Ask the Appraiser – How are Narrowbody Aircraft Values Performing?

In the third edition of our ‘Ask the Appraiser’ webinars, our experts Mike Yeomans and Phil Seymour examined the trajectory of narrowbody aircraft values, identifying the hottest trends and the impacts of macroeconomic factors on the market.

What are the latest trends in narrowbody aircraft values and lease rates?

Aviation intelligence from IBA Insight revealed that new narrowbody aircraft market values have broadly recovered to pre-pandemic levels. The 2022 value of a new Airbus A320neo is 3.5% higher than in 2019, with the 2022 and 2019 values of a Boeing 737 MAX 8 now on par.

By contrast, mid-life aircraft values are recovering at a slower pace, with a 15-year-old A320-200 25% behind 2019 levels.?

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Lease rates for new narrowbody aircraft are rising above 2019 levels. This is largely being driven by a combination of short supply, and rising demand and interest rates. Overall, narrowbody lease rates are recovering, and lease rate factors are rising due to the cost of borrowing. Previous generation narrowbody lease rates have followed a slower path of recovery, but are set to benefit from new aircraft supply constraints.

Data from IBA Insight reveals that the Airbus A320neo and Boeing 737 MAX families will be the predominant narrowbody aircraft in service by 2032.

The bottom line - key takeaways

• Passenger markets have opened, and demand is recovering, with the majority of travel restrictions now lifted
• Supply chain and OEM bottlenecks are easing slowly, which in turn is helping lease rate recovery
• Despite this, inflation, interest rates and labour costs are all causing issues for the aviation industry
• Operational costs are set to rise due to increased labour and jet fuel costs. Furthermore, a strong US dollar combined with sanctions on Russian oil will add further cost pressure for the industry

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