CFS: What’s that freighter worth?

This is a recording of the valuation panel at this year’s virtual Cargo Facts Symposium, featuring speakers from AISI, mba Aviation, MUFG Bank, and IBA. See all our previous coverage of this year’s Symposium. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Olga Razzhivina Good evening, everyone. Thank you for joining our valuations panel. I know it's the last show of the day. I have a brilliant group of panelists who in the next 45 minutes will share their thoughts and opinions on the values and trends on both cargo and fiscal passenger aircraft. All of them have extensive experience and are well known in the industry. So keep introductions to the minimum. So now I don't have the luxury of turning my chair and saying to my left is because we're spread wide across both sides of the Atlantic. I'll start from the east. So first I'll introduce Burt from livin bird has been an industry since 1983. During this time, he has worked with banks and leasing company including an ABC bank, where he started aircraft finance, operating lessor Iam and DVD bank. After the sale of the DVD bank to m u of G vert is now heading the bank's aviation research Research Unit. West from birth and closer to me is Mike Yeomans. Mike is a director of valuations at iba, a UK based aviation consultancy. Since joining iba in 2011. Mike has worked on a variety of valuation assignments including commercial and technical due diligence, as well as large portfolios and ABS valuations. jumping across the Atlantic we come to Lindsay Webster. Lindsay is the vice president of the Asset Management Group at MBA, a US based aviation consultancy. She's in charge of a large portfolio of work, including valuations of various assets, market research, and value and useful life modeling. And also on that side of the Atlantic is Mark Hall sir mark is the president of a ISI firm that specializes in commercial aircraft and engine valuations as well as parts prior to join in. sigh Mark has had a long career as a pilot flying for delta, Singapore cargo and Korean Air and he brings over 38 years of aviation experience to discussion. So it has been a really grim six months for everybody in the world, with COVID COVID-19 shutting down most of our lives. And if somebody mentions aviation, most people will think of empty airports and park planes and struggling airlines. Yet, we do have one bright spot in the aviation in this gloom and that's cargo operations. And with the most passenger aircraft, Park bellick cargo capacity is nearly disappeared. And that created an unprecedented spike in the demand for freighter aircraft. And even though I add a number show declines year on year, we see quite the opposite quite a few aircraft have been taken out of storage, including the very large aircraft like the seven, four sevens, even the converted freighters, which were always less preferred. So I think we'll start by pulling our core audience and we'll start with the large freighter sector. Katie, could you please cue the first question, please? Thank you. So which of these aircraft will hold their value best in the next 10 years? Is it a triple seven 200 built freighter v 7478. f c 747 400 converted freighter or triple seven 300 the Auckland Florida threat converted freighter please vote now. Okay. I think right, the votes are still coming in. Alright, I think that while the votes are still coming in we do seem to have quite a clear winner in them. Oh, no, no, no clear. It's not clear. But interesting. Okay, I think we do have a clear winnerBertOlga Razzhivina You're the only one of us who actually has a an experience of converting large aircraft as a financier and banker would you repeat that experience? I know we are having new programs coming in. We just heard that kalita is a launch customer for triple seven 300 Dr. Would you go go it again for the large freighter conversionBert van Leeuwen um Thank you. Oh God, of course also, thanks to the cargo FX theme for allowing me on this pedal. really an interesting one. Just a bit of background Yeah, we were in fourth in the past especially under the DFB brands before being taken out by me of GE in some 747 conversion projects are experienced there was basically debts that the converted 747 was always and I think that's reflected in the outcome it's always been a kind of a second best because it was a big airplane it looked like a 747 dedicate or the factory freighter but it wasn't because lacked nose door so I think lessons we've learned is that you should if you go for conversion program you should still go for the for the very best available and and don't go for compromise now in this if I look at the the for aircraft types here I would say yes especially freighter it's kind of a stopgap solution where you're you're seeing a shortage of capacity so that may be temporary and I expect fully when this when the situation changes dose will be the first one to go to the to the desert figured out the other airplanes to LRF was a fantastic and it still is a fantastic freighter but I think that's one that will see competition. I think today it was announced that kalita will take on the first of converted airplanes 300 to convert airplanes that will be competing as a 200 LRF. They have different characteristics. But I would say yes, the eight f has this unique nose door which makes it suitable for for the outside cargo. If the the 400 elf would have been on the on this chart, I'll probably pick that because it's a lot cheaper. So it's probably what we would It's value. But the ATF I think it's still an expensive airplane. But I think that's we'll see that as a flight for a long, long time, because we will need outsize cargo capacity. And just to add to your to remark, Carter, we are still engaged in cargo conversion projects. Although at this point in time, the ones we're looking at are more on the on the narrow body, their body scientists equations, which I think we'll discuss later on. Sure. Olga Razzhivina Mark, as an appraiser, how do you feel about the triple seven 300 our passenger values at the moment? The oldest aircraft, the oldest aircraft of a bio toward 1615 years of age, and it's just a trickle, but most of them coming down to 1210 years? Do you think their values are justified the current conversion just yet? Are they going to produce a freighter? That's right price and the ramp? Yeah, we, Mark Halsor we've been looking at that. And we've been tracking, you know, through through the pandemic, we've been, you know, tracking these, these these terrible decreases in current market values for, you know, basically all widebodies except for just a few of the, you know, the top sellers. And so now we we think, and I think cloetta is back this up that I think that the feedstock price is getting to the point where even with when you're talking about a $30 million conversion cost, and that might be a little bit on the high side, but I think you might be throwing in some maintenance events there to get to 30 but still a huge investment in an aircraft that, you know, I think, at the end of the day is is probably worth, you know, 50 60 million and can then live a long, long life with the utilization of Frater. You know, indefinitely almost probably 2030 years. So I, you know, my, our feeling on it is yes, we're at that point where we will finally see the thing that Boeing was kind of protecting all along, which was there was going to be enough decline in feedstock value to make the 300 yard conversion from pasture to freight are feasible. Unfortunately, it took the pandemic to do it. Olga Razzhivina Yeah. And if you think of it, if you were to reconfigure a passenger triple seven 300 Dr. To a decent spec, you'd be spending another 30 million anyways. That's correct. Yeah. I agree with that. Yeah. Olga Razzhivina Yeah, I'm like, Can I ask you? Do you think there will be a triple seven x freighter, or most needs for that size aircraft will be fulfilled by converting passenger aircraft that confined second homes. And let's not forget that this generation of Whiteboard is like the triple seven 300. They are had really unprecedented production rate hikes, produce, delivering more aircraft onto the market than anybody else has done before. So do we really need another production freight? Are we going to be happy with because it's not going to have a nose door? Are we happy with them just converting them? Older aircraft? What do you say? Mike Yeomans I certainly wouldn't rule it out long term. I don't think we'll see one in the near term. I mean, I think we're certainly seeing some delays on the X program and the aircraft coming out there. I think in terms of Boeing's focus over the over the next while I don't think it's going to be necessarily on on on bringing a triple seven x Raider into the market. And like you say, there's a there's a large fleet out there of passenger aircraft. In terms of no recent announcements of what operators are doing with their fleets. We've seen a lot of noise around fleet exits have we worked out there's around 125 aircraft either going into long term storage or exiting or retiring? A 300. Er, so there's certainly going to be plenty of feedstock available over the next few years to feed that that program. So I don't I don't see see in any time anytime in the next few years, personally. Olga Razzhivina Yes, I guess, more to the point Boeing might think about their own conversion program, which they've been toying around with for a number of years, as we have seen at this conference over the past few years. Right. I'm going to move the proceedings a little bit in a completely opposite way. And that's because in the past when Lindsey and I were this, speaking at this conference, at the after the session, we always received complaints that we didn't cover the smallest sector the turboprop freighters. So I'm going to have to I'm going to move to that side of freighters. So we'll be jumping up and down in this pick and mix session or whack a mole as Boris Johnson would put it. And Katie, could you please cue the second polling question? Right. Will integrators follow FedEx in ordering all new turbo proprietors or carry on with conversions? A Yes, they will order a new ATR 72 600 deaths. No, there's plenty of 70 to five hundreds available. No after fly be bankruptcy q 400 offers the best opportunity. Now. The days of terror perforators for integrators are gone. Please vote now. Well, either only one person is still watching and voting or we have an absolute unanimous opinion on the subject. Right. Okay. Well, somebody is thinking of splitting the answers. Okay, I think we have most answers in and I think the glut of the seven. Okay, somebody thinks there is no more place for frates turbo proprietors. It's very interesting. I do wonder how that's gonna pan out at the moment with the lack of bullet capacity. Right, I think we have most of the results in the favor is definitely in the all the turboprops court. So Lyndsay? Can I ask you a question about the both 500 and 600? So probably 500 is mostly that now the most favored conversion? Where would you see the necessary level of values for the 70 to five hundreds. And do you see those aircraft reaching the necessary low levels of pricing for the convergence today, Lindsey Webster and only 70 to 500. Even you know, before the pandemic those values for free, pretty impacted, just due to the availability of the market, also, just due to the fact that they had a number of 72 600 people it just afternoon, push those those aircraft into this market, I think a lot earlier than anyone was expecting. And so I do think that values for the 70 to 500 for the freighter conversion, you know, that being said, you kind of see like the FedEx, the, you know, the feedstock carriers 20 to 30 of them that FedEx uses, they actually have the some of the smaller aircraft like the 40 to 300. And as well as I think like Morningstar just picked up the 72 200. So even though there are a number of the 500 that are available in there, you know, feedstock is actually pretty cheap, we're still seeing that people are going for even the 7200. So while I think that the 500 are still at a you know, pretty low value in terms of what would actually be necessary to convert the aircraft. I think the fact that there are so many 70 to 200 out there that are so much cheaper, and really, there's really not that much difference, right, as far as the actual capacity of the aircraft. And that I do think that, you know, the 500 probably do still have a little bit further. You know, or if the 72 aircraft, they're picked up in secondary market, we a little bit more demand for the 500. But I really, you know, I think that that's going to kind of depend on on how the rest of the integrators go, just moving up from the Yep, from the two hundreds which are so readily available. Olga Razzhivina Think you're quite right, the price of the aircraft is very important in that market. And from what I understand the contracts for people operating for opera for integrators are very short term and they don't always get the good planning horizon. So you do have to think about your pennies and pick up the cheapest aircraft. So I think you're quite right there's there is a lot of two hundreds available and probably 500 is going to be the next wave. Mike, I'm going to pick on you Next, because you're here with me in the UK. And we have seen the collapse of fly B, which is the largest operator of Q 400. And rumors of its restart notwithstanding. Do you think the Q 400. sf, will take off in bigger numbers? I know our polling question suggests it's only 5% think that it provides a better opportunity. But do you think it's speed characteristic and more robust perception of a more robust airframe? We'll do it favours. Mike Yeomans I think certainly, if we've been talking about, you know, pricing of feedstock, you know, some of the some of the numbers that we've seen on the q4 hundreds that have come into the market, obviously, there's been a lot of oversupply with that. The failure of fly B, and other carriers, fleets coming out of 1015 aircraft fleets coming out into the market. So I think in terms of that, that pricing, there's certainly potential, I think, on the 70 to 500, though, you know, I wouldn't see some of those older aircraft being that much different in terms of the price point and the acquisition costs he can get hold of the aircraft for at the moment. So I think, you know, I agree with their with the, the sentiment of the polis here in the five hundreds, somewhat more of the proven the proven platform for the freighters there, and this sort of maintenance and operating costs are lower as well. So, you know, to your point of watching the pennies, I think that's gonna play into into its favor there as well. So, for me that still the 500 is going to be the more more prevalent platform for the freighters, converted freighters going forward. Olga Razzhivina Thank you, Mike. Right. In our true pick and mix style, we'll return to the whitewater sector. And this time, we'll try and speak about small widebodies, which are well, we have a built still seven six sevens built as built freighters but a lot of the aircraft are being converted. Ecommerce has done remarkably well. During the lockdown, we all I think have been guilty of shopping online. And we see a strong demand still strong demand for the freighters of the 767 variety. And a lot of airlines have announced that they're going to retire their 7767 fleets early. But of course, a lot of those aircraft are going to be in the condition that probably leaves one cycle and everything to fly them to Mojave Desert. And some would be not eligible for age reasons or total hours and cycles. So there are still concerns about the availability of this feedstock. So one obvious replacement is the a 330, and especially the 300 variety, because it's got a larger volume. And until now, the fifth stock price was one of the biggest obstacles to create conversions, but that's obviously rapidly changing even since pre COVID. Katie can ask you to please cue the third polling question. Right, we already have some answers. Where do you expect the ac 3300 feet stock values to be in order to create the right on the ramp price? A 25 and above million be between 20 and 25 c 15 to 20 million and D 10 to 15 million. It's amazing. People want to pay more for their feedstock. Oh, now they don't. Well, oh, I think somebody can make a 25 million aircraft work for conversion. I think official Price Is 18 million or thereabout. Okay, I think we're fairly well in with the responses. Of course, most people would rather cheap pay less, but it looks like nearly half of all respondents can make the maths work even with the more expensive feedstock. So I think 25 million is well within the grasp of bird Can I ask you with all the facts commerce and integrated growth and passenger at 13 been available very cheaply. Does this sector excite you as a potential investor? Or do you see any problems on the horizon? Bert van Leeuwen Yeah, we're always excited to right price, the right youth. But now I think there is going to be demand clearly for this, this generation of airplanes, especially the 330 300, I guess, to eventually become the successor to the to the the older generation Seven, six. But as always, it's it's a matter of what's the right to the price, the right price to strike. And, I mean, the question is, where do you expect the value feature films to go? I think it's, if we look at the market at the moment, what we're hearing from our own remarketing team is extremely challenging to place a 330 300 in the passenger market. So I mean, what we've seen in the past, we buy body airplanes, the feedstock after a initial premium that was paid for feedstock airplanes, eventually the values the feedstock, airplane prices dropped to a level just over partout levels. So I expect that to the 330 300 zoes will go down quite dramatically. And maybe even to the to the 1015, I guess around 15 is probably what we can expect. Maybe even less if it's if it really gets worse. But what I'm really afraid of in this market is that we will see a lot of look at the ownership, there's a lot of 330 star owned by financial investors and leasing companies. And if they find out that, yeah, once they get our airplanes returned by the lessee, either because of lease termination, or because of a default, or because they are just not willing to accept, for instance, power by the hour contracts, there'll be quickly to realize that they can place those 330 at any reasonable lease rate anywhere else. So I'm a little bit of freight. And that's not only for the 330. But also for other for airplanes, also the nobodies fear that leasing companies, investors will, but if you will, if you look at it from a bit of a cynical side, kick the can and try to put those airplanes through conversion program, which potentially could trigger a glut in three, four years from now when things go back, hopefully, to normality, and we will see a lot of passenger wide bodies flying again with with the belly space. So I'm not sure if it's, if it's the right time at the moment, and I would say would rather wait a little bit before before investing in this airplane. But I feel there's got to be quite some pressure on the on the fits of values. So yeah, eventually displaying will be there but not the right time yet to strike. I would say Olga Razzhivina NZ can ask you, bird has mentioned that. It wouldn't be surprising the value is going down to 15 million and below. Do you see the feedstock values for the 333? Hundreds reaching any level close to that and Seven, six sevens as well? They're obviously a bit older. And where would where what do you think would be the youngest passenger aircraft converted into Frazier? In the 330 character glory in this downturn? Lindsey Webster Yeah, I mean, getting down to the 15 million, I definitely think that that's possible. I know that some people have mentioned even just trying to sell an A 330 $3.5 million is hard in this market. Um, you know, I think that we saw a little bit further to fall to get maybe down to like, what the audience kind of shows us the really the range. But I don't think Far from it, obviously, depending on how far this pandemic takes us, and how many carriers go bankrupt and the number of aircrafts that are out there. Um, but you know, I don't think there yet, you know, the 767, in order to for this aircraft to compete with the 767, I used to have to come down further. Especially because there are, you know, I know that there's been some, there not being enough 767 p stock out there. And, you know, the ones that do come out, as you'd mentioned before, don't really have that many likes left on them, or have long legs left. And so you know, I do think that there are still Seven, six sevens out there to be converted. And so for people to want to move over to the a 333, the value has to be pretty low, except I want to pick up that aircraft because then if you on your 767 operator, you're you're getting your fleet, you know, it doesn't really make a lot of sense, regardless of how good the cost is. And so yeah, so I think that you have a little bit of ways to go there. And I'm so sorry about the second part of your question. Ah, wait, Olga Razzhivina what? how young Do you think is going to be the youngest aircraft converted into French We've seen this downturn in this category. Lindsey Webster Yeah, I mean, that's for the a 333. You know, I'm not entirely sure where that would be as far as the age, I know that them coming off of their first leases at 12 years old, that people might get a little desperate. So I wouldn't be surprised if I saw a 12 year old boy obviously wouldn't make that much sense from an economic perspective of the value that you'd get out of there. But I would still, I would probably expect it to somewhere like, you know, 14 to 16 should be where people are converting this aircraft. Olga Razzhivina Yes, I wouldn't be surprised to see a 12 year old coming out of a first lease and going in straight into conversion, because in the market that we see today, you're not getting any premium on passenger aircraft for youthful age. And by converting it, you might be adding another 15 years on to the life of the aircraft or so you hope. So that's as Byrd said, it's kicking the can down the road. As a very, it becomes quite important. And I think some early adopters, we already seen the airlines that put aircraft from their own fleets through conversion. So maybe that's helps to popularize the type without jumping straight into the big integrator fleets. So probably We'll see. Maybe some integrators starting to scratch their heads and thinking whether they would want to go into that type of conversion. So I think we have covered everything but the narrowbodies freighter conversion. So it has been the most brilliant sector from our point of view. And some of the problems like 74757 and 747 Classic are starting to wane. And others are starting to take over like seven through seven then G and the tentative steps from the HB 20. Family. So do the old fritas still have miles to go? Are they going to fall victim to import age restrictions? Are the new freighters too expensive? Where does the value lie? So let's ask our audience Katie, could I ask you to pull the cue the last polling question please. All right. What passenger aircraft would you like to buy for freight conversion? A 737 800 b h 321 200? c 737 400 and d m d 80. And so far, we have only one popular aircraft? Right. I think we have the preferences rather certain MDA was an interesting one, it was never taken off in a big way. Mark, can I ask you about your thoughts on the a three t 321. Fred conversion? We don't we have now several programs. What do you think it will take for it to break the Boeing incumbency in the narrowbody? freighter space? is and how long do you think it will take? Mark Halsor That's a very interesting question. there's kind of two things driving that there. Obviously feedstock price in the 321 itself and then you know, kind of the whole 757 verted flavor freighter market maturing and those aircraft you know getting to the point in life where you know, a 321 would be an upgrade in both, you know, kind of capability with kind of the flow rolling systems especially in the belly and then just avoiding the maintenance of of another D check or whatever for a 757. So, I think I think the the 321 is obviously the the heir to the 757 segment. And I think that we're seeing you know, more 757 PCs actually retired. And the the feedstock is is very low, even in the pandemic. I have seen some talk of maybe a 307 573 Hundred conversion, those were younger aircraft and, you know, operated by the big North American carrier carriers mainly and there's there's talk that they might just be hit on the head because of the pandemic. So you'd have that little wrinkle in it. But But again, there's no stcs on the on the 757 300. So it's just it's, I think it's going to be just the replacement of the 757. And then growth of e commerce that will will keep the will will make the 321 a successful converted freighter, but I don't see it getting a jumpstart from the pandemic, I think that the 321 still has a bit to go on feedstock pricing. Although we're you know, the Narrows are doing the best in this in this pandemic, but they still I would think need to come down a bit more before you see a rush to them. And then you know, we were really not certain about the conversion cost itself. There's been a lot of numbers thrown around, and I'm trying to find the one I had. But it was north of north of six, and these were in usds. And of course, you're gonna probably get them done by ew. So there's all sorts of kind of bloating pieces in the equation. But I think long term it'd be a good play for a freighter converted, especially if you have one on lease now on the passenger side. And you think transitions coming up? I think as we were talking before, I think it'd be a good time to move to conversion. Hmm. Olga Razzhivina All right, Bert, you mentioned narrowbodies earlier. So do you think that space deserves a more diverse investor base base? Do you think many financier's would be brave enough to enter into the freight conversion lured in by knockdown prices? Bert van Leeuwen Yeah, hopefully not. Because that would mean more competition for us. But I think most of the financier is a little bit intimidated by that market because it's more complex. It's it is of course, smaller markets. And obviously the the narrowbody freighter market, it's dominated essentially by a handful of major integrators. The well known us players, maybe some coming from China, and then there are airlines around those who are basically flying contracts for the so as we have seen in the past the fleet decision of a major integrator, okay, let's say FedEx, it's going to be determining for which airplane is going to be the most successful air. So that that is still to be to be seen, I think the treatment you want to and I like the play myself, I think it's an excellent successor to the seven five, it may be a little bit too early yet. We also have to think about the well. Apart from gargle version, there's also the competition if you will from partout. Although those those prices will go will come down. But it's it's it's going to be more for the specialists also bringing it bringing the airplane from feedstock and contracting the cocoa version to flying freighter that's intimidating to many of the of the financier. I think the 737 821, they can coexist going forward, like seven, five and the seven, three at the moment. Also 738 hundred, I think it's going to find a good place in the market. Again, maybe wait a little for the max to be grounded. It's cool, I think by Boeing, then we will probably see a lot more of the 7800 coming to the market and probably values drop. And the idea well, it's probably the only one I could afford to buy for Coco version, but I wouldn't. And the 7400 I think they're almost true the the suitable airplanes, and it's it's coming. It's getting a bit older now. And I don't think that they said that's a long term, it's still a good good option. If you have the airplanes probably good airplane to fly for a couple more years, but it's coming to the end of its life. So I think combinations 321 and 7800. But give a little bit more time before you plunge into the 800 because I think there's so this will come down and again the set overall. And that's also something on the on the wide body that I forgot to say is the 330 and part outflows 330. With the rules engines are obviously very questionable because you don't know what you're going to get for the engines. But here in this case with 70 and 20 those engines are still pretty popular. So they are definitely are valuable. And maybe in a few years time, they will be in a rush to get to get spare engines, just allies have neglected the maintenance on the on the engines and I've run them out. Olga Razzhivina Yep. Yeah. All right. Um, Lindsey, one of your responsibilities I noticed in your job in your bio is looking after them useful lives of aircraft. And we're seeing quite a rush towards energy conversions at the moment. Do you feel that some of the classic freighters might be pushed out of the space before their time? And what do you think that's gonna do to the thinking about the post conversion? freighter life? Yeah, Lindsey Webster that's a really good question. Because I think, you know, especially some seventh financier's minds as well, concerns about that, I think that one of the things that is important to keep in mind is the 737 hundred, though it is, you know, cheaper in the sense of a fuel burn efficiency on it, and the maintenance cost can be a little bit more manageable, because they do have longer intervals. This still the upfront cost, yep, acquisition cost is quite high. And I think that some of the less orders going into this space expect to get at least right, that's also equally as high as the conversion cost and the feedstock price, but they're competing in the market of operators that have the 737 400. And with one additional pallet, you know, it doesn't really make sense to pay the lease rates that the lowest sorts we're going to want. And so when you're kind of looking at that, you know, the 737 400 it's, you know, one, one less palette, really, obviously, there's some, the engines are, you know, expensive to overhaul and maintain. And but at the same time, restraints are very attractive, especially for the operations that the aircraft is used in, where you have sort of fixed fee flying, and you're not going to really want to immediately move up to that 800. So I don't think that you know, just because they enter into the freighter conversion market, that immediately it's going to, you know, bump out the 400, you know, the pandemic could bring, you know, I know that g cast and BBM have been pretty active in converting the aircraft. So there are already a number of eight hundreds that have been converted and placed in the market. But they're not really directly competing with the four hundreds just because a lot of the reason why the eight hundreds have been brought in is because there's a lot of foreign feedstock. And so I think if people had the option for the 400 versus the 800, and the lease rates they could get it probably would choose the 400 for the short term, that obviously the 800 is more attractive as a long term investment. But you know, I still think that the 400, probably the ones that are converted or being converted have at least 10 years of economic life left on them, if not longer. Olga Razzhivina Yes, interestingly, I was listening to one of the earlier panels at the conference, on the narrowbody freighters. And I think, when it comes to the choice of which aircraft to pick, the one of the things that comes into play is reliability, because a lot of those contracts that you mentioned, do specify reliability of aircraft, because that is for Express freight. And in some cases, that's where a newer generation becomes more attractive. But interesting enough, there is also a difference in their quality of conversion. And that can really affect the availability of aircraft, or interesting. Now, I think we have a question from the audience. What are the current lease rates for the P two f a 330 300? Anybody would like to take it? Mike Yeomans I would say, if you're looking at it from from a sort of least or least write factor perspective, now you've got your conversion cost in this sort of maybe says 17 to 18 million. Now, if you're looking to get your feedstock, I think everyone must between, you know, 10 to 1515 to 20. So if we're in the sort of 15 million, you know, yeah, you're on RAM prices is getting into the low to mid 3030 millions there. So I think from a lease rate factor, you know, you're gonna need to be in the mid to high 300 thousands, maybe nudging 400 it's, you know, it's gonna it's gonna attract a premium above the 767 converted freighter which would see sort of in the low there so you'd expect it's a larger aircraft you know, it's going to attract a premium in terms of the lease rate there so that's you know, that's where I'd be on a on a lease rate market lease rate today for Olga Razzhivina anybody else would like to point Bert van Leeuwen oh, guy I tend to agree with with Mike. Again. I think we were early All in that program. And so there will be premiums around. And again, I think those will be under pressure going forward as well because of cheaper feedstock. And I guess that that's, that's, we'll see that maturing that market and that that premium set will probably disappear will evaporate. But I agree with Mike's mic numbers. For the time being. Olga Razzhivina Right, we have another question. It seems that an operator could cover a 400 marginal reliability disparity with a spare plane or two. Oh, that's the 80s and 90s thinking and still be cheaper overall than the 800. f? Do you think that's the Oh, does the least right up to 400? This is less than a lease rate for 800. f. I think that's what the question comes down to? Oh, Mark Halsor I think the math wouldn't work on that. We were we were seeing 800 mg, you know, converted freighters in around the 190, you know, 180 to 190 a month range. And I'm thinking that, you know, the four hundreds, you know, less capable, still north of 100, probably in the, you know, the 120 range, I'm just, you know, I'm spitballing a little bit here, because I just don't have a real recent number, especially with the firming of the rates in COVID. So, still, you know, 120 and 219, you know, you don't have enough room for two, they're sitting around assuming that one's just a spare. If you could get some utilization out of the other one. Yeah, maybe maybe you can make that work. But I don't, I don't really think it helps you on the reliability side, I think the 800 mg is just a super reliable aircraft, just by definition. And I think with the place where the cargo door and you know, the engineering on it, there's not going to be any, you know, kind of ramp rash developing on these airplanes, where they're knocked out of service by, you know, some truck hitting them and that kind of thing. So I just think that, you know, you would just by definition, get more reliability out of an 800. And I think that that, by would, by itself, just, you know, not cause a need for for to spare for on our 400 no spare. Olga Razzhivina Thank you, Mark. I think I've been reading last week on the publication's of cargo facts that some country had to 800 sf sitting on the ground because they've been hit by a truck. Which happens. Right, I think we're coming up to our time limit. And I would like to thank all our panelists for very insightful and informative panel and for your opinions and for taking your time, Bert, especially you get some quite late in Holland. So thank you very much, everybody. And thank you for listening to us.

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