomy of up to eight hours. Air France, Olympic Air and Qatar Airways currently operate the -LR type.

The A319 aircraft is powered by two CFM56-5 or V2500 engines, de-rated versions of the engines fitted on the A320 model.

The CFM engine family accounts for 790 aircraft or 66% of all of the A319 population. The most popular engine is the CFM56-5B5 with a total of 309 aircraft equipped. The CFM56-5B6 engine represents 288 aircraft, while the CFM56-5B7 has 50 aircraft equipped. The CFM56-5A engine represents 143 aircraft.

The V2524-A5 engine is the most popular of the V2500 engines with 243 aircraft equipped. The V2522-A5 model powers 127 aircraft, while the V2527-A5 versions equip 37 aircraft.

According to Flightglobal's ACAS database, an estimated 107 aircraft on backlog are committed to the CFM56 engines, with the CFM56-5B5/P accounting for 69 future deliveries. Another 97 aircraft are committed to the V2500-A5 engine models, with 49 aircraft powered by the V2524-A5 variant. The remaining 34 aircraft on backlog had yet to be committed at the end of June 2010.

Market

As at 30 June 2010, there were 1,197 passenger aircraft in service with 102 operators.

Out of 1,197 aircraft in service, an estimated 657 are on operating leases, eight are subleased while the remaining 532 aircraft are owned by operators. The average fleet age is 6.40 years.

Airbus had recorded 11 firm orders for the A319 model this year before going to the Farnborough air show. At the air show, S.A.T., the holding company of Germania, firmed its order for five A319s with CFM56 engines, with deliveries to start in April 2011.

Backlog is estimated at 238 passenger aircraft with deliveries stretching through 2017.

Over the past two years the A319 population has grown by about 100 aircraft. Airbus has delivered 26 A319 passenger aircraft since the beginning of the year. Deliveries include two in January, five in February, six in March, five in April, four in May, two in June and two (Avianca and EasyJet) this month.

Airbus has just announced a second hike in its A320 Family aircraft production rate in less than six months. The manufacturer is stepping up its monthly A320 production rate to 40 aircraft per month by the first quarter of 2012. Airbus currently produces the A320 at 34 aircraft per month but disclosed earlier in March that it would raise the rate to 36 in December. The manufacturer says the "increased demand" for the jets, combined with a "healthy" backlog, has prompted the production decision. The new rate increase will see production raised to 38 in August next year and 40 in the first quarter of 2012.

 

EasyJet is the largest operator of the type with a 137-aircraft fleet. Its backlog of 41 aircraft has deliveries scheduled through 2013. In addition, the easyJet Switzerland subsidiary operates 14 A319s.

The success of the EasyJet campaign opened new doors for Airbus, especially in the low-cost North American market with Frontier, Spirit, Virgin America, Volaris and now-defunct Skybus.

However the next three largest operators remain US Airways (93 aircraft), Delta Airlines (57 aircraft operated by Northwest) and United Airlines (55 aircraft).

Over the last past few years, Airbus has made some inroads in Asia, particularly in China. Today, Chinese carriers account for more than 12% of the A319s in service, with China Southern operating 41 aircraft.

The A319 model has also penetrated the CIS countries with more than 50 deliveries to operators such as Aeroflot, Air Astana, Armavia, Azerbaijian Hava Yollari, Rossiya and S7 Airlines.

This year, Adria Airways has become a new customer for the type this year along with Avianca Brazil and more recently Jordan's Royal Falcon.

Airbus' European market accounts for now for 43.7% of the total fleet in service with 523 aircraft.

Airlines in Europe have added the A319 model to their A320 fleet with a view to optimise capacity requirement. This has been the case for Air France, Alitalia, Austrian Airlines, British Airways, Finnair, Iberia, Lufthansa, TAP Portugal, Turkish Airlines and Swiss. Low-cost carriers such as easyJet and Germania had another approach: replacing 737-300 and -700 fleets with the A319 type.

 

The North American fleet account for 316 aircraft or 26.4% of the total fleet.

The Asia-Pacific region has 215 aircraft in service with operators or 17.9% of the total fleet.

Another 107 aircraft are with South American carrier while the Africa-Middle east region accounts for 36 aircraft.

The A319 has been hit by three bankruptcies: Sabena and Swiss in the early part of the last decade and Skybus in 2008, but Airbus has worked hard to ensure that the subsequent fleets found homes. Today availability is negligible. Apart from aircraft being offered on ACMI basis there are only half a dozen of aircraft offered in the market place.

Since the beginning of the year, a relatively few transactions have closed in the second-hand market.

Aigle Azur added one ex-Iberia aircraft from RBS Aviation Capital. Brussels Airlines added one aircraft from Aircastle while Chengdu Airlines leased an aircraft from GECAS. Air Berlin transferred two 2007/08-vintage aircraft to Belair Switzerland, while easyJet transferred one aircraft to easyJet Switzerland. Turkish Airlines recently added a pair of 2007-vintage ex-Olympic Air aircraft to its fleet, while three China Eastern aircraft are in the process of being extended, CAO understands.

Lately Royal Falcon leased a 1999-vintage aircraft from Aircastle, while Meridiana Fly leased a 1996-vintage A319 from NBB Leasing.

Earlier in the year, Air Berlin agreed a sale and leaseback transaction with Jackson Square for one used aircraft and SMFL Aircraft Capital Corporation (SMAC) acquired two A319-100s from Iberia and leased them back for a period of nine years. Some of the EasyJet aircraft have also been financed through sale and leaseback transactions.

The A319 orderbook has not seen many cancellations this year but operators are amending orders due to demand.

Since the beginning of the year, Turkish Airlines has converted six A319s to the A320 model and another eight to the A321 model. EasyJet has converted more A319 orders to A320s, switching 10 over to the larger variant. National Air Service placed a 20-aircraft order in 2007 but has now swapped the model for the larger A320 variant. Spirit Airlines has 22 A320s and 13 A319s on order. Spirit previously swapped 20 A319s to 20 larger A320s as it aims to make the A320 the backbone of its fleet. LAN Airlines changed three A319s for the A320 model while Avianca and Middle East Airlines changed one A319 each to the A320 model. US Airways has changed five A319s to the A321 model.

On the other hand, Iberia changed a two-A320 order into A319s, while TAM Linhas Aereas' order for five A320s was changed to two A319s and three A321s.

Lessors GECAS and ILFC have changed one A319 order each to the A320 model while CIT Leasing has cancelled four orders.

The 737-700 model is the natural competitor to the A319. But the A319 has been the target of many CSeries campaigns as some operators are looking at flexibility on thinner routes.

One CSeries customer, Republic Airways Holdings, has aligned the CSeries delivery dates with its Frontier's A319 existing expiration dates. The first of 40 CSeries CS300s will be delivered in the second quarter of 2015.

Qatar Airways, another A319 operator, has also been linked with the CSeries. Earlier this year the Qatari carrier, which operates 25 Airbus single-aisles and has orders for 20 more, said it may opt for either the CSeries or the re-engined A320 family, or sign for both.

IBA Group's senior analyst Alice Gondry says that the threat of the CSeries is "not materialising as yet," with due respect for the lack of orders placed for this newcomer at the Farnborough Airshow. "There remains however the speculation of re-engining," she adds.

"The A319 comes under strong competitive pressure from the 737-700 and, going forward, there is the potential threat from the CSeries and the possibility of the manufacturer launching a re-engined successor," comments Martin O'Hanrahan Avitas' director asset valuation.

Collateral Verifications' VP commercial aviation services Gueric Dechavanne says the demand for A319 has, however, diminished over the last few years, and does question the long-term future of this aircraft. "With the potential entry into service of the CSeries in 2013, this may also affect the long term success and residual values of this aircraft," he comments. "Although a bit too early to tell, as the industry recovers over the next few years, this should provide some good insight as to the long term viability of the A319," he adds.

Lease rates and values

Availability is negligible, with six aircraft reportedly being parked, but most of them are in between operators.

At the time of the Sabena and Swiss bankruptcies, monthly lease rates for older aircraft were in the $160,000 range a month. In 2002, new deliveries commanded lease rates around $220,000 a month. In 2003, $200,000 a month was the bottom of the market while at the top end lease rates reached $260,000. In 2006 lease rates ranged between $260,000 and $315,000 a month. At the top of the market monthly lease rates on new aircraft were around the $360,000 mark.

Lease rates have declined since. Today new aircraft would be placed in the $270,000 to $290,000 range.

Gondry says the aircraft has shown little volatility, surplus or availability, and values should bounce back once healthier trading conditions return. "Four V2524-A4 powered aircraft were taken on lease over the 12 months, among them two new delivery aircraft being leased by AerVenture to Adria Airways. Only two aircraft with the IAE engines are currently parked," she says. "Consequently, IBA considers the aircraft lease rates and current market values as being fairly stable," she adds.

"In the last 12 months, Collateral Verifications has seen values drop by about 5-15%, with lease rentals dropping by about 5% to 10%, depending on the vintage. With the beginning of a potential recovery for the industry, we feel that these numbers will most likely remain stable for the next six to nine months with a potential for improvements thereafter," comments Dechavanne.

Collateral Verifications says the lease rates of 2010 deliveries are $270,000 a month. Avitas says the aircraft would command a $280,000 to $290,000 a month rate while IBA sees the aircraft leasing between $270,000 and $310,000 a month.

A two-year old aircraft would command monthly lease rates in the $260,000 to $270,000 region for Avitas. Collateral Verifications says the lease rates of older models are around $240,000 a month while IBA's lease rates are the $250,000 to $290,000 range.

A 10-year old V2524-A5 powered A319 leases for $167,500 a month says Collateral Verifications. IBA's monthly lease rates range between $175,000 and $210,000, while Avitas estimates the lease rates in the $190,000-$200,000 range.

Collateral Verifications estimates older models' lease rates at around $137,500 a month while Avitas estimates the lease rates in the $145,000 to $155,000 a month range. IBA's lease rates for older models are in the $140,000 to $170,000 a month range.

Current market values are in the $13.9 million range for oldest aircraft according to Collateral Verifications. MBA's CMV is at $12.5 million. Avitas values the 1996-vintage at $13.4 million while IBA says the CMV is near $15 million.

A 10-year old V2524-A5 powered A319 has $19.9 million CMV for MBA, $17.2 million CMV for Collateral Verifications, $17.8 million for Avitas and $19.7 million for IBA.

A new delivery has a CMV of $37.5 million range for IBA and MBA while Collateral Verifications and Avitas are in the $34 million range.