Cargo operators strain under higher aircraft lease, purchase prices

The cost to buy or lease aircraft — in both widebody and narrowbody segments — has risen sharply in recent years, creating a difficult squeeze for operators looking to expand their fleets. That’s the consensus of experts who spoke on a panel at Cargo Facts Symposium last week in Nashville, Tenn. [caption id="attachment_57299615" align="aligncenter" width="2560"] Panelists George Dimitroff from Cirium Ascend, Pooja Gardemal from BK Associates and Anna Kopinski from MBA Aviation speak at Cargo Facts Symposium (Photo/Cargo Facts)[/caption] “Two years ago, lease rates for the oldest 777-300ERs were $200,000 cheaper than they are now, ” said Anna Kopinski, director of asset valuations at aviation consultant MBA Aviation. “We've seen 50 aircraft that were stored a year and a half ago put back into service. We've seen maintenance cost rise incredibly, and we've seen passenger long-haul demand continue to grow. “I think it’s safe to say that feedstock prices are just getting out of balance at this point.” The purchase price of a 777F was about $30 million at that time, and now, she estimates, that has risen to $40 million to $45 million. George Dimitroff, head of valuations at Cirium Ascend, put that number closer to $50 million, with engine values driving much of the increase. “Anybody looking for feedstock to convert is having to compete with people who are looking to tear down the aircraft to reuse the parts, the engines, etc., and they are usually the winning bidders at the moment because the lack of retirements means the lack of serviceable parts too,” he said. For a 25-year-old A330, prices are in the “mid-30s or even 40s” million-dollar range. “In the narrowbody space, it's the same problem, except even worse,” he added. Most Airbus A320 feedstock comprises primarily 10- to 15-year-old aircraft, costing in the high teen millions of dollars, Dimitroff said, “which, in my view, is still too high to make the converted freighter viable.” While there has been about 10% reduction in lease rates due to the glut of A320s and A321s on the market following Spirit Airlines’ bankruptcy, “passenger airlines appear to be flying their narrowbodies less, but they are not giving them up just yet, ” he added. For a 737-800, the purchase cost could be “at least $20 million … which again makes it look too expensive.” “I feel like it's been a roller coaster since COVID,” said Pooja Gardemal, managing director of appraisal and consulting firm BK Associates. Medium-widebody feedstock , such as the 767 or A330, remains “relatively expensive and constrained,” Gardemal said, adding that passenger aircraft retirements “don't automatically translate into viable feedstock.” For example, many 767 fleet retirements from passenger use could come from 2027 through 2030, and operators will have to decide if they are willing to invest significant amounts of money into converting and maintaining those or opt to part them out. “For now, it's a wait and see,” she said. Stay up to date on all the news coming out of Cargo Facts Symposium here .

Cargo operators strain under higher aircraft lease, purchase prices

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