an overview of engine values - airfinance journal do engine and aircraft values compare with age?...
TRANSCRIPT
AN OVERVIEW OF ENGINE
VALUES
AN OVERVIEW OF ENGINE
VALUESInvesting in Engines: London Roundtable
7th
April 2009
Investing in Engines: London Roundtable
7th
April 2009
The information contained in our databases and used in this presentation has been assembled from many sources, and whilst the utmost care has been taken to ensure accuracy, the information is
supplied on the understanding that no legal liability whatsoever
shall attach to Ascend, its subsidiaries, officers, or employees with respect to any error or omission that may have occurred.
OVERVIEWENGINE VALUES VS. AIRCRAFT VALUES
ENGINE VALUE LIFE CYCLE
ENGINE VALUE BREAKDOWN
FACTORS AFFECTING MAINTENANCE
CHANGING & UPGRADING
IMPORTANT FACTORS FOR ENGINE FINANCIERS TO CONSIDER
HOW DO ENGINE VALUES DIFFER FROM AIRCRAFT VALUES?
Aircraft Values Engine Values
Build Year Matters
Maintenance Condition Matters
Value drops with time as soon as the aircraft rolls out of the factory
List price has very little effect on used aircraft value
Build Year does not matter
Maintenance condition accounts for 80-90% of engine value
Value can increase with time, driven by list price increases and LLP pricing
Values closely correlated to manufacturer list prices
HOW DOES ENGINE VALUE CHANGE OVER ITS LIFE CYCLE?
not to scale
HOW IS AN ENGINE’S VALUE BROKEN DOWN?
not to scale
HOW DO ENGINE AND AIRCRAFT VALUES COMPARE WITH AGE?
Comparison between two GE90-115B engines and a 2007 build Boeing 777-300ER –
both Half Life.
Future Base Values given in USD Millions under 2.5% inflation assumption.
$0m
$20m
$40m
$60m
$80m
$100m
$120m
$140m
$160m
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
HOW DO YOU VALUE AN ENGINE?
TYPICAL SHOP VISIT COSTS AND LLP PRICING
Narrowbody Engine(eg CFM56, V2500)
Smaller Widebody (eg CF6, PW4060)
Larger Widebody(eg GE90, Trent 800)
Overhaul $1.5m - $2m
Overhaul $3m to $4m
Overhaul $4.5 to $5m
LLP stack $1.8m to $2.2m
LLP Stack $3.5m to $4.5m
LLP Stack $5m to $6m
HOW DO EXTERNAL FACTORS AFFECT MAINTENANCE?
OVERHAUL INTERVALS
0
5000
10000
15000
20000
25000
30000
0.8 1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 2.8 3 3.2 3.4 3.6
Hour to Cycle Ratio
Tim
e on
Win
g (H
ours
)
First RunSecond RunThird Run
CHANGING AN ENGINE RATINGPossible within an engine family (e.g. CFM56-5B, V2500-A5)
1. Pay manufacturer a fee2. Change the chip that controls the
engine’s thrust rating3. Change the data plate, certifying
engine as a new variant
Clever planning and moving engines between aircraft can extend their life
IMPORTANT FACTORS FOR ENGINE OWNERSMaintenance Reserves (to keep “Full Life” value)
Manufacturer Service Agreements
Technical Record Keeping
Policy on use of PMA Parts
Asset Monitoring… “Where’s my engine?!”
For further information please visit
www.ascendworldwide.com
THANK YOUAny Questions?
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■ SPACE ANALYTICS
“Ascend is our GPS system to navigate through the industry”Nils Hallerström, President, PK AirFinance
New York+1 212 551 1118 [email protected]
Hong Kong+852 2813 6366 [email protected]
London+44 20 8564 6700 [email protected]
The information contained in our databases and used in this presentation has been assembled from many sources, and whilst the utmost care has been taken to ensure accuracy, the information is
supplied on the understanding that no legal liability whatsoever shall attach to
Ascend, its subsidiaries, officers, or employees with respect to any error or omission that may have occurred.