Appraisers feel it is too early to determine what the secondary market for the Airbus A380 will look like.
“I think the secondary market has still yet to be established,” said Gueric Dechavanne, vice-president, commercial aviation and valuation services, at Collateral Verifications, speaking at Ascend’s Finance Forum in San Francisco. “We still have six to eight years to go before we see the effect.”
Dechavanne appraises a new A380 at $234 million with a lease rate of $1.8 million.
“Certainly, there is some concern for the secondary market,” he adds. “We do not know what type of operator will take that type of aircraft, and at what price points,” he says. "It is still a matter of wait and see."
Ascend’s vice-president of the Americas, George Dimitroff, believes the most likely secondary market is the high-density charter market. “But whether this comes to anything, we don't know,” he says.
The good news, according to Dimitroff, is that the incumbent airlines may keep the aircraft for longer than their initial lease terms.
He appraises a 2013 A380 at a baseline value of “just over $200 million”. Dimitroff admits Ascend is seeing delivery pricing that is higher due to buyer-furnished equipment (BFE), “but that doesn’t necessarily mean that [BFE] translates to value”.
Bryson Monteleone, principal of Tailwind Capital, also agrees the second market has yet to be determined.
He believes with niche aircraft, which he deems the A380 to be, the market will dictate trading on the secondary market. “But we don't know what that is yet,” he said.
Monteleone says the secondary market will come down to value for money. “As a carrier, you can have one A380, three Boeing 777s or four Airbus A330s - so you can put all your eggs in one basket or take multiple aircraft,” he says.
He estimates new A380 base values are in the “low 200s”, plus BFE, “where the sky is the limit”.
Stuart Rubin, principal, ICF SH&E, agrees with Dimitroff that a positive sign for A380 values is that some initial carriers may keep their aircraft longer than anticipated. “This would be positive,” he said.
However, Rubin believes the secondary market could be “challenging”.
“I think there is a cautionary tale with respect to the secondary market. Very large size aircraft tend to get parked a bit earlier than people anticipate, such has been the case with the Boeing 747-400 and some of the smaller widebodies,” he says.
Rubin points to the Boeing 777-200ER in particular. “I know a number lessors have had difficulties placing some of the earlier aircraft from Asian operators,” he says.
Also adding to the challenging secondary market is the A380 freighter conversion programme, he says, as it has been put on hold for the time being.
Rubin sees 2013 baseline A380 values at $210 million.