Engine Values Book Issue: 20 – March 2020
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Engine Values Book Issue: 20 – March 2020 Member of ISTAT UK CAA Approval No. UK.MG.0622 www.iba.aero Welcome to the 18th edion of IBA’s Engines Values. We have updated it with current views on engine values, lease rates, maintenance costs and maintenance informaon along with market data supported by IBA.iQ, our Online Plaorm which now provides engine values. In this year’s editorial, we must of course recognise the recent and sudden onset of the Covid‐19 pandemic. At the me of wring, we appear to be nearing the peak of daily new cases though much of this remains uncertain with the world’s governments connuing efforts to promote self‐isolaon and quaranne. The aviaon market has seen a steep drop in demand with some operators parking all aircra and others parking up to 80% of their fleet. Future demand levels remain as yet uncertain, but we are monitoring the situaon carefully. Naturally, due to the unclear condions that lie ahead, the market has effecvely been put on hold and as such all quoted values and lease rates provided in this edion refer to the market situaon immediately prior to the Covid‐19 outbreak. The impacts of Covid‐19 will be far reaching, affecng everyday lives of the world’s populaon for several years. IBA spends a great deal of me assessing the relaonship between base and market values, carefully considering short‐, medium‐ and long‐term factors. So, whilst market values can fluctuate, we remain confident in the connuing stability of base values overall. The variables here will typically be the duraon and scale of the soening values, inevitably affecng some markets more than others. For 2020 the aviaon landscape looks set to change dramacally and IBA will connue to closely monitor the market, providing advice and consultaon to our clients throughout this trying period. Looking at the year leading up to this point, 2019 was a strong performance year in the engine market and remained consistent with our expectaons, albeit with market values rising above base for several engine types. In the narrowbody market, the teething issues surrounding the early life of the LEAP‐1A, LEAP‐1B and notably the PW1100G appear to be coming to an end and they are proving to be reliable and fuel‐efficient engines for their respecve operator bases. 2019 was of course the year of the 737MAX groundings and, wring this commentary in March 2020, we are now one year into the grounding of the fleet. The knock‐on effect, compounded by the connued shop visit demand, has been to see short‐term demand for Boeing 737NG and 737 Classic aircra and their respecve engines to jump considerably along with some consequences for the A320ceo markets. Unsurprisingly, the CFM56‐7B, CFM56‐5B and V2500‐A5 remain the engines seeing the highest trading volume, though demand for LEAP and PW1100G engines has grown noceably. Looking at widebody markets, the Airbus A330ceo and Boeing 777 families have both seen a notable soening in value from an aircra perspecve. Typically, this has a delayed impact on engine values, though we have seen some notable soening in these markets too. The Boeing 787 powered by the Trent 1000 and GEnx‐1B connues to be a success though, of course, the issues surrounding the Trent 1000 and the considerable cost burden on Rolls Royce remains an area of concern. Feedback from Rolls Royce is, however, more posive and by all accounts we are nearing the light at the end of the tunnel with fewer AOG events. The Airbus A330neo aircra powered by the Trent 7000 has so far entered the market relavely smoothly and orders picked up in 2019 aer what had been a slow few years of orders for the type. The A350 powered by the Trent XWB remains a popular widebody choice with consistent order growth year on year and the engine has proved very reliable in service. Looking at Boeing’s largest twin, the 777X connues to see slow order demand but tesng of the plaorm and the new General Electric GE9X connues. Finally, the A380 has connued to soen and part out acvity has started on earlier‐build aircra. The type is therefore desned to have a shorter operang life than expected. The aircra remains a favourite amongst passengers, but operang costs have seen many operators reducing their exposure to the fleet. Looking to the year ahead, we expect the economic and social impact of Covid‐19 to be far‐reaching and significant. We ancipate traffic demand will take me to recover fully and some airlines will fail to respond to government intervenon. As such, typical demand for aircra and engines will shrink and values and lease rates will soen, however, only unl airlines want to avoid shop visit costs and turn to leasing instead. Whilst there can be a delay in this happening, the extent will depend on how many assets remain parked which can be ulised. Once they run out, and airlines connue to conserve cash, demand for spare engines will recover. ___________________________________________________________________________________________________________________________________________________________________________ IBA Group Limited, IBA House, 7 The Crescent, Leatherhead, Surrey KT22 8DY, UK i T: +44 (0) 1372 22 44 88 |F:+44 (0) 1372 22 44 89 | www.iba.aero 2020 Edion Member of ISTAT. UK CAA Approval No. UK.MG.0622 Copyright © 2020 IBA Group Limited VAT No: 123 37 13 47 Registered in England Reg.No:2246507 All Rights Reserved Contents ___________________________________________________________________________________________________________________________________________________________________________ IBA Group Limited, IBA House, 7 The Crescent, Leatherhead, Surrey KT22 8DY, UK 1.ii T: +44 (0) 1372 22 44 88 |F:+44 (0) 1372 22 44 89 | www.iba.aero 2020 Edion Member of ISTAT. UK CAA Approval No. UK.MG.0622 Copyright © 2020 IBA Group Limited VAT No: 123 37 13 47 Registered in England Reg.No:2246507 All Rights Reserved Table of Contents iii Engine Value Methodology vi Value Definions vii Maintenance Definions viii Disclaimer ix Secon i: Worldwide Distribuon & Market Share i.1 Manufacturer Market Share by Installed Engines i.3 Manufacturer Market Share by Operators i.4 Engine Type Market Share by Thrust Class i.5 Secon 1: CFM Internaonal 1.1 CFM56‐3 1.3 CFM56‐5A 1.7 CFM56‐5B 1.11 CFM56‐5C 1.18 CFM56‐7B 1.22 CFM‐LEAP 1.28 Airworthiness Direcves 1.33 Secon 2: Engine Alliance 2.1 GP7000 2.3 Airworthiness Direcves 2.7 ___________________________________________________________________________________________________________________________________________________________________________ IBA Group Limited, IBA House, 7 The Crescent, Leatherhead, Surrey KT22 8DY, UK 1.iii T: +44 (0) 1372 22 44 88 |F:+44 (0) 1372 22 44 89 | www.iba.aero 2020 Edion Member of ISTAT. UK CAA Approval No. UK.MG.0622 Copyright © 2020 IBA Group Limited VAT No: 123 37 13 47 Registered in England Reg.No:2246507 All Rights Reserved Secon 3: General Electric 3.1 CF34 3.3 CF6‐80C2 3.10 CF6‐80E 3.14 CF6‐50C, CF6‐50E & CF6‐80A 3.18 GE90 3.19 GEnx 3.23 Airworthiness Direcves 3.29 Secon 4: Honeywell 4.1 ALF502 & LF507 4.3 Airworthiness Direcves 4.7 Secon 5: Internaonal Aero Engines 5.1 V2500 5.3 Airworthiness Direcves 5.8 Secon 6: Pra & Whitney 6.1 JT8D‐200 6.3 PW2000 6.7 PW4000‐94 6.11 PW4000‐100 6.15 PW4000‐112 6.19 ___________________________________________________________________________________________________________________________________________________________________________ IBA Group Limited, IBA House, 7 The Crescent, Leatherhead, Surrey KT22 8DY, UK 1.iv T: +44 (0) 1372 22 44 88 |F:+44 (0) 1372 22 44 89 | www.iba.aero 2020 Edion Member of ISTAT. UK CAA Approval No. UK.MG.0622 Copyright © 2020 IBA Group Limited VAT No: 123 37 13 47 Registered in England Reg.No:2246507 All Rights Reserved PW1000G 6.23 Airworthiness Direcves 6.29 Secon 7: Rolls‐Royce 7.1 AE3007 7.3 RB211‐524 7.7 RB211‐535 7.11 Tay 7.15 Trent 500 7.19 Trent 700 7.23 Trent 800 7.27 Trent 900 7.31 Trent 1000 7.35 Trent XWB 7.40 Trent 7000 7.44 BR715 (Rolls‐Royce Deutschland) 7.49 Airworthiness Direcves 7.52 Secon 8: Pra & Whitney Canada 8.1 PW100 8.3 Airworthiness Direcves 8.10 ___________________________________________________________________________________________________________________________________________________________________________ IBA Group Limited, IBA House, 7 The Crescent, Leatherhead, Surrey KT22 8DY, UK 1.v T: +44 (0) 1372 22 44 88 |F:+44 (0) 1372 22 44 89 | www.iba.aero 2020 Edion Member of ISTAT. UK CAA Approval No. UK.MG.0622 Copyright © 2020 IBA Group Limited VAT No: 123 37 13 47 Registered in England Reg.No:2246507 All Rights Reserved Engine Valuaon Methodology Whilst the techniques used and the judgements made do not isolate every single influence and reduce it to a numerical value that impacts on the overall model, it is our view that the complexity of a purely mathemacal approach would produce values that were overly sensive to minor changes in the parameters feeding it. Consequently, IBA feels that, when making an assessment of engine value, there is sll no substute, for the blend of market research and intelligence, mathemacs, and judgement based on the experience of the appraiser in this highly dynamic market. The Engine Values Book has therefore been constructed around the following criteria: Scope: Engine variants associated with current producon “modern technology western‐built passenger and cargo aircra” with an entry into service date of post‐1980 and with a minimum populaon of 200 engines and/or 100 delivered aircra. Method: Determinaon of values includes account of replacement price, age, market condion, depreciaon based on resale history and useful economic life. Engines are considered within the market segment to which they belong and compared with the competor engines in the segment.