Oriel market values By: Les Weal, 3 rd October 2017, AE Finance and - - PowerPoint PPT Presentation

Oriel market values

By: Les Weal, 3rd October 2017, AE Finance and Leasing School,Dubai

Methodology:Current Market Values

2

• Market research

– Public sources: company reports, SEC filings, news – Private sources: OEM briefings, market stakeholder interaction, valuation assignments

• Data analysis

– Normalising data: for specifications, maintenance condition, transaction volumes, deal specifics – Extrapolating data: extending values to each aircraft type/variant/vintage combination

What is it worth today?

3

Built 1992 Cost new $100m Passenger load 400 Range 8000nm Speed 600mph Weight 870,000lb number built 700

What is it worth today?

4

Built 1992 Cost new $3m Passenger load 19 Range 700nm Speed 150mph Weight 11,500lb Number built 700

Total Fleet 2014-17

5 Source: Oriel, CAPA Fleets

Single aisles 2014-17

6 Source: Oriel, CAPA Fleets

A320-200 MV & LR (k.ages)

7 Source: OrielVIP

737-800 MV & LR (k.ages)

8 Source: OrielVIP

Twin aisles 2014-17

9 Source: Oriel, CAPA Fleets

A330-300 MV & LR (k.ages)

10 Source: OrielVIP

777-300ER MV & LR (k.ages)

11 Source: OrielVIP

Aircraft specifications: for better or for worse?

12

Extra weight easyJet selection Extra capacity Airbus increases exit limit

Source: Oriel

Lesson: subfleets best isolated early

13

Aircraft age

Source: OrielVIP

Investor Rationale For Early Part-out

Source: Aircastle’s Investor & Analysts Day Presentation April 2013

What are LLPs worth?

15 Source: Oriel data

Part name Part life - Cycles Cycles remaining Potential part-

• ut value

Fan Fan Disk 24,900 9,867 64,829 $ Booster Spool 30,000 5,610 44,076 $ Fan Shaft 30,000 2,072 10,484 $ HPC HPC Fwd Shaft 20,000 2,772 14,276 $ HPC Spool S1-2 20,000 8,735 67,958 $ HPC Disk S3 20,000 2,772 7,195 $ HPC Spool S4-9 20,000 2,772 51,282 $ HPC CDP Seal 18,000 2,063 8,190 $ HPT HPT Fwd Shaft 17,300 1,815 13,502 $ HPT Fwd Air Seal 15,800 13 112 $ HPT Disk 18,500 2,240 29,580 $ HPT Rear Shaft 20,000 2,772 13,584 $ LPT LPT Disk S1 25,000 1,018 4,593 $ LPT Disk S2 25,000 1,018 5,265 $ LPT Disk S3 25,000 1,018 5,318 $ LPT Disk S4 25,000 7,772 35,098 $ LPT Shaft 30,000 2,818 20,722 $ LPT Stub Shaft 25,000 610 1,788 $ LPT Conical Support 25,000 7,772 27,214 $ Total 425,068 $ Part name Part life - Cycles Cycles remaining Potential part-

• ut value

USM adjusted Fan Fan Disk 24,900 9,867 64,829 $ 38,897 $ Booster Spool 30,000 5,610 44,076 $ 26,446 $ Fan Shaft 30,000 2,072 10,484 $ 6,291 $ HPC HPC Fwd Shaft 20,000 2,772 14,276 $ 11,421 $ HPC Spool S1-2 20,000 8,735 67,958 $ 54,367 $ HPC Disk S3 20,000 2,772 7,195 $ 5,756 $ HPC Spool S4-9 20,000 2,772 51,282 $ 41,026 $ HPC CDP Seal 18,000 2,063 8,190 $ 6,552 $ HPT HPT Fwd Shaft 17,300 1,815 13,502 $ 10,802 $ HPT Fwd Air Seal 15,800 13 112 $ 90 $ HPT Disk 18,500 2,240 29,580 $ 23,664 $ HPT Rear Shaft 20,000 2,772 13,584 $ 10,867 $ LPT LPT Disk S1 25,000 1,018 4,593 $ 2,756 $ LPT Disk S2 25,000 1,018 5,265 $ 3,159 $ LPT Disk S3 25,000 1,018 5,318 $ 3,191 $ LPT Disk S4 25,000 7,772 35,098 $ 21,059 $ LPT Shaft 30,000 2,818 20,722 $ 12,433 $ LPT Stub Shaft 25,000 610 1,788 $ 1,073 $ LPT Conical Support 25,000 7,772 27,214 $ 16,329 $ Total 425,068 $ 296,177 $ Part name Part life - Cycles Cycles remaining Potential part-

• ut value

USM adjusted Part-out valuation Fan Fan Disk 24,900 9,867 64,829 $ 38,897 $ 9,198 $ Booster Spool 30,000 5,610 44,076 $ 26,446 $ 8,815 $ Fan Shaft 30,000 2,072 10,484 $ 6,291 $

• $

HPC HPC Fwd Shaft 20,000 2,772 14,276 $ 11,421 $

• $

HPC Spool S1-2 20,000 8,735 67,958 $ 54,367 $ 10,892 $ HPC Disk S3 20,000 2,772 7,195 $ 5,756 $

• $

HPC Spool S4-9 20,000 2,772 51,282 $ 41,026 $

• $

HPC CDP Seal 18,000 2,063 8,190 $ 6,552 $

• $

HPT HPT Fwd Shaft 17,300 1,815 13,502 $ 10,802 $

• $

HPT Fwd Air Seal 15,800 13 112 $ 90 $

• $

HPT Disk 18,500 2,240 29,580 $ 23,664 $

• $

HPT Rear Shaft 20,000 2,772 13,584 $ 10,867 $

• $

LPT LPT Disk S1 25,000 1,018 4,593 $ 2,756 $

• $

LPT Disk S2 25,000 1,018 5,265 $ 3,159 $

• $

LPT Disk S3 25,000 1,018 5,318 $ 3,191 $

• $

LPT Disk S4 25,000 7,772 35,098 $ 21,059 $ 6,322 $ LPT Shaft 30,000 2,818 20,722 $ 12,433 $

• $

LPT Stub Shaft 25,000 610 1,788 $ 1,073 $

• $

LPT Conical Support 25,000 7,772 27,214 $ 16,329 $ 4,902 $ Total 425,068 $ 296,177 $ 40,130 $

First glance: $425k USM discount: $296k Real demand: $40k Painful reality: $0k

Maintenance component in leases

16 Source: Oriel VIP

Lease-end compensation

• Restores to “full-life”

condition

• Calculated at lease-

end prices Lease-end comp/ Maintenance reserves

• Are pre-agreed rates

sufficient?

• Are escalation rates

realistic?

• Do return conditions

allow minimum build? Physical return conditions

• Do return conditions

allow minimum build?

• What is the

maintenance condition worth?

$0m $5m $10m $15m Half-Life Base Value "Owner" Adjusted Base Value Adjusted Base Value

What is the value of RCs? Case study

17 Source: Oriel, CAPA Fleets

Return Conditions

• “fresh” 12-year

airframe check

• Landing gear half-

life

• Engines / Engine

LLPs minimum 3,000 cycles remaining $5.5m downside $2.5m upside

Les Weal Tel: +44 3330112129 Mobile: +44 7913845440 les.weal@oriel.aero

Olga Razzhivina Tel: +44 3330117676 Mobile: +44 7715868776

• lga@oriel.aero

Thank you.