AFM Issue 87 by AFM Magazine

The business and financing of airline operations

Interview: Turkish Technic CEO Interview: AerCap CEO FAA Furlough Used aircraft values

Turkish MRO: Fixed for growth

Published by

Novemberâ&#x20AC;&#x201C;December 2013 Issue 87 www.afm.aero

Foreword Editor Mary-Anne Baldwin Mary-Anne@afm.aero +44 (0)208 831 7511

What a month October has been! The US aviation industry’s furloughed workers have long been back at work but, as we discuss on page 40, it will take some time for them to return to some semblance of organisation. We tell the cautionary tale of the furloughs and take a look at the full ramifications it had on the industry.

Contributors Chris Kjelgaard, Martin Roebuck, and Justin Burns. Advertising Manager Ellis Owen Ellis@afm.aero +44 (0)208 831 7519 Editorial Director Joe Bates joe@aviationmedia.aero

But the furlough didn’t stop everyone in their tracks. Indeed, we’ve heard a lot of news coming from America recently.

Design Andrew Montgomery andy@afm.aero Website Jose Cuenca jose@aviationmedia.aero Published on behalf of MRO Network by Aviation Media Sovereign House 26-30 London Road Twickenham, TW1 3RW, UK Managing Director & Publisher Jonathan Lee Jonathan@aviationmedia.aero AFM IS A FULLY AUDITED MAGAZINE Website: www.afm.aero AIRLINE FLEET MANAGEMENT AFM does its best to use recycled products or those from renewable sources. (ISSN 1757-8833) Online: 1757-8841 (USPS 022-324) is published bi-monthly by UBM Aviation Publications Ltd and distributed in the USA by SPP, 95 Aberdeen Road, Emigsville PA. Periodicals postage paid at Emigsville, PA. POSTMASTER: send address changes to AIRLINE FLEET MANAGEMENT, c/o PO Box 437, Emigsville PA 17318.

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After three years of dithering, the Federal Aviation Administration (FAA) has finally waved through new rules governing flight training in the US. And, just as went to press, we heard the US authorities have given their support to the merger between American Airlines and US Airways. It will certainly be interesting to see how the merger unfolds and exactly what form the world’s largest airline will take. We take an in-depth look at flight training, including the FAA’s new rules (page 45), but it’s not all about the US, y’know. With a flood of new aircraft about to enter the market, we also examine the prospects for end-of-life aircraft (page 28) and Morten Beyer & Agnew assesses the impact of Next Generation aircraft on aircraft values (page 33).

about HABOM, the company’s new MRO facilities at Sabiha Gökçen Airport (page 24). Located between the growth markets of Asia and Africa and the existing cash cow that is Europe, Turkish Technic is set for big things. This is the last of the year and we’re signing off with a little festive treat for you all. We’ve relaunched our app, which is now available both on Apple and Android devices. It’s free to download and it’s a gift that lasts throughout the seasons! You can find links at www.afm.aero/app To everyone celebrating the festive season, Aviation Media wishes you a wonderful holiday!

And with the world’s fleet increasing, it has never been a better time for MRO companies. That’s why we also talk to Ismail Demir, CEO of Turkish Technic,

Editor Mary-Anne Baldwin

Get the app! Vist www.afm.aero/app to download either the on the go! Apple or Android version, and read

The views expressed in each edition of Airline Fleet Management (AFM) are not necessarily the views of MRO Network, but of individual authors and contributors and MRO Network shall therefore not be liable for the contents of any articles included in this publication. AFM, part of MRO Network, has used its best efforts in collecting and preparing material for inclusion in AFM but can not and does not warrant that the information contained in this product is complete or accurate and does not assume and hereby disclaims, liability to any person for any loss or damage caused by errors or omissions in AFM whether such errors or omissions result from negligence, accident or any other cause.

afm • Issue 87 – November–December • www.afm.aero

The business and financing of airline operations AIRLINE FLEET MANAGEMENT

Interview: Turkish Technic CEO Interview: AerCap CEO FAA Furlough Used aircraft values

Turkish MRO: Fixed for growth

ISSUE 87 November–December 2013

Published by

November–December 2013 Issue 87 www.afm.aero

Issue 87 November –December

In this issue

03 10 16 20 24

Foreword

NEWS ROUND UP

The latest on deals, mergers, appointments and more FOCUS

One to one: Aengus Kelly, CEO, AerCap

Mary-Anne Baldwin speaks to Aengus Kelly, CEO of AerCap, about aircraft orders, large leasing deals and the development of the leasing market.

Lufthansa’s fleet strategy Chris Kjelgaard talks to Lufthansa Group, Europe’s largest airline group, about its fleet strategy over the next 12 years.

MAINTENANCE OPERATIONS

One to one: Ismail Demir, CEO, Turkish Technic

Mary-Anne Baldwin speaks to Ismail Demir, CEO of Turkish Technic, about the company’s expansion plans, its new facility at Sabiha Gökçen and its moves to break into cabin design.

afm • Issue 87 – November–December • www.afm.aero

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CONTENTS

28 33 36

TRADING, LEGAL AND FINANCE

Creative developments: End-of-life solutions Martin Todd, AFRA’s communications manager, examines the changing market for end-of-life aircraft.

The impact of the Next Gens

David Tokoph, VP of valuations and technical analysis at Morten Beyer & Agnew, assesses the impact of Next Generation aircraft on the values of A320 CEOs and 737 NGs.

Aircraft demand: Back to business

40 45

Mary-Anne Baldwin reports from the International Society of Transport Aircraft Trading (ISTAT), Barcelona, where industry leaders discussed aircraft demand, financing and lease rates.

FLEET OPERATIONS

Counting the cost of the FAA furlough

With US federal aviation staff back at work, Justin Burns measures the impact of the furlough on the industry.

Flight of fancy: The problems with pilot training

Demand for pilots has never been higher, yet across the globe potential pilots must tackle crippling course fees, lofty flight hour requirements and national hiring rules. Martin Roebuck reports.

DATA

Industry data Data including: Aircraft deals and orders; aircraft list prices and lease rates; engine market values and lease rates.

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NEWS

Airbus mulls stretch as it prepares to deliver A350

irbus has said it will stretch its A350 aircraft should it receive enough demand, although its first hurdle is to prepare for the A350-900’s entry into service in 2H 2014. Speaking to the media, the A350 programme’s chief, Didier Evrard, said it is on track with the A350-900 and that the flight test trials are “going well”. The aircraft had its first test flight on 14 June 2013 and Airbus hopes to certify it in August 2014, ready for delivery to its launch customer, Qatar, in October. The manufacturer has avoided a possible delay by choosing not to include lithium batteries (the ingredient that plagued Boeing’s 787 programme) during the first year of the programme. The two test A350-900s are equipped with lithium batteries; however, the commercial aircraft will use the standard nickel cadmium batteries. Airbus will introduce lithium packs a year after the first deliveries and once they have been approved.

“We didn’t seek initial certification for the A350 with lithium because we didn’t want to take any risk of delay,” explained Evrard. “But we think our lithium power design is sufficiently different.” Evrard said Airbus could stretch the A350-1000 by adding panels to its fuselage. “Stretching further is possible; there are no show-stoppers, but today it’s still in the pre-concept phase.” He added: “It’s a question of market, of priorities, and we will continue to listen to our customers about what’s best for them.” With three variants of the A350, Airbus will not be in a rush to stretch it just yet. First, it will roll out the 300-seat A350-900; then the 350-seat A350-1000 and 270-seat A350-800. And, with a sizeable backlog of 756 A350 orders as of the end of September, Airbus will have its hands full for some time. The manufacturer will increase its production from one to three a month by the end of 2014, and plans to build this to 10 a month within four years after entering service. Evrard said it would wait until 2016 before deciding any further production increases for the programme.

NEWS IN BRIEF Embraer deliveries miss target Embraer has formally announced its 3Q deliveries, which totalled 44 by the end of September 2013, considerably down from its target. Of those 44, Embraer delivered 19 commercial and 25 executive jets during the quarter. This compares with the 51 deliveries made during the last quarter. However, Embraer has a firm order backlog of $17.8bn, up 4.1 per cent from the last reported quarter. The manufacturer had planned to deliver 90 to 95 commercial jets, 80 to 90 light executive jets and 25 to 30 large executive jets this year. It will now struggle to meet this annual guidance, having a target of 32 to 37 commercial jet deliveries during 4Q.

Flynonstop airline is non-starter A Norwegian start-up carrier, Flynonstop, has filed for bankruptcy just six months after it started its operations. The airline, which was started by an heir to a family ice cream business, Hennig-Olsen ice cream, was launched using a single E190 aircraft on lease from CIT Aerospace. The carrier posted a loss of NOK2.5m last year and debts of NOK26.2m. It had operated routes from the Kjevik airport Kristiansand to Parma, Berlin, London, Stockholm and Paris. However, flights to Parma, Berlin and Paris were soon cut due to poor demand and an inability to operate with a single aircraft.

New airline, Aurora, to serve Russia Aeroflot has unveiled its new subsidiary, Aurora Airlines. The new carrier was established under order of Russia’s prime minister in order to boost accessibility in the area. The airline plans to grow from 172 flights this year to 534 in 2018. The number of destinations will increase from 30 to 128 during this time. Annual traffic is expected to reach 2.4 million passengers. Aeroflot’s share in the new company will be no less than 51 per cent. The rest of the shares will be gradually transferred to the Far Eastern Federal District governments. Konstantin Sukhorebrik was appointed director general of Aurora.

afm • Issue 87 – November–December • www.afm.aero

NEWS

IATA reports uptick in September’s demand IATA has announced global passenger traffic results for September, showing a continuation of the strong demand trend, despite a slight slowdown in August. Total revenue passenger kilometres (RPKs) and capacity rose 5.5 per cent and 5.3 per cent, respectively, compared with September 2012. The 80.3 per cent load factor was in line with levels achieved in the same month last year. Director general and CEO, Tony Tyler, commented: “We are seeing a more positive environment for air travel demand, based on rising business confidence, a strong increase in export orders in September and better performance of key emerging markets like China.” September’s international passenger demand grew 5.7 per cent year-on-year, with no region seeing a decrease. Asia-Pacific carriers recorded an increase of 8.5 per cent in international passengers, with improvements in China’s GDP growth and Japan’s economy cited as reasons for this. European international traffic climbed 3.4 per cent, while North America saw 2.3 per cent growth in September.

Flybe to drop 500 UK staff UK regional airline, Flybe, is to slash 500 jobs as part of a cost-cutting scheme that should save the airline an additional £26m ($42m) a year. The carrier is already under a £40m ($64m) cost-cutting scheme, which was set to rise to £45m ($72m) during 2014 and 2015. The airline’s new CEO, Saad Hammad, who started in August this year, said: “We are going to shrink to grow. Without these proposed cuts we cannot be viable.” Hammad will also review the carrier’s route, fleet and aircraft utilisation, with a view to trimming them. Flybe currently employs 2,700 people. However, 650 staff were made redundant last January. It is thought the upcoming lay-off will affect only UK staff.

FAA finalises new pilot training regulations The US Department of Transportation’s Federal Aviation Administration (FAA) has put in place new pilot training rules in the US after three years of red tape. The new regulations will introduce training for more effective pilot monitoring, enhanced runway safety procedures and more extensive crosswind training, including training for wind gusts. Additionally, pilots will be put through more ground and flight training to prevent and recover from aircraft stalls and upsets. These new standards will impact future simulator standards as well, the FAA has said. Also, airlines will now be required to track the data of crew who have failed proficiency checks or underperformed during flight training. What the FAA calls its ‘final rule’ follows the tragic crash of a Colgan Air aircraft, flight 3407, in February 2009, after which there was a congressional mandate in the Airline Safety and Federal Aviation Administration Extension Act of 2010 to ensure better pilot training. Airlines will have five years to comply with the new rules, which give time for software updates. The FAA has estimated that the roll-out of the new rule will cost the industry $274.1m to $353.7m. However, the estimated benefit is nearly double that at $689.2m.

Spirit AeroSystems breaks JV with Progresstech Spirit AeroSystems International is to sell its 50 per cent stake in Spirit-Progresstech to a member company of Progresstech. The two companies started their joint venture in 2007, but Spirit will end the union as part of the previously announced strategic review. The sale will allow Progresstech to expand its work in North America. “Both of our companies have benefited from the joint venture that began in 2007,” said David Walker, Spirit’s SVP and chief technology officer of business development. “We value the talent and services provided to us by Spirit-Progresstech, and we are pleased this announcement supports our companies’ priorities now and into the future.”

Apollo Aviation signs $570m deal Apollo Aviation announced it is to acquire 38 aircraft and 11 engines in a deal worth $570m. The multi-strategy aviation investment manager has acquired the assets for its second aviation fund – the Sciens Aviation Special Opportunities Investment Fund II (SASOF II). The order includes 12 A320 CEO family aircraft and 13 737 Next Generation models. During the 3Q alone, Apollo Aviation committed to purchase 13 aircraft for approximately $200m. William Hoffman, Apollo Aviation’s chairman, said: “We continue to see a robust market for mid-life flight equipment. We have a solid pipeline of deals, many involving in-production aircraft on lease to major airlines in North America, Europe and Asia.”

afm • Issue 87 – November–December • www.afm.aero

NEWS

JetBlue delays E190 deliveries

Asia to step up aircraft finance More than 40 per cent of commercial bank debt for aircraft deliveries will come from Asia, says Boeing Capital Corporation (BCC). Speaking at Boeing’s financier’s event in Hong Kong, Kostya Zolotusky, the company’s MD of capital markets development and leasing, explained that Asia shows both strong demand for aircraft, and a strong ability to finance those aircraft. “Roughly 40 per cent of all industry deliveries are forecasted to go into Asia over [the] next two decades,” said Zolotusky. “We’re seeing a lot of liquidity coming on line to finance deliveries here. Japan’s banks have seen a reawakening globally as well as locally. Liquidity is coming from Singapore, South Korea, Taiwan and Australia with banks becoming very active financing participants.” Boeing predicts that Asia will take more than 12,800 aircraft, worth $1.9tn, over the next 20 years. China is expected to take 40 per cent of those deliveries. This year alone, China is expected to supply almost one quarter of the global commercial bank debt, while Japan will provide around 20 per cent. “It is gratifying to see a much more balanced global commercial bank debt market for our industry, with Asia playing a material role,” Zolotusky said.

AWAS delivers A320 for Vanilla Air ANA Holdings has taken delivery of an A320 for its new low-cost regional subsidiary, Vanilla Air. It is the first of three A320s to be delivered to ANA on behalf of the start-up airline. All aircraft are being supplied on lease from AWAS. Vanilla Air will be based in Narita, flying to Naha (Okinawa), Sapporo, Seoul and Taipei. “This is a very important day for Vanilla Air... We would like to thank AWAS for helping us to quickly gain access to new order aircraft that met our specific needs,” commented ANA Holding’s SVP, Shinzo Shimizu.

ALC reports 3Q increase Air Lease Corporation (ALC) has reported a revenue increase of 23 per cent, rising to $216m during 3Q. Income before taxes increased 31 per cent to $75m, with a pre-tax margin of 35 per cent for the three months ending 30 September, 2013. “Our pre-tax profit margin of 35 per cent is the highest ALC has achieved to date. ALC’s board of directors declared $0.03 per share cash dividend, which represents a 20 per cent increase over the previous quarterly cash dividends,” said Steven Udvar-Házy, CEO. The company also re-opened its bank revolver and upsized its facility from $1.7bn to $2bn. It added three new banks while a number of existing banks increased their participation.

JetBlue Airways has announced a major fleet restructuring, including the deferral of its E190 deliveries. The airline will now take delivery of its 24 E190s between 2020 and 2022, a delay of four to six years. The carrier has also converted an order for 18 A320s to A321s. It now has an incremental order for 15 A321 CEO and 20 A321 NEO aircraft, which will provide fleet flexibility and fuel-burn savings. “We are reducing our capital commitments through the next three years, which is consistent with our free cash flow and return on invested capital goals,” said JetBlue’s CFO, Mark Powers. “While the E190 is critical to our continued success in Boston and San Juan, we are now at the point where our network growth calls for larger gauge aircraft,” the airline’s CEO, Dave Barger, explained. “In addition to allowing us to more cost-effectively serve certain high density markets, we believe our fleet restructuring plan will allow us to accelerate attractive growth opportunities at Fort Lauderdale Hollywood International Airport.” As from 2015, JetBlue will also retrofit up to 110 A320s in its current fleet, which will lower fuel-burn by three per cent.

Boeing ups its 737 output Boeing is to increase its production of the 737 aircraft to 47 aircraft per month by 2017. It will start with an increase from its current rate of 38 to 42 aircraft a month from 1H, 2014. Once fully implemented, the programme will deliver more than 560 aircraft a year, increasing its output by almost 50 per cent since 2010. Beverly Wyse, VP and general manager of the programme, said: “We’re taking this step to make sure our aircraft get into the hands of our customers when they need them.” There are more than 3,400 unfulfilled orders across the 737 family, including from El Al, Aerolineas Argentinas and Alaska Airlines.

afm • Issue 87 – November–December • www.afm.aero

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NEWS: People

On the

move Universal Avionics appoints DeHerrera as CEO Universal Avionics has appointed Paul DeHerrera as its new CEO, promoting him from COO. DeHerrera was COO since January 2008, managing the daily operations and playing an integral part in decision-making. He started at Universal Avionics in 1994 as manager of OEM marketing at the firm’s headquarters in Tucson, Arizona, and has also held other roles within the company.

Southwest announces run of appointments Southwest Airlines has made five key executive organisational leadership changes. Andrew Watterson joins the US carrier as VP of network planning and performance. Sherry Staber has been appointed VP of business transformation solutions, operations and enterprise management. Bill Tiffany, currently Southwest’s maintenance senior director of supply chain management, has been promoted to VP of supply chain management. Brian Hirshman, currently SVP of technical operations, has been appointed SVP of operations. And Ryan Green, now senior

director of loyalty and partnerships in marketing, has been promoted to MD of customer development.

Pat O’Brien joins Apollo Aviation

Boeing has named Vicky Hartley as its new London-based senior financing director. The former air finance consultant and banker will be based in the London Heathrow office. Hartley will serve the aircraft manufacturer’s Europe-based airline, financing and leasing customers. She most recently ran her own UK finance consultancy firm where clients included airlines, export credit agencies and major banks operating in aircraft finance.

Apollo Aviation Management Limited (AAML) has elected Pat O’Brien to its board of directors. O’Brien is a former partner at KPMG, where he spent 32 years. During his time at KPMG, O’Brien became a specialist on the cross-border tax implications of leasing aircraft into multiple jurisdictions. AAML chairman, William Hoffman, said: “Pat O’Brien’s wealth of experience will ensure he provides strong and able leadership as Apollo Aviation Management rapidly becomes one of the largest mid-life aircraft lessors based in Ireland.”

BOC Aviation appoints Gerard Kenneally

Norton Rose Fulbright appoints Sandilands

BOC Aviation has appointed Gerard Kenneally as its new chief technical officer. Kenneally has 24 years of experience in technical positions. He was formerly SVP and manager of technical operations at GECAS and prior to that worked with GPA and Aer Lingus. His role will be to further develop airline technical relationships and links with all technical service providers. Kenneally will be based at BOC Aviation’s Dublin office, where he will report to MD and CEO, Robert Martin.

Legal practice firm, Norton Rose Fulbright, has appointed Keith Sandilands as its head of aviation in Asia. Sandilands is an asset and structured finance lawyer and is experienced in all aspects of aviation, domestic and cross-border finance, operating leasing and the sale and purchase of aircraft. “We’re expecting to see further growth in aviation across Asia, and I’m looking forward to returning to the region to assist clients with that growth,” Sandilands said.

Boeing names Hartley as new finance director

afm • Issue 87 – November–December • www.afm.aero

FOCUS: AerCap

One to one: Aengus Kelly, CEO, AerCap Mary-Anne Baldwin speaks to Aengus Kelly, CEO of AerCap, about aircraft orders, large leasing deals and the development of the leasing market.

eeting Aengus Kelly, CEO of AerCap, at his hotel suite on the sidelines of the ISTAT conference, Barcelona, it was obvious that the leasing company is in demand. My chat with Kelly was sandwiched between his meetings with a low-cost carrier and a capital markets investor (I’ll give you a hint; they are both European). It’s clear why Kelly’s schedule is so stacked. It’s a good time for lessors; airlines need new, more fuel-efficient aircraft and they typically want to lease them. Supporting this demand, Kelly explains that AerCap’s current portfolio strategy is to buy aircraft from airlines, rather than ordering them from the OEMs. “We just felt there was a better risk-reward trade-off. That said, we talk to the OEMs all the time and if they gave us a deal that we thought was appropriate, we would be very aggressive there and do a large deal with them,” the CEO explains. “I have no predisposition against ordering and I am quite happy to order in large numbers from the OEMs – when I

think the pricing is right! We have ordered an awful lot of aircraft from the OEMs in the past, but our future book at the moment is mainly comprised of transactions that we’ve done with airlines.”

Fleet of foot AerCap still has 20 737s and “a couple” of A320s on order, but many of its 371 aircraft have come from airlines (most notably through its deals with LATAM and American Airlines). And it looks set to do more. In May 2013, AerCap entered a $2.6bn sale and leaseback arrangement with LATAM for 25 widebody aircraft, including nine A350-900s, four 787-900s, two 787-8s and 10 A330-200s. It was a sizeable deal for any lessor and it signalled a growing demand for large leasing deals. Kelly has “no doubt” we will see more of these large sale and leaseback deals as airlines approach lessors to fund the wave of ‘mega orders’. “I am hopeful that we can replicate transactions like that in the future,” he tells me.

afm • Issue 87 – November–December • www.afm.aero

FOCUS: AerCap

“To do something like that you have to have scale and a platform,” says Kelly. “What LATAM wanted was to know that there was an exit out of part of the fleet – the [A]330s – because the new equipment was coming. Obviously, LATAM can do sale and leasebacks all day long and raise any amount of money they want and people will be falling over themselves to do it. But to take widebodies on short-term leases, that’s where the real value add was.”

On the money

Kelly explains that the risk associated with taking shorter leases was reflected in the purchase price of LATAM’s

“A lot will come from those capital markets; we see new banks entering the market continuously.”

Another thing keeping Kelly busy is the fact that financing is returning to the market. “The US capital markets are wide open today,” says Kelly. “We saw Virgin Australia get a EETC [equipment enhanced trust certificate], which was something that really took me by surprise, that it could get done by a name not instantly recognisable in the United States.

I have no predisposition against ordering and I am quite happy to order in large numbers from the OEMs – when I think the pricing is right! aircraft. Although he didn’t give a price, the CEO said: “Overall, I felt it was a good deal for our shareholders and it certainly met all the targets we have in terms of returns.” The scale of the LATAM deal is comparable to AerCap’s agreement with American Airlines, which rents approximately 30 aircraft from the lessor. When asked whether the possible merger between American and US Airways might affect American’s leased fleet with AerCap, Kelly assured that the deal is protected by the courts. “Where American haven’t gone to the court to have them approved, they could be handed back at any time, but we don’t have any [aircraft] that are subject to that,” he explains.

But he explains that banks are choosing to finance only the most stable of borrowers – which means the exclusion of most airlines, and the success of lessors. “We have seen a definite shift away from banks lending to anything but the top tier airlines,” Kelly surmises. AerCap has already secured funding from across the globe, including Australia and Canada, and it sees Asia as a growing financial market. One of AerCap’s biggest lenders is in Singapore, and its financiers in Taiwan have risen from none to 20 in the last five years. The company has the same global approach to finance as it does with its customers (100 airlines in over 50 countries)

afm • Issue 87 – November–December • www.afm.aero

FOCUS: AerCap

and its bases. These include: Amsterdam; Ireland; Shanghai; Abu Dhabi; Singapore; and Fort Lauderdale, America, from which it also manages operations in Latin America. Indeed, the company is focused on operating on a global level. When asked his thoughts on a possible economic slow-down in China (during ISTAT, Avitas’ Adam Pilarski highlighted concerns that low domestic demand will impede China’s overall growth), Kelly acts with the assured confidence that only a man with fingers in many pies could muster. “I’m not an airline, I don’t care where the growth comes from,” he tells me. “I’m confident that on a macro level we’ll see growth at around the five per cent level. If China goes to three but Brazil goes to seven, I don’t really care.”

Keeping up with the Joneses Kelly seems equally unthreatened by competition, particularly with regard to the idea that airlines might start leasing. “I can’t see it,” he asserts, assuredly. “A lot of them are talking about it but actually getting to it? I doubt it. The OEMs won’t let them. And the banks wouldn’t give them the money.” Likewise, he doesn’t foresee a threat from OEMs encroaching into the leasing space in the same way they have within MRO. “The [OEMs] hate to lease. They want a relationship with the customer to a finite point… They only do it [lease] as an absolute last necessity.”

Indeed, being one of the largest leasing companies, AerCap has little reason to worry about competition. However, the sale of ILFC might change that. Kelly offered no insight into who might buy the leasing giant, or whether it might be sold through an IPO, but in general he foresees only a limited amount of industry consolidation. “If you look back over the last 20 years, there’s really been eight or nine leasing companies and that hasn’t changed that much. There might be different names on the doors – like ourselves for example – but has the composition really changed that much? Not really.” AerCap was itself formed by a series of mergers that stem from as far back as the days of Guinness Peat Aviation (GPA), the grandfather company of leasing. In 1998, Texas Pacific Group acquired 62 per cent of GPA and changed its name to AerFi. A year later, AerFi bought the Swedish aircraft lessor, Indigo Aviation, and in 2000, it was acquired by debis AirFinance for $750m. Then finally, in 2005, debis AirFinance was bought by Cerberus Capital, and it was renamed AerCap. Kelly has worked with the company all through that time, starting with GPA in 1998, then its successor, AerFi, and now AerCap. A great deal of the consolidation Kelly has seen has been within his own company, but he doesn’t predict any major changes within AerCap – apart from, it seems, growth.

afm • Issue 87 – November–December • www.afm.aero

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FOCUS: Lufthansa

Lufthansa’s fleet strategy Chris Kjelgaard talks to Lufthansa Group, Europe’s largest airline group, about its fleet strategy over the next 12 years.

ue to the size and standing of Lufthansa Group, the decisions it makes regarding its fleet are of the utmost importance, and not only to its airlines but also the manufacturers. The group operates more than 620 aircraft and its subsidiaries, close affiliates and joint ventures stretch to at least 10 carriers. Among them (to name only four) are Lufthansa Cargo; Swiss International Air Lines; Sun Express; and Lufthansa CityLine.

and rearranging its cabin interior. This would enable the CS300 to seat 160 passengers in single-class, highdensity configuration – or between 130 and 140 passengers in a two-class configuration on Lufthansa’s mainline routes. “Part of the [CS300 programme] delay was customertriggered,” says Buchholz. “We knew it would result in a three-month delay, but we wanted it because we would get a better aircraft over the lifecycle.”

So it is little wonder that such a company holds weight with OEMs. However, very few would have guessed it had influenced the CS300 programme.

So why is it a surprise that Bombardier listened? Well, because the group has not even ordered the aircraft yet.

According to Nico Buchholz, EVP of the group’s fleet management, Lufthansa – along with some other airlines – “pushed Bombardier… to maximise the market potential” of the CS300 by stretching its fuselage by 18in (48cm)

Of course, the conversation between Bombardier and the airline group suggests a deal may be done soon. Buchholz admits: “We probably will be looking at CS300s within Swiss and within the group. We always look at an aircraft as a whole family.”

afm • Issue 87 – November–December • www.afm.aero

FOCUS: Lufthansa able to progress against the heaviest headwinds the industry is likely to encounter. SCORE is just the start of what is intended to be a continuously evolving process. Christoph Franz, Lufthansa Group’s CEO, has already decided that, after 2016, the group must be open to further revenue and cost initiatives as well as a spirit of entrepreneurialism. A keystone of its business strategy is that each of its airlines will be consistently profitable; this is no small task. As the group’s flagship airline, the Lufthansa-Germanwings passenger network has been tasked with improving its operating result by €920m ($1.24bn) annually by 2015. Careful management of fleet capacity, fleet costs, aircraft efficiency and flight-staff productivity are all under watchful eyes. Buchholz says Lufthansa’s fleet plan until 2025 is predicated on “very conservative” passenger traffic growth of three per cent a year (measured in available seat kilometres, or ASKs).

Out with the old Up to 2016, this traffic growth will be met with increased aircraft utilisation, replacing 70-seat aircraft on short-haul flights with larger models, and (on many Asian long-haul routes and short-haul, non-hub flights) increasing the number of seats on aircraft. In fact, until 2016, Lufthansa’s passenger operation will remain frozen at 400 aircraft; this compares with 408 at Lufthansa German Airlines and its regional subsidiaries during 2012. However, airlines across the group will welcome a raft of new aircraft deliveries.

SCORE However, the group’s overall fleet plans have become somewhat conservative. Enveloped in the biggest revenue-enhancement and cost-reduction programme in its history, Lufthansa Group has been taking a hard look at every aspect of its business. As the group’s highest revenue earners, Lufthansa German Airlines and its low-cost arm, Germanwings, have come under intense scrutiny. Under the group’s restructuring programme – SCORE (synergies, costs, organisation, revenue and execution), the company aims to improve its operating profit by €1.5bn ($2bn) a year by 2015; this compares with its €820m ($1.1bn) operating result in 2011. Only by increasing its annual operating profitability to €2.3bn ($3.1bn) by 2015 does the group think it will be

Buchholz says Lufthansa’s short-haul aircraft replacement plan will see the airline and its associated regional carriers reduce their number of aircraft types from nine to just three by 2015. These will include the A320 family, the E190/195 and Bombardier’s CRJ900. In October, Lufthansa cut its turboprop fleet of all remaining ATR 72s and Bombardier Q400s; however, the group continues to fly Tyrolean Airways’ Q400s. Under the rationalisation process, Lufthansa is shutting its Augsburg Airways subsidiary and transferring Augsburg’s E195s to Lufthansa CityLine. By 2015, Lufthansa will offload all of the Avro RJ85s, Fokker 100s, CRJ700s, 737-300s and 737-500s currently in its fleet. Fokker 100s may remain in service with Tyrolean Airways, although by 2015, Swiss International Air Lines will have begun replacing its 20-aircraft Avro RJ100 fleet with the first of 30 Bombardier CS100s on order.

afm • Issue 87 – November–December • www.afm.aero

FOCUS: Lufthansa Meanwhile, Lufthansa’s passenger operation is transferring a total of 24 A319s and A320s and 23 CRJ900s to Germanwings. The aircraft will build on the low-cost subsidiary’s existing fleet of 38 A319s so that it can take over Lufthansa’s operations at Berlin, Cologne, Düsseldorf, Hamburg, Hannover and Stuttgart – the group’s six largest German destinations outside Lufthansa’s two hubs, Frankfurt and Munich. Under SCORE, which began in January 2013, Germanwings has already taken over much of Lufthansa’s flying at Hamburg and Stuttgart. By 2015, it will operate a total of 87 aircraft. Its fleet will probably be comprised of 43 A319s, 21 A320s and 23 CRJ900s (with the CRJ900s on wet-lease from Eurowings).

Speaking on engine selection, he says: “There is no ‘right’ engine globally.” He adds; “It depends on the attribute you want.” However, the group placed an earlier order for 30 A320 NEOs, powered by Pratt & Whitney PW1000G geared turbofans. These A320-family orders largely cover Lufthansa’s short-haul mainline requirement for the foreseeable future, but Buchholz notes that Lufthansa and Germanwings also operate 70 A319s between them: “They’re young, but eventually we have to look at what we do in that market segment.” In September, Lufthansa Group made another splash by ordering 34 777-9s and 25 A350-900s, becoming the launch customer for the 777-9 in the process.

We have the ability to adapt fleet sizes and the size of the aircraft to the market Because Germanwings configures its A320-family jets with more seats than Lufthansa, and because its cabin staff are non-unionised and paid less, this process will allow the group to drive down its short-haul trip costs and ASK expenses. And in doing so, Germanwings is becoming more profitable. Its passenger yields grew at double-digit percentage rates in 2012 and 2013, and by the end of this year, its operating profit is expected to have grown some €200m ($270m) from 2011.

Orders and cancellations To counteract all these divestments, in March 2013, Lufthansa ordered 100 A230-family aircraft (including 30 A320 CEOs and 70 A320 NEO-family aircraft), along with two more A380s. Buchholz says the A320-family order made in March was “focused on A320- and A321-size” aircraft. Again, Buchholz reminds us what effect such sizeable orders can have on an OEM. The deal “determined the entry into service date for the A320 NEO overall,” he says, adding that “the current order still needs to be equipped” in terms of engine selection.

These deals increased Lufthansa Group’s total outstanding aircraft orders to 295 aircraft. In addition to the two new orders, the group expects to receive two A380s; 15 747-8Is; 11 777s (six 777-300ERs for Swiss International and five 777Fs for Lufthansa Cargo); three A330-300s; 65 A320-family jets; four E195s; and 30 CS100s (destined for Swiss International). But despite the two A380s Lufthansa ordered in March 2013, it recently cancelled options for three A380s, taken when the German giant placed its original order for 12 of the superjumbos in 2001. “In the markets we’re serving and in the timeframe we’re looking at, it did not make sense to take them,” says Buchholz. All four A380s are now on firm order; they will be delivered by the end of 2014 and will go into service on routes to Asia and North America. Buchholz minimises the importance of cancelling the A380 options: “They were never submitted to the supervisory board [for approval] and if at some point we need more A380s, we can still order them. They’ll still be available.” Lufthansa Group’s current market view up to 2025 sees no need for more A380s or 747-8Is, according to Buchholz. “The 747-8 and the A380 are the big ships. We’re certain we have enough big ships through 2020 and beyond.”

afm • Issue 87 – November–December • www.afm.aero

FOCUS: Lufthansa

However, it does see a need to replace the 22 747-400s and 23 A340s currently in Lufthansa’s fleet. Under the SCORE initiative, in 2014, Lufthansa will convert these aircraft into a two-class (business and economy) configuration in order to increase their overall revenueearning capability per seat. However, it will then sell them by 2025. Lufthansa will also begin replacing the older aircraft among its 24 A340-600s by that time. To do this, it will use the 34 777-9s and 25 A350-900s it ordered in September. While Lufthansa’s passenger operation can accommodate all those aircraft by 2025, it has a variety of methods to boost or reduce its planned capacity if it needs to. The group can also cater to its subsidiary and affiliated long-haul carriers, Austrian (officially now Tyrolean Airways), Brussels Airlines and Swiss International.

options on at least 20 more 777-9s, as well as the additional A350 XWBs.

XXX

“With that, we would cover what we see as the [total] requirements in the group,” he says. Alternatively: “Some options may be used for Lufthansa.” Additionally, says Buchholz: “We have the ability to adapt fleet sizes and the size of the aircraft to the market.” The company’s widebody options give it the flexibility to take more A350-1000s than originally planned, and its 777-9X order also gives it the flexibility to “take the [shorter, longer-range] -8X if it were to become an interesting aircraft for us. We also would look at 787 variants – but not the -8; it is too small for us,” he explains.

For example, when ordering the new 777s and A350 XWBs, Buchholz also arranged “different options with different manufacturers” that included taking more aircraft. In September, Airbus announced that Lufthansa had taken options on 35 more A350 XWBs and that it could take some of those as stretched A350-1000s.

Another ace up its sleeve is its conservative fleetownership and depreciation policy. Lufthansa Group owns more than 90 per cent of its aircraft and depreciates all owned aircraft to 15 per cent of original cost over 12 years. This gives Lufthansa the flexibility to keep almost any aircraft in service longer than originally planned, or retire or store it at short notice.

Buchholz also reveals that, in addition to the 777-9s and A350 XWBs it has on order: “We can increase the total by about the [same] number of aircraft we have ordered.” This implies Lufthansa has taken as yet undisclosed

In this way Lufthansa can manage the size of its long-haul fleet closely, matching actual market demand – a valuable capability for any airline to have in tomorrow’s turbulent skies.

afm • Issue 87 – November–December • www.afm.aero

MRO: Turkish Technic

One to one:

Ismail Demir, CEO, Turkish Technic Mary-Anne Baldwin speaks to Ismail Demir, CEO of Turkish Technic, about the company’s expansion plans, its new facility at Sabiha Gökçen and its moves to break into cabin design.

urkey has undergone considerable change in recent years, not least within its aviation sector. The country’s growing economy has fertilised both domestic and international passenger traffic, which in turn has bolstered the whole sector.

Ismail Demir, CEO of Turkish Technic, explains that its affiliate – Turkish Airlines – was first to see this growth. “It [the economy] helped the airline to grow and more people started to see Turkish Airlines as world-class, rather than Third World.” With Turkish Airlines as its main customer, Demir explains: “As an MRO we have benefited from this quite significantly.”

Turkish Technic’s original plan was to offer half of its service to Turkish Airlines and half to third parties, “but the growth was even beyond our expectations”. Instead, around 25 per cent of its work is for third parties. Half of that is for domestic airlines and only 10 to 15 per cent covers Asia, the Balkans and Europe. Indeed, because of the needs of its domestic airlines, Turkish Technic’s current market share in Europe is “rather small”, says Demir. However, the company’s potential customer base stretches far wider, to reach not only the Balkans and Europe but also the Middle East, Russia and central Asia. Demir says the

afm • Issue 87 – November–December • www.afm.aero

MRO: Turkish Technic

Turkish HABOM facilities.

company may also look at partnership opportunities in Northern Africa and its geographical positioning makes it well placed to do all this. Indeed, Turkish Technic’s growth rate is capped not by a lack of customers, but a lack of space. Demir explains: “We have many customers asking us for available slots who we have had to reject, unfortunately, due to a lack of space. So that makes us hopeful that when we have more capacity, we will have more and more customers coming to us.”

HABOM Thankfully, the company and its potential customers will not have to wait any longer. When Demir spoke to AFM during the first week of November, the company was just days away from introducing the first two aircraft (which are Turkish Airlines’) to its new $500m, 370,000m² maintenance facility, HABOM, at Istanbul’s Sabiha Gökçen International Airport. HABOM, which in Turkish means aviation heavy maintenance and overhaul facility, has already opened one hangar and two shops, but it will wait another nine months, and until it is fully up and running, before it opens officially. “We don’t want to waste our time but start right away,” says Demir. It has completed its Turkish Directorate General of Civil Aviation (DGCA) inspections, been given the green light from the Federal Aviation Administration (FAA) and now awaits approval from the European Aviation Safety Agency (EASA). HABOM is almost twice the size of Turkish Technic’s other facilities and will provide plenty of space to cater to more third-party customers. The facility has two hangars, one of which has 11 narrowbody bays and the other has three widebody bays, one of which is for paint. It also includes considerable space for components as well as state-of-the-art hydraulics, landing gear and avionics repair shops.

The development of the facility was in line with its original budget of $500m, which included $300m build costs, $100m for tools and equipment and $100m for employee training. “We had a good deal with the construction contract; also, we had placed orders for the tools and equipment so that didn’t escalate that much. There is always some deviation from the budget, but it was very limited,” Demir says.

MNG The company also has additional space at the former MNG facility at Atatürk Airport, Istanbul, which Turkish Technic bought in April last year. This provides an extra three widebody and seven narrowbody bays. With rumours that Atatürk Airport may close, the acquisition may seem strange, but Demir explains that the purchase was of the company, not just the facility. “They approached us because they were losing some money two years in a row, and we said ‘if the price is right we could be interested’.” Turkish Technic is keen to locate itself in new key markets. In fact, Demir admits that it has already discussed building a maintenance facility at a new airport planned for a location just north of Atatürk. “We have to be [there]. It is a must for us to be there, for sure. There is no question about it,” he says. “The official plan is to open the [airport] facility in 2017 to 2018 but a project of this size might have some unexpected delays.” For now, it will focus on incorporating the former MNG into the Turkish Technic network. “We are trying to make two separate structures act as one profit centre, but in the meantime co-operate with each other,” explains Demir. He adds that Turkish Technic has been working hard on this but is hopeful about the future. “It’s not very easy to turn the company around so we are still spending some effort, but we have passed all these difficult stages and it is on the right track with a significant customer base.

afm • Issue 87 – November–December • www.afm.aero

MRO: Turkish Technic

Turkish Technic’s widebody hangar.

Future developments

MNG is small in comparison with Turkish Technic; its 2012 revenues reached $80m, which compares with Turkish Technic’s $550m–$600m. But while the newly acquired company is comparatively small, it offers Turkish Technic the space and potential to expand into central Asia, which is MNG’s current customer base.

Of course, when it comes to training, Turkish Technic is somewhat of an expert. Together with Turkish Airlines, the MRO company held an EASA Part-147 approved training arm. Now, that is run solely by the airline. Demir explains: “We want the training body to be a separate body so that it does not get influenced by our other operations and so it can have a more independent structure.”

Turkish Technic’s plans for Asia are big – indeed big enough to warrant investment. While most companies trim back the costs of loss-making acquisitions, Turkish Technic is pumping money into the business – namely in its staff. All of MNG’s staff have been retained and they will be joined by 1,500 newly trained workers, which will be split between HABOM and the ex-MNG facilities.

However, Turkish Technic does have practical training facilities and on-the-job training, which complement Turkish Airlines’ Part-147 training courses.

Despite the struggle to merge the two businesses, training has been easy to synergise, perhaps because of Turkish Technic’s background in the subject.

But it is the company’s other affiliates that are perhaps most interesting. Under the moniker, Turkish Cabin Interior (TCI), Turkish Technic is now designing and manufacturing a prototype 737-800 galley in 2012, which is being produced for the next deliveries of Turkish Airlines’ aircraft. The next product will be five galleys for the A330 programme, due to enter service soon. Plus, they are also bidding to work on the 777.

“MNG is linked to our new facilities, so it is a process of getting people trained under one roof,” he says. But while it has been relatively easy to train staff for the HABOM and former MNG facilities together, the courses have been “intensive” and have seen many people come through the door. The company employs around 4,800 staff: 2,500 of which work under Turkish Technic; 800 are in line maintenance; and 1,500 work at HABOM. This number will increase by 300 to 400 each year in line with the company’s growth plans. “We are not seen as a very strong player in the international market yet, but with our experience and our new young

workforce, I think we’re going to be one of the strongest players in the market,” says Demir.

“In the summer, it [MNG] did not have much work but both ex-MNG and Turkish’s facilities are now full. I guess this month [November] would be a good month to see a recovery in the company.”

Training is just one of many sidelines Turkish Technic has undertaken. The company also has engine JVs with Pratt & Whitney (P&W), Goodrich and a local O&M company, Zorlu.

In yet another subsidiary – Turkish Seat Industries (TSI) – Turkish Technic is designing and producing seats for narrowbody economy class aircraft. Already under way is a 737-800 seat for Turkish Airlines, which will be delivered in 2015. “Right now with Turkish HABOM, it’s going to be hands-on airframe maintenance and component maintenance, but Turkish Technic will evolve to cover more of the design and manufacturing business,” says Demir.

afm • Issue 87 – November–December • www.afm.aero

TLF: End of life

Creative developments: End-of-life solutions Martin Todd, AFRA’s communications manager, examines the changing market for end-of-life aircraft.

veryone agrees that an aircraft is a valuable asset, but how to value that asset as it ages is an increasingly vexed question. Traditionally, aircraft owners, be they airlines or lessors, continued to fly their aircraft until they were approaching 25 years of age. The aircraft would be handed from first- to secondto third-tier airlines, to be dismantled or parked at the end of its life. However, that rather simplistic lifecycle has changed significantly in recent years. As the market has changed, aircraft owners are more willing to consider a range of options at a much earlier stage in their asset’s lifecycle. For example, aircraft as young as 15 years old (and sometimes younger, albeit rarely) are now considered as candidates for dismantling if market conditions

favour such an option. The fact that aircraft are being disassembled a full 10 years earlier than is traditional marks a significant change in dynamics. Meanwhile, with oil prices hovering above $100 a barrel and fuel costs accounting for more than a third of an airline’s operating costs, the demand for more fuel-efficient aircraft remains strong. In the current market, middle-aged aircraft are less appealing, which means more are being considered for dismantling. It has been estimated that new aircraft will replace 40 per cent of the current global fleet in the next 20 years. Ken Fitzgibbon, CEO at EirTrade, has noticed that the age of aircraft being dismantled is decreasing. He notes that with

afm • Issue 87 – November–December • www.afm.aero

TLF: End of life recover enough for it to fly again. Softer lease rates for mid-life aircraft, particularly the narrowbodies, add to the risk of parking. The owner must also consider how best to preserve its asset. Vincent of APAS says: “Aircraft placed into storage should only be positioned in dry, arid, low humidity environments. While there is a temptation to use local parking alternatives, adverse climatic conditions can rapidly lead to corrosion and major repair costs.” Although EirTrade’s base in Ireland is by no means arid, it does offer a cost-effective solution. EirTrade does not charge to park aircraft at its facilities in Knock, Ireland – a fee that usually stretches up to €500 per day per aircraft – although it does charge for preservation. Another way to retain value is by keeping full and up-to-date records, says Fitzgibbon. Similar to General Electric’s ‘True engine’ motto, EirTrade delivers what it calls ‘True trace’, which means engines carry records tracing their every detail. “Without the paperwork being correct the material has no value, so the trace has become the key aspect in how you sell the parts.” Fitzgibbon points out that much of the value in an aircraft is tied up in the engines, particularly if they have green time left on them. “It’s probably cheaper now to buy an engine than it would be to send your existing one for a shop visit.”

growth markets such as Asia choosing to take new instead of second-hand aircraft, there will be a growing availability of aircraft for teardown. Tom Vincent, MD at Asia Pacific Aircraft Storage (APAS), says: “The part-out market has experienced significant growth and interest in the last 10 years. The forthcoming wave of new aircraft deliveries will further add to part-out opportunities.” APAS has only recently built facilities in Alice Springs, Australia, but its MD says: “Discussions with potential customers indicate a growing interest in the part-out of aircraft much earlier than the 25-year benchmark.”

Value beyond the selling price An aircraft owner must consider many things before it decides to park or tear down an aircraft. These include the market demand for the aircraft, its age, economic life, the values of its parts and whether the engines have any green time left. In fact, parking an aircraft is seen as an increasingly risky business. While parked, the aircraft loses value and there is a possibility that demand will not

“Every aircraft will represent a different opportunity,” says Vincent. “Some operators will view an aircraft as the optimal source of components for their existing fleet. Other investors will focus on aircraft whose residual value is trading at a discount to the components. This approach is no different to a corporate trader investment proposition where the sum of the parts is more valuable than the going concern.”

When to part out In a world of high oil prices, there is major demand for more fuel-efficient aircraft. According to AFRA’s deputy director and AELS’ general manager, Derk-Jan van Heerden: “If you look at certain categories of the 737, such as the 737-600, many of these coming out of leasing agreements at around 10 years old found it very difficult to find new leases and new operators. Many of these have been parked or parted out. You could say the same for the A318; they no longer fit into the market.” When considering whether to lease, convert or part out, the 737-400 is a good case to consider. This aircraft type is an ideal candidate for parting out. Depending on the type, you could expect to receive $1.5m to $1.75m for the two engines. The airframe, including hydraulics, landing gear and APUs and wheels etc., could be purchased for between $150,000 and $250,000. Dismantlers should expect to recuperate their outlay within the calendar year and still have remaining parts, which would be sold for clear profit.

afm • Issue 87 – November–December • www.afm.aero

TLF: End of life

For converters, the 737-400 is competitively priced. Competition in the MRO sector is such that conversion costs are relatively low. And finally, the 737-400 is in a good position to replace the less efficient 727s and 737-200s as a freighter.

Discussions typically take place over aircraft built in the mid-90s, for example, the A320 powered by CFM or IAE engines. In the traditional aircraft market, such an aircraft would expect at least two more three-year leases, based on current lease rates of around $120,000 a month.

The case for dismantling Aircraft owners have gained more trust in the aircraft dismantling sector, which is largely due to the emergence and growth of the Aircraft Fleet Recycling Association (AFRA), which promotes best practice in the aircraft end-of-life sector.

However, the aircraft coming to the end of its lease may be facing significant maintenance costs. The average cost of a D-check may be $1m to $2m and repairs may cost another $5m to $6m, if you factor in two engine overhauls.

AFRA was founded in 2006 at a meeting in Chateauroux Air Centre with 11 founder members. Since then it has grown to 71 members, representing all sectors of the aircraft dismantling and recycling industry and including three of the main aircraft manufacturers. Since its emergence, AFRA has rigorously promoted best practice within the end-of-life sector and has developed a series of guides on best management practice.

The complete cost of getting the aircraft back in the air can come to $5m to $7m. The majority of this will be paid by the lessee’s maintenance reserves account, which is built up over the operational lease period. But the owner or lessor will still have to find significant funds to complete the maintenance programme in order to make the aircraft airworthy again.

As aircraft end-of-life industry standards have risen, there has been a noticeable increase in the willingness to find creative solutions for older aircraft. According to Martin Fraissignes, executive director of AFRA: “We have clearly raised the bar regarding industry standards in aircraft disassembly and recycling. Aircraft owners working with AFRA members know they will be dealing with highly professional individuals and organisations who will be offering innovative and creative options for dealing with older aircraft in the most sustainable and safe way, with an awareness of the financial realities facing the aviation sector.”

Biousse says: “I will ask the lessor; ‘Are you sure you will recover that $6m to $8m maintenance investment? Do lease rates and demand for this type of aircraft at this age merit that outlay?’”

Laurent Biousse, director of the Aeronautics Fund, notes: “I find it is important to enter into dialogue with owners, primarily lessors, in order to make them fully understand that dismantling is a viable option. They are much more responsive to these conversations than they were a couple of years ago, especially concerning middle-aged aircraft around 15 years of age.”

“I will offer the owner $3m to $4m for the aircraft as is. So they will end up with between $8m and $12m for the asset when you include the maintenance reserve monies. And we will set about recouping our $3m to $4m investment through selling the engines, APUs, landing gear, hydraulics and all the other parts as demanded by the market. The fund will expect us to recover the investment within the calendar year. “Due to new financial options, which we at the Aeronautics Fund offer, aircraft disassemblers now have the financial muscle to make attractive offers for middle-aged aircraft,” claims Biousse. “Which I believe enhances the aircraft end-of-life sector and provides greater opportunities for the industry as a whole.”

afm • Issue 87 – November–December • www.afm.aero

TLF: Aircraft Values

The impact of the Next Gens David Tokoph, VP of valuations and technical analysis at Morten Beyer & Agnew, assesses the impact of Next Generation aircraft on the values of A320 CEOs and 737 NGs.

t is an interesting time within aviation as we are shifting between technological eras. The rise in oil prices, which began in the late 2000s, has driven engine manufacturers to make technological advancements. This in turn has led airframe manufacturers to develop their products – a relationship that has until now been reversed. Nearly every airframe manufacturer has introduced new platforms to serve these engine developments. In the narrowbody sector, Airbus announced its NEO, Boeing its MAX, and more recently, Embraer its E2. Widebodies have seen two all-new designs in the 787 and the A350, re-engineering is also emerging with the 777X, and there are rumours of an A330 variant. As the industry transitions into this phase of new technology, existing aircraft values come into question. Normally, passenger demand and jet fuel prices are two of the most significant factors influencing commercial aircraft values. But, with the introduction of replacement fleets, the economics of the existing technologies change, typically resulting in a shorter economic life for aircraft that are manufactured near the end of the production run. An example of this is the 737 Classic, which was affected by the introduction of the Next Generation variant. The last 737 Classic was produced in 1999, while the first 737 NG was delivered in 1998. It took roughly 15 years for the value of a 1998-vintage aircraft to reach the same value as a 1984-vintage after 25-years-old. This shows there is a natural shortening of an aircraft’s economic life for aircraft manufactured at the end of the production cycle.

will keep the demand for existing products high. Still, it is widely believed that manufacturers incentivise the sale of aircraft ‘last off the line’ in order to keep their production lines open through the transition period. The manufacturer’s success in meeting its deadlines for entry into service will also determine values across the vintages of the current-generation aircraft. Delays in the production, and ultimately the delivery, of new aircraft will help to stabilise the values of existing aircraft. For example, the 767-300ER aircraft saw a flattening of values as a result of troubles with the 787 programme. Manufacturers appear to have learned from past mistakes and they are more reluctant to establish public milestones, instead preferring a ‘wait and see’ approach. Recently, there has been a great deal of discussion regarding the economic lives of aircraft and whether it is shortening. Looking at narrowbody and widebody aircraft as two distinct categories, there has been volatility historically. Technological advancement, recessions and global development have each contributed to ups and downs in the average retirement age of these aircraft – and they will continue to contribute to this volatility.

Manipulating depreciation

With regard to narrowbodies, the historical average retirement age has fluctuated between 26 and 27 years; GDP growth drives up the average, and economic strife drives it down. With these variations, it can often be difficult to identify the direction of the trend. However, looking back from the 1980s up to 2001, there was a continuous increase in economic life, which climbed from roughly 18 to almost 30 years. And this was consistent with growth in the aviation industry.

Manufacturers will attempt to retain the values of their existing offerings throughout the development and introduction of their replacement aircraft. Varying the production rates of new designs

The post-9/11 climate stabilised the growth of the average retirement age until its decrease following the 2008 recession. In

afm • Issue 87 – November–December • www.afm.aero

TLF: Aircraft Values Market value variance from price at delivery 737-300 YOM 1984

737-300 YOM 1994

737-700 YOM 1998

737-800 YOM 1998

737-300 YOM 1999

Market value percentage change

120% Out of production 100% 80% 60% 40% Out of production 20% 0%

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Aircraft age

Source: MBA.

Market value ($US millions)

Value life curve 737-300 $50

YOM 1984

YOM 1994

YOM 1998

YOM 1999

YOM 1998 737-700

1998 737-800

1998 introduction of 737NGs: Final production year of 737 classics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Source: MBA.w

the short-term, and as we reach the end of the A320 and 737NG families, the economic life of narrowbody aircraft will continue to fall. The average narrowbody retirement age will then continue its slow decline as the newest of the older generation aircraft experience a shorter life. However, the trend is expected to stabilise at around 26 to 27 years. This short-term dip in the economic lives of narrowbodies will steepen the depreciation value curves for these aircraft. However, in many cases they will be balanced by the manufacturer’s pricing concessions. Widebodies have traditionally had a more stable trend in their economic life, partly due to their higher cost and because, until the mid 1990s, they had not existed long enough to determine their economic life. From that time until now, the average widebody retirement age for passenger aircraft (not taking into account aircraft converted to freighters) has been between 22 and 25 years. Because they have historically not fluctuated in average retirement age, they are expected to maintain it at around 24 to 25 years.

Out with the old The introduction of both the NEO and the MAX will undoubtedly impact the values of current-generation aircraft. However, there are a number of factors determining when, and to what extent, aircraft will be affected. For example, Boeing and Airbus both expect almost five per cent traffic growth, year-on-year. They also predict up to 30,000 new aircraft deliveries over the next 20 years in order to replace existing aircraft and cover growth. Another factor that will affect the requirement of new aircraft is a lower utilisation of the existing fleet. This is estimated to be 14 per cent over the first 10 years of an aircraft’s life. These three factors will drive demand and values for existing technology during the introduction of the re-engined variants, and will ultimately determine the value of existing aircraft. Considering these factors and assuming a smooth introduction of the replacement fleets, values of the A320 CEOs and 737 NGs will not be significantly affected until around eight to 10 years after the first MAX and NEO deliveries.

afm • Issue 87 – November–December • www.afm.aero

TLF: ISTAT Europe

Aircraft demand: Back to business Mary-Anne Baldwin reports from the International Society of Transport Aircraft Trading (ISTAT), Barcelona, where industry leaders discussed aircraft demand, financing and lease rates.

lthough the recession hit the industry hard, many of its companies have come out the other end with a better understanding of how to do business. And now demand is starting to return, those lessons are being put into practice.

According to Peter Morris, chief economist at Ascend, the top five airlines from Western Europe had a combined 14 per cent slump in growth during the recession. Only six of the 47 airlines measured showed an increase in domestic flights, and 29 on international flights. However, Brian Pearce, who holds the same role at IATA, believes that while the overall results from Europe were negative, the decline was largely due to their poor use of capital. He judges that airlines have learnt their lesson and are now much better at handling their finances. Outside ISTAT, we have heard the same message from IATA. In September, the aviation body lowered its 2013 global industry outlook by eight per cent, or $1bn, down to $11.7bn. Passenger growth is pitched at five per cent, just down from the 5.3 per cent previously forecast. IATA forecasts that this year, airlines will post a 3.2 per cent operating margin – this is despite a two per cent rise in the

gross domestic product (GDP), a rate at which airlines are expected to post losses. How? Because airlines have become better at being airlines. Not surprisingly, Airbus’ John Leahy, COO customers – who spoke at the conference – was optimistic about air travel demand. Ignoring the smaller ups and downs, Leahy argued that air travel has doubled over the last 15 years and that two-thirds of those living in emerging market countries will be flying by 2032. Roman Pakhomov, CEO of Avia Capital Services, predicts Russia’s strong demand for new aircraft, many of which will replace older aircraft in the country’s aging fleet. But Pakhomov said that despite being the largest bank in Russia, Avia Capital Services will take “a conservative approach” to financing and will not lend to foreign companies; however, it will finance deliveries of Russian products, such as Sukhoi aircraft, abroad. He added that more than 70 per cent of Russia’s aircraft financing comes from foreign banks and lessors, and while domestic financiers will hold a larger percentage of the market in the future, these banks are government-owned.

afm • Issue 87 – November–December • www.afm.aero

TLF: ISTAT Europe deliveries approaching a forecasted record level of more than $100bn during 2013. It added that as production rates rose during 2013, so did financing. “There is good liquidity at reasonable prices for deliveries despite the fact that aircraft financing is undergoing a meaningful transformation,” Zolotusky said during ISTAT. “We believe we’re well positioned for the availability of adequate and reasonably priced capital to fund the production growth.” Following the event, the manufacturer announced that it would increase production rates for the 787 Dreamliner to produce 12 of the aircraft each month by 2016; its current target is to hit 10 per month by the end of the year. The update was announced on the back of news that Boeing’s revenue had grown by 11 per cent to $22.1bn and the order backlog was worth $415bn.

Bursting the bubble Other emerging markets may not fare so well. Adam Pilarski, SVP of Avitas, expressed concern over China’s future growth rates. According to the analyst, China’s private domestic consumption is 36.3 per cent; this compares with 68.6 per cent in the US and 68.6 per cent in Japan.

It will also up the production of its 737 to 47 aircraft a month by 2017, starting with an increase from its current rate of 38 to 42 aircraft a month from 1H 2014. Once fully implemented, the programme will deliver more than 560 aircraft a year, increasing its output by almost 50 per cent since 2010.

He highlighted China’s need to increase its domestic demand and lower its reliance on exports, particularly because demand from its main supporters – Europe and the US – is low.

However, it will lower production for the 747-8 Intercontinental from 1.75 to 1.5 aircraft per month due to poor market demand. The adjustment will come into effect in 2015, one year after the first 747-8 delivery is due.

He also warned delegates that over-ordering has put the industry in a bubble. Pilarski highlighted that there are 1,736 aircraft on order and added: “We have a bubble [and] we’re just making it bigger.” Yet in Airbus’ presentation shortly after, Leahy replied: “We’re not necessarily in a bubble but a very strong growth cycle.” He told the delegates that Airbus currently has 5,330 orders, but added: “Will every one of those orders get delivered? Absolutely not.” Following Leahy, Kostya Zolotusky, MD capital markets at Boeing, quipped that while Airbus celebrates more orders than Boeing, the latter makes more deliveries. “They always win the order competition but they don’t make the deliveries,” he said. Yet, he still rejects Pilarski’s claims.

Boeing has taken only 107 orders for the 747 since its launch in 2005. Critics have argued that the four-engined aircraft costs airlines more in both fuel and maintenance. However, Boeing said it is still confident in the programme and that the new production rate will not have a significant financial impact. Meanwhile, Airbus will increase production of the A350 from one to three a month by the end of 2014 and plans to up this to 10 a month within four years after entering service. It is on track to roll out the first of three A350 variants – the 300-seat A350-900 in 2H 2014. It will then launch the 270-seat A350-800 and the 350-seat A350-1000, and has already shown interest in stretching the latter.

Preparing the shopping list Shortly after the conference, Boeing released highlights from the event, claiming the market is “in balance” – no doubt a direct response to Pilarksi. It quoted Zolotusky as saying: “All key measurable and relevant criteria point to a market balance for demand and capacity growth, aircraft utilisation, load factors, stable parked fleet, aircraft lease rates and strong performance for residuals, without outside circumstances affecting the market.” Boeing added: “Key indicators used to determine airline over-capacity remain within nominal ranges” – this is despite

Demand for aircraft was pretty evident during ISTAT, with a number of speakers making clear their interest. Emirates’ SVP, Brian Jeffrey, said the company is in talks with both manufacturers regarding new orders and that the 777X is “certainly one of several options”, along with the A380 and A350. Jeffrey Knittel, president of transport finance at CIT, would not confirm whether it would order the 777X, but said: “We are evaluating [it] and think it fills a need for our customers.” He added that CIT is unlikely to order the A380 due to reconfiguration issues but does see its value.

afm • Issue 87 – November–December • www.afm.aero

TLF: ISTAT Europe

When fellow lessor, Ron Wainshal, CEO of Aircastle was asked ‘if you could invest in only one aircraft, what would it be?’ He told delegates the A330 or 777: “Although it’s competitive.” Vueling’s CEO, Alex Cruz, was less open on which aircraft his airline will acquire but said it will look for sale and leaseback deals despite being owned by British Airways, and may make outright purchases in a “couple of years”. But aside from high demand and production rates sat an elephant in the room – cargo. In its industry outlook for 2013, released last September, IATA lowered its expectations for cargo growth from 1.5 per cent to 0.9 per cent. While we have celebrated gentle growth in global passenger demand, cargo growth just refuses to budge. IATA added that Brent oil prices – a major factor in the demand for cargo aircraft – are expected to average at $109 per barrel (pb) for the year, $1 more than expected. However, it calculated that jet fuel prices have dropped $1 lower than forecast to $126.4pb. It added that the crisis in Syria had led to a drop in demand for fuel, not an increase in cost (as was expected) and that the net impact on the overall fuel bill will be neutral. So will parked freighters such as the 747-400s come back on the market? Aerolease’s Thornton says it depends on oil but “a lot of those aircraft will come back”.

In a poll of ISTAT delegates, the majority – with 42 per cent – believed rates for the A320 CEO have improved but that the introduction of next-generation aircraft will undo this, leaving rates to fall again. Additionally, 30 per cent of the audience said only the young aircraft have had an uptick and that older A320s have stayed the same. However, John Vitale, CEO of Avitas did not agree. Countering this, Vitale has seen rates for both young and old aircraft improve and he believes the uptick will be relatively long-term. The dip was in part due to the release of a large number of A321s by Spanair, which oversupplied the market and put a “tremendous amount of pressure on the A321”, says Knittel. Like his peers, the CEO is seeing activity on the A321, which he says will push up rates. Regardless of fluctuations, there is confidence in the A320 as both a leasing asset and as an efficient, successful aircraft. “Those airplanes will fly no matter what market they’re in; you’ll always find a market,” backed Aengus Kelly, CEO of AerCap. “There is not an issue with these planes... They will have a place in aviation for a serious amount of time. It’s really about your book value at the time and how you depreciate it.”

The return of the A320

According to Steven Udvar-Hazy, CEO of Air Lease Corporation, he leases A320s at $360,000 to $380,000 per month, but this has fallen to $300,000 for some lessors. He believes the industry will not see those low figures again. Yet, Udvar-Hazy says he now has more than one customer interested in each A321 he has to trade. “For the first time, we can dictate prices on the A321.”

One aircraft that has showed signs of recovery is the A320; there has been a similar trend for the A321 and A319 aircraft, the values of which dipped but have also started to recover.

And with demand for aircraft being strong and with financing on the rebound, this is just the start of a return to form.

Bill Cumberlige, KV Aviation, supported Thornton, believing half of the world’s parked freighters will return to service, but while IATA’s Pearce says oil prices will depreciate, Ascend’s Morris argued: “I don’t think cheap oil is ever coming back”

According to Wainshal, rates have improved by five to 10 per cent, but the expectations on A320 lease rates were much higher five years ago than they are now. He surmised: “The A320 market has recovered a bit, but it’s still in a bad place.”

afm • Issue 87 – November–December • www.afm.aero

FLEET OPS: Furlough

Counting the cost of the FAA furlough With US federal aviation staff back at work, Justin Burns measures the impact of the furlough on the industry.

he US Government’s 16-day shutdown in October saw about 15,500 Federal Aviation Administration (FAA) workers furloughed and its registry office closed. It is estimated to have cost the aviation industry dearly.

Not since 1996 had it seen such a crisis. Then, federal workers were furloughed for 27 days as US politicians were deadlocked over funding for Medicare, education, the environment and public health in the budget. This latest shutdown, which was the first for 17 years, came about after the US Treasury’s funds ran dry and the government had to file for a higher debt limit, or do without. Republicans and Democrats wrangled over the nation’s soaring debt before Congress finally agreed to end the stalemate and raise the country’s $16.7tn deficit a mere 24 hours before the deadline. Wall Street economists have estimated it may have cost the US economy about $24bn, while the cost to the aviation industry is yet to be fully understood. Its members are still assessing the damage, although many are just relieved it is over.

Counting the cost An estimated 700,000 federal employees were furloughed, among them about 15,500 FAA workers and 3,000 aviation safety inspectors. Separate to those 3,000 were 2,800 members of the National Air Traffic Controllers Association (NATCA), which included support specialists and engineers. During this time, the US air traffic control system ran close to a ‘yellow’ alert level as workers running radar and other equipment were also furloughed. However, 14,600 federal air traffic controllers – who were deemed essential to the safe running of flights – remained on the job. This meant there were few, if any, flight delays or cancellations. The government’s sectioning of workers into essential and non-essential categories created more than a little controversy. Many believed it had made poor judgements and furloughed staff who were crucial to safe operations. Among those furloughed were: Operation and manufacturing inspectors; engineers; legal instrument examiners; compliance

afm • Issue 87 – November–December • www.afm.aero

FLEET OPS: Furlough specialists; flight inspectors; flight procedures specialists; and administrative staff. The implications were far-reaching. For example, a manufacturer cannot hand an aircraft to an airline without the aircraft first being checked by a FAA safety inspector. Similarly, all maintenance on existing aircraft must be checked before they can fly again. Yet all those inspectors were furloughed. Also, airlines, aircraft makers and suppliers could not get parts and systems certified for use in aircraft. NATCA said in a statement that projects, including the Next Gen programme, were affected and will take months to recover as a key deadline was missed. Other projects, like fixing key navigational aids and construction of facilities, such as the new control tower in Las Vegas’ McCarran Airport, were brought to a halt. NATCA added: “Starting up again will not be easy or as quick as flipping a switch, it will be more like getting a freight train up to speed. The task now remaining is stabilising how our aviation system is funded.” The FAA’s aircraft registry, in Oklahoma – which usually registers about 10,000 aircraft a month as well as carrying out pilot registration – was shut, meaning deliveries were delayed. “There is now a backlog of inspections of three weeks and the pressure is on the safety inspectors to do them as people want aircraft inspected,” Linda Goodrich, VP of the Professional Aviation Safety Specialists (PASS) union, said when she spoke to AFM in late October.

witnessed the highs and lows of the US aviation system. But she said the furloughing of many staff should never have happened and questioned why these key aviation employees were told to stay at home. “There is a document from the Department of Transportation that says one of the things exempt from furloughing was flights standards inspection, yet someone made the decision to. Inspectors on the railroad were not furloughed. Why was aviation? “Aviation safety has always been critical and essential unless you are going to shut down the whole system. As aviation safety professionals responsible for the regulatory side, this was a significant hit to us,” said Goodrich. According to the VP, the furloughing was “completely avoidable”. She believes that safety was compromised and that politicians should have come to an agreement much sooner. “From PASS’ perspective, the shutdown of the government for even a day has an impact on the aviation industry. It was unnecessary and totally avoidable and we got in the middle of politics, which put the [aviation] system in jeopardy,” she explained. “Our system is dependent on all parts functioning and one piece not functioning for three weeks increases the risk.” She added that PASS relies on the data collected by FAA officials in order to monitor the industry. But due to the shutdown, none of this data was collated, meaning the full cost of the furlough is almost impossible to calculate.

Implications for the industry The shutdown could have created significant delays in aircraft deliveries, but they did not show a significant hit. Airbus delivered 59 aircraft in October, two more than the same month in 2012 and up on the 51 in September this year.

A clearer picture of the financial costs will become much clearer in the months ahead, but Goodrich believes the amount of money lost was “enormous”, and that most of it was due to delayed aircraft deliveries.

Boeing delivered 54 in October, down on the 62 it delivered in September, but up on the 50 it delivered in October 2012.

“We are deeply concerned over the manufacture and service of aircraft out there during that time as we were non-existent and data has been lost. We will have to figure it out along with the consequences.

However, Airbus was reported to have been unable to deliver an A321 aircraft to JetBlue and other aircraft to the US Airways Group. Boeing was able to mitigate at least some damage as, being an FAA Organisation Designation Authorization (ODA) holder, it has the authority to perform some of its own certification work on behalf of the FAA. A Boeing spokesman said its staff worked with customers to “mitigate any potential delivery impacts”. When Goodrich first heard who was being furloughed she thought the FAA had made a mistake. During her 40 years in the industry – which included work as a pilot, mechanic, and more than 15 years as VP for PASS – Goodrich has

“The real indicators are what we call a ‘smoking hole’, such as when an airplane crashes. We do not want to see the visual consequences of us not being in the system,” said Goodrich. “We do not know at this stage, and might see the consequences coming up, unfortunately. Only time will tell and at this stage we have just been lucky, quite frankly.” Vaughan Jennings, from the trade group Airlines for America (A4A), agrees the government shutdown harmed the US economy and had a “direct impact” on the airline industry. However, he said that the millions of travellers who flew from airports during the period felt no impact and believes safety was not at risk.

afm • Issue 87 – November–December • www.afm.aero

FLEET OPS: Furlough

“We did not see an effect on travel as front-line employees were not subject to shutdown-related furloughs and the safety of the system was not compromised,” Jennings commented. He said A4A would continue to work with the FAA to maintain safety in the US aviation system, which he believes is the “safest in the world”. However, FAA workers may not be so forgiving. The US aviation industry has had a rough ride since the global recession took effect around six years ago, and Goodrich believes the shutdown was a double blow to workers who are already “fighting for their futures”. She added that “there are morale issues among workers” due to the uncertainty of whether they may be furloughed again. Another worry is that there is no plan to mitigate the work hours lost during those 16 days. According to Goodrich, who met with the FAA soon after the shutdown, there was no immediate strategy for recovery. “They [the FAA] just shrugged their shoulders and said: ‘We do not have a plan – everybody must go back to work and assess what they were doing before and pick up the pieces’.” She added: “There was no plan, and because there was no plan that has raised a lot of attention with Congress. The industry is really angry and saying: ‘Look what happened to us, you… cost us millions of dollars’.” For aviation employees across the industry, getting back to normal has been a challenge. This is particularly the case for safety inspectors who were unable to collect vital data during the shutdown but now need it in order to continue their work. “It is a mess. How do you figure out the biggest risk when we have no data to evaluate it? There is just subjective speculation,” Goodrich complained. The VP estimated that, as of late October, safety inspectors were about three to four weeks away from getting a true assessment of which data is missing.

What lies ahead? Although staff are back at work, the US debt mountain shows no signs of disappearing. This has left industry leaders bracing themselves for round two. In fact, another shutdown is feared to be on the horizon and could take place in the early part of 2014. This is when Democrats and Republicans will have to strike another deal in Congress over the country’s spiralling $16.7tn deficit. The federal debt cushion now extends until 7 February, with current spending levels being authorised to fund the US until 15 January. Goodrich hopes lawmakers will think twice before letting such a situation arise again and there will be huge consequences if they decide to furlough federal workers for a second time in less than five months. She concluded: “We have been, and are, on red alert and trying to figure out temporary funding resolutions to maintain standards and prepare staff in case it happens again. “You do not want to be in a position where you are saying: ‘We could have averted this and saved people’ if there was an accident. We do not want that bad news as aviation safety professionals – and the shutdown and furloughs could have created that.” The consequences of the shutdown could have been far greater in terms of safety and operations, but only time will tell if the political wrangling in Congress has caused real harm. Many people across the industry are hoping Republican and Democrat politicians will not let this happen again, and that when it is debated, they put safety and the economy over political gain.

afm • Issue 87 – November–December • www.afm.aero

FLEET OPS: Furlough

Flight of fancy: The problems with pilot training

Demand for pilots has never been higher, yet the US has just rolled out a new set of training restrictions meaning it is harder to become a pilot than ever before. And, across the globe potential pilots must tackle crippling course fees, lofty flight hour requirements and national hiring rules. Martin Roebuck reports.

ommercial pilots are going to be in short supply over the next 20 years. Boeing estimates that airlines will have to hire almost half a million new pilots over this period – 25,000 per year to keep pace with an expected doubling of passenger fleets. Yet, it seems it has never been harder to become a pilot. Indeed, in November, the Federal Aviation Administration (FAA) finalised new pilot training regulations, which will cost the industry up to $353.7m and US pilots a great deal more training time. Meanwhile, Asia-Pacific airlines are just struggling to fill their cockpits. In fact, the majority of demand will come from Asia-Pacific region where airlines will require an additional 190,000 pilots by 2032. Even Europe (where air traffic is slightly in decline) will need another 99,000 pilots. North America will require a further 85,000. “When there was a glut of candidates, airlines could afford to be picky,” says Nikki Heath, MD of human performance company, Symbiotics. “But things are gradually changing. Those laid off from airlines that were forced to downsize, or failed to survive the recession, have been hoovered up again.” Some countries are putting added pressure on themselves by hiring only their own nationals, Heath points out. “IndiGo wants only Indian pilots; Thai Airways employs only Thais; and TAP Portugal doesn’t use foreign pilots.”

In some cases, governments are trying to drive out expats; however, other countries require a mass influx of trained staff. Regions such as the Middle East “need stacks of people from wherever they can get them, or they won’t be able to fly all their new aircraft,” Heath comments. Anthony Petteford, director of strategic projects at the aviation training organisation, CTC, says: “Qatar Airways has embraced our MPL [multi-crew pilot licence] cadet programme, but despite a wish for home-grown pilots, it’s having to recruit from all over the world. “Emirates is in a different position. It wants to train as many pilots as possible in-house, but it’s all widebody, so cadets don’t always work so well, though a few can go straight on to its A330s.” Air Arabia and other Gulf carriers have cadet openings but predominantly look for nationals, Petteford confirms. One irony is that there can be many pilots looking for jobs in markets considered to be short of suitable recruits. “There are 5,000 unemployed licence holders in India, but the quality of the training they have had, and where they have spent their time, is taken into account,” Petteford says. “Airlines are taking a risk management approach and recognise the importance of pre-selection and training through a recognised, auditable school.”

afm • Issue 87 – November–December • www.afm.aero

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FLEET OPS: Pilot training

CTC’s simulator instructor.

CTC is seeking training approval from India’s Directorate General of Civil Aviation, and China is also part of its “strategic plan” following its move to open up to foreign training schools after freezing its approved list some years ago, says Petteford. “We believe the solution for China is MPL. Phase one core skills can be taught there. Students would need only 70 to 100 hours of flight training outside China and could then complete their simulator-based training back in the country,” he says. Among various other options, CTC has put about 400 pilots through full training, placing 98 per cent of them. It is one of three training providers for British Airways, which is looking to enrol around 70 students for 2014 and has just begun pre-selection. The organisation also operates regular cadet programmes for easyJet and provides training for Jetstar’s Australia, Asia and Pacific operations. CTC also hopes to establish a foothold in the US market in the next two or three years. Petteford says it is important that they establish a brand presence there but also that they “try to influence regulators” in the country. Such negotiations are crucial as the rules in the US are diverging ever more from the regulations that apply to the rest of the world. Regulatory bodies across Europe worked together from the 1970s onwards under the auspices of the Joint Aviation Authorities (JAA), a ‘club’ without legal status whose member countries could retain their own flavours of local regulation. Following almost 10 years of discussion, a single overarching European Aviation Safety Agency (EASA) regulation officially replaced JAA in 2012, although individual countries are digesting the implications at varying speeds and the fine print is still being amended.

Different US model Things have always been different in the US, where historically most pilots develop their private pilot licence (PPL) into a commercial licence by gaining experience with light aircraft, then flying for a regional airline before joining a major long-haul carrier, by which time they may have built up 3,000 hours of flying. “The US has never embraced the training school ethos, though it was coming round to it pre-Colgan,” Petteford says. He is referring to the watershed moment when a Colgan Air flight from Newark to Buffalo crashed in February 2009, killing the crew of four, all 45 passengers and a person on the ground. Icing was initially suspected but further investigation revealed that the captain responded inappropriately to the vibration of the stick shaker, stalling the Dash-8 Q400. The crew were tired and “chatty” during the flight, explains US aviation consultant, Joe Fournier, which meant they did not pick up the problems soon enough. As they went deeper, accident investigators learned there was not enough background research on the pilots’ careers – only their last five years were recorded and the FAA was not sufficiently focused on previous training. Under pressure from the US Congress to move rapidly, the FAA drew up revised rules on safety, mentoring, training, screening and qualifications, which were enshrined in the Airline Safety and Federal Aviation Administration Extension Act 2010. Three years on, a full set of rules have finally come into play; however, airlines will be given another five years to fully adhere to them. The new regulations will introduce training for more effective pilot monitoring, enhanced runway safety procedures and more extensive crosswind training, including training for wind gusts. Additionally, pilots will be put through more ground and flight training to prevent and recover from aircraft stalls – something that will impact future simulator standards as well, the FAA has said.

afm • Issue 87 – November–December • www.afm.aero

FLEET OPS: Pilot training

CTC’s 737-800 simulator.

Also, airlines will now be required to track the data of crew who have failed proficiency checks or underperformed during flight training – a recommendation that was stalled until now because of privacy and standardisation concerns regarding a pilot record database. The most controversial change is that pilots must complete at least 1,500 hours in the air – excluding simulator training – before qualifying for their commercial licence. This is a six-fold increase on the previous US regulation and current EASA requirement, although 1,000 hours is acceptable for graduates of university flight schools and experienced military pilots. “The FAA went in the wrong direction from our point of view,” Petteford says. “It’s now even more draconian than it has been over the last 50 years.” Other parts of the world are following the EASA route. Growth markets such as Hong Kong and Singapore have no general aviation infrastructure, he notes, so there is no way pilots could gain their 1,500 hours – even if they wanted to and could afford it. Petteford hopes the US can be persuaded to adopt the MPL formula, which involves fewer flying hours, especially solo, with more time on the simulator. “That may be a solution going forward and perhaps a more parallel pathway,” he says.

students have wised up and are less concerned about financing a course than the end result. “Through social media, candidates will know your placement track record.” EPST believes in a “wide funnel” and accepts only 15 per cent of those who walk through the door. Selection is based not just on knowledge, cognitive tests and hand-eye co-ordination, but on aspects such as personality, the ability to be a team player and potential for captaincy. “Most airlines don’t hire first officers, they hire potential captains,” Verburg says. More than half of applicants are rejected immediately, following personality and psychological tests, group exercises and simulator assessment. Honesty at this stage is vital, Verburg stresses. “Most ATOs [approved training organisations] see selection as a loss of revenue. But are you training pilots for a job in an airline, or just to get a licence?” The latter approach generates good revenue but it is “stealing” if a school trains people who have little chance of passing their exams or securing a job. EPST has trained 600 pilots in its 15 years and has experienced only one failure owing to a lack of flying skills. Another 37 failures were down to inadequate scores in theory tests or behavioural issues. “The risk of taking on the financial burden is therefore very small,” Verburg says.

Training to fly for a commercial airline is expensive for those who have not secured sponsorship and are trying to fund themselves.

A flying school can get 100 per cent financing if it can show the bank a “quality loop” in terms of students’ subsequent flying careers. “You must pay the money back if a candidate fails – it was your mistake for selecting them,” he says.

“You have to pay up to £150,000 ($240,000) and there are no guarantees at the end of it. Kids aren’t coming forward,” Symbiotics’ Heath says.

The school will remove a student, even late in their training, if it no longer feels it can put them forward to an airline. It could be held accountable if there was an accident, he points out.

Dick Verburg, founder of European Pilot Selection & Training (EPST) in the Netherlands, admits financing a course is a big ask without selling a house, taking on a large loan or (for lucky youngsters), accepting parental help, but says potential

Liability is a risk from the candidate’s side, if they fail, especially in the US. But Verburg says: “If you explain to them it will cost a lot more, especially in the presence of their parents, they de-select themselves. You don’t have to send them away.”

Why personality counts

afm • Issue 87 – November–December • www.afm.aero

INDUSTRY DATA: Deals

Industry data

51 56

Aircraft deals

List prices and lease rates

Firm orders

Engine data

Aircraft deals 12 September to 23 October MSN Manu- facturer

Model

Event

25261 26300 1071 5701 5767 5772 1447 5775 1006 33490 37730 38430 38736 39067 39157 115 1107 41307 41633 5656 1444 5744 5765 39024 5777 36933 38059 5773 39433 127 5785 38045 39136 40150 42235 42816 95024 121 5406 5717

737-400 737-400SF 72-600 A320-200 A321-200 A320-200 A330-300 A320-200 42-600 737-800 777F 777-300 737-900ER 737-800 737-800 A380-800 72-600 737-800 777F A320-200 A330-200 A320-200 A319-100 737-800 A320-200 737-800 737-800 A320-200 737-800 A380-800 A320-200 737-800 737-800 737-800 777-300 737-900 SSJ 100-95B A380-800 A319-100 A320-200

Converted Converted Destroyed Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service

Boeing Boeing ATR Airbus Airbus Airbus Airbus Airbus ATR Boeing Boeing Boeing Boeing Boeing Boeing Airbus ATR Boeing Boeing Airbus Airbus Airbus Airbus Boeing Airbus Boeing Boeing Airbus Boeing Airbus Airbus Boeing Boeing Boeing Boeing Boeing Sukhoi Airbus Airbus Airbus

Data supplied by IBA’s JetData. www.ibagroup.com

Current Owner/Operator Air Contractors Allied Air Lao Airlines Jetstar Japan Asiana Airlines Air Arabia Singapore Airlines Jetstar LIAT American Airlines FedEx British Airways Malindo air Jet Airways Shenzhen Airlines Air France Skywest Air China China Southern Airlines Capital Airlines Air China IndiGo Sichuan Airlines. Leased from BOCOMM Norweigan Air shuttle SMBC Southwest Airlines Shanghai Airlines AWAS Solaseed Air Emirates EasyJet GECAS Shenzhen Airlines Malaysia Airlines Singapore Airlines United Airlines Interjet British Airways Avianca Jetstar

Date 24/09/2013 22/10/2013 16/10/2013 12/09/2013 12/09/2013 12/09/2013 13/09/2013 13/09/2013 13/09/2013 13/09/2013 13/09/2013 13/09/2013 13/09/2013 13/09/2013 13/09/2013 14/09/2013 14/09/2013 14/09/2013 14/09/2013 15/09/2013 16/09/2013 16/09/2013 16/09/2013 16/09/2013 17/09/2013 17/09/2013 17/09/2013 18/09/2013 18/09/2013 19/09/2013 19/09/2013 19/09/2013 19/09/2013 19/09/2013 19/09/2013 19/09/2013 19/09/2013 20/09/2013 20/09/2013 20/09/2013

Source: IBA’s JetData.

afm • Issue 87 – November–December • www.afm.aero

INDUSTRY DATA: Deals Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals 12 September to 23 October MSN Manu- facturer

Model

Event

5780 1108 42230 5671 38737 5778 38043 39333 15279 41195 42143 42245 42739 17000371 17000372 1452 5748 5781 38953 42817 1446 5470 5660 5742 5787 38680 40954 41791 42236 1449 5756 5759 5786 31912 35822 36914 39728 41700 19000636 19000639 1453 5664 5782 5788 39624 38619 5752 5754 36912 38484 19000349 5762 5774 5789 34944 5746 34929 31917 34785 39364 5779 36286 38044 41263 5784 36227 40151 40790 41704 41707

A320-200 72-600 777F A320-200 737-900ER A320-200 737-800 737-800 CRJ-900 737-800 777-300ER 787-8 737-900ER E175LR E175LR A330-200 A320-200 A319-100 737-800 737-900ER A330-300 A321-200 A320-200 A320-200 A321-200 777-300ER 737-800 737-800 777-300Er A330-300 A320-200 A320-200 A319-100 737-900ER 747-800F 737-800 737-800 777-300ER E-190AR E190AR A330-300 A320-200 A320-200 A319-100 737-800 787-8 A320-200 A320-200 737-800 787-8 E-190LR A320-200 A321-200 A319-100 787-8 A320-200 787-8 737-900ER 787-8 737-800 A321-200 787-8 737-800 737-800 A320-200 787-8 737-800 737-800 737-900ER 737-800

Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service

Airbus ATR Boeing Airbus Boeing Airbus Boeing Boeing Bombardier Boeing Boeing Boeing Boeing Embraer Embraer Airbus Airbus Airbus Boeing Boeing Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing Boeing Airbus Airbus Airbus Airbus Boeing Boeing Boeing Boeing Boeing Embraer Embraer Airbus Airbus Airbus Airbus Boeing Boeing Airbus Airbus Boeing Boeing Embraer Airbus Airbus Airbus Boeing Airbus Boeing Boeing Boeing Boeing Airbus Boeing Boeing Boeing Airbus Boeing Boeing Boeing Boeing Boeing

Current Owner/Operator Jetstar Kalstar Aviation Emirates Airline China Southern Airlines Malindo Air Spring Airlines Garuda Indonesia. Leased from GECAS Malaysia Airlines Endeavor Air Aviation Capital Cathay Pacific All Nippon Airways United Airlines Republic Airlines Republic Airlines Virgin Australia TAM Linhas Aereas American Airlines China Southern Airlines United Airlines Garuda Indonesia Sichuan Airlines Wizz Air Hungary VietJetAir. Leased from AWAS Philippine Airlines. Leased from AWAS Air China JAL Express Xiamen Airlines Singapore Airlines Philippine Airlines China Southern Airlines. Leased from ALC China Eastern Airlines. Leased from SMBC American Airlines Delta Air Lines Cargolux Southwest Airlines China Eastern Airlines Etihad AZAL Azerbaijan Airlines Austral Lineas Aereas Singapore airlines Air China Jetblue Airways American Airlines GOL Transportes Aereos British Airways TAM Linhas Aereas Avianca Brasil. Leased from Aviation Capitial Southwest Airlines LAN Airlines Niki Thai AirAsia Asiana Airlines. Leased from BOC American Airlines Hainan Airlines MEA-Middle East Airlines. Leased from GECAS China Southern Airlines Delta Air Lines Royal Brunei Airlines Qantas Utair Aviation Air India GECAS Skymark Airlines British Airlines Jetstar Airways Malaysia Airlines. Copa Airlines Alaska Airlines Utair Aviation

Date 20/09/2013 20/09/2013 20/09/2013 21/09/2013 21/09/2013 23/09/2013 23/09/2013 23/09/2013 23/09/2013 24/09/2013 24/09/2013 24/09/2013 24/09/2013 24/09/2013 24/09/2013 25/09/2013 25/09/2013 25/09/2013 25/09/2013 25/09/2013 26/09/2013 26/09/2013 26/09/2013 26/09/2013 26/09/2013 26/09/2013 26/09/2013 26/09/2013 26/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 27/09/2013 28/09/2013 28/09/2013 28/09/2013 28/09/2013 28/09/2013 29/09/2013 30/09/2013 30/09/2013 30/09/2013 30/09/2013 30/09/2013 01/10/2013 01/10/2013 01/10/2013 01/10/2013 02/10/2013 02/10/2013 03/10/2013 03/10/2013 03/10/2013 04/10/2013 04/10/2013 04/10/2013 05/10/2013 09/10/2013 09/10/2013 09/10/2013 09/10/2013 09/10/2013 09/10/2013 Source: IBA’s JetData.

afm • Issue 87 – November–December • www.afm.aero

INDUSTRY DATA: Deals Aircraft deals 12 September to 23 October MSN

Make

Model

Event

43255 5793 31919 33905 34925 37364 38473 41262 5532 5805 5794 1100 29146 5770 5791 5803 41309 124 1459 5801 5802 5807 1110 42231 42818 5818 38431 39204 5809 5811 1460 5799 5808 38060 39137 40260 26419 37669 734 1451 1466 602 33015 24411 5773 5777 38045 39431 41195 877 33024 2726 542 27463 25868 466 3905 38044 621 2621 41262 5532 2128 603 5252 1038 29351 33621 1109 25313

Boeing Airbus Boeing Boeing Boeing Boeing Boeing Boeing Airbus Airbus Airbus ATR Boeing Airbus Airbus Airbus Boeing Airbus Airbus Airbus Airbus Airbus ATR Boeing Boeing Airbus Boeing Boeing Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing Boeing Boeing Airbus Airbus Airbus ATR Boeing Boeing Airbus Airbus Boeing Boeing Boeing Airbus Boeing Airbus Airbus Boeing Boeing Airbus Airbus Boeing ATR Airbus Boeing Airbus Airbus ATR Airbus ATR Boeing Boeing ATR Boeing

737-900ER A320-200 737-900ER 737-800 787-8 737-800 787-8 737-800 A320-200 A320-200 A320-200 72-600 777-300 A320-200 A320-200 A320-200 737-800 A380-800 A330-200 A320-200 A320-200 A320-200 72-600 777F 737-900ER A320-200 777-300ER 737-800 A320-200 A320-200 A330-300 A320-200 A321-200 737-800 737-800 737-800 737-500 747-800F A319-100 A330-200 A330-200 42-500 737-700 737-300 A320-200 A320-200 737-800 737-800 737-800 A320-200 737-800 A321-200 A320-200 737-300 747-400F A320-200 A319-100 737-800 42-500 A319-100 737-800 A320-200 A320-200 42-500 A320-200 72-600 737-800 737-800 72-600 737-400

Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Finance lease Finance Lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Op lease Parked

Data supplied by IBA’s JetData. www.ibagroup.com

Current Owner/Operator Alaska Airlines Volaris Delta Air Lines All Nippon Airways China Southern Airlines Spice LAN Airlines GECAS BOC Aviation Tigerair SilkAir AZUL - Linhas Aereas Brasilerias Garuda Indonesia China Eastern Airlines Etihad Finnair Air China British Airways Air China LAN Airlines Air France. Lease from Aercap IndiGo Jettime. Leased from NAC Emirates United Airlines LAN Airlines British Airways Hainan airlines GoAir. Leased from ACG GoAir Philippine Airlines Tianjin Airlines EVA airways. Leased from GECAS Shanghai Airlines Shenzhen Airlines flyDubai Kyrgyzstan Air Company AirBridgeCargo. Leased from Sberbank Leasing Safi Airways Air Nambia. Leased from Intrepid Air Nambia. Leased from Intrepid Air KBZ. Leased from NAC Georgian Airways. Leased from ALC PAL - Principal Airlines. Leased from BCI StarFlyer. Leased from AWAS Citilink Garuda Indonesia. Leased from SMBC Skymark Airlines Solaseed Air. Leased from AWAS Aeroflot. Leased from Aviation capital Shaheen Air. Leased from ILFC Air Niugini. Leased from CIT S7-Siberian Airlines. Leased from ILFC Shaheen Air International. Leased from ILFC Avia Traffic. Leased from Aerovista Centurion Air Cargo R Airlines. Leased from Avion Express Atlantic Airways. Leased from SMBC Garuda Indonesia. Leased from GECAS Satena. Leased from Phoenix Air Serbia. Leased rom BBAM Okay Airways. Leased from GECAS Jetstar airways. Leased from BOC Golden Myanmar Airlines Satena. Leased from NAC Chengdu Airlines. Leased from CALC Jettime. Leased from Intersky Sunwing Airlines Nok Air. Leased from SMBC Villa Air R Airlines

Date 09/10/2013 10/10/2013 10/10/2013 10/10/2013 10/10/2013 10/10/2013 10/10/2013 10/10/2013 11/10/2013 11/10/2013 12/10/2013 12/10/2013 15/10/2013 17/10/2013 17/10/2013 17/10/2013 17/10/2013 18/10/2013 18/10/2013 18/10/2013 18/10/2013 18/10/2013 18/10/2013 18/10/2013 18/10/2013 19/10/2013 19/10/2013 19/10/2013 21/10/2013 21/10/2013 22/10/2013 22/10/2013 22/10/2013 22/10/2013 22/10/2013 22/10/2013 27/09/2013 27/09/2013 12/09/2013 12/09/2013 12/09/2013 12/09/2013 12/09/2013 16/09/2013 18/09/2013 18/09/2013 19/09/2013 19/09/2013 24/09/2013 25/09/2013 25/09/2013 26/09/2013 27/09/2013 27/09/2013 30/09/2013 02/10/2013 04/10/2013 04/10/2013 06/10/2013 08/10/2013 10/10/2013 11/10/2013 14/10/2013 16/10/2013 18/10/2013 18/10/2013 18/10/2013 18/10/2013 22/10/2013 02/10/2013

Source: IBA’s JetData.

afm • Issue 87 – November–December • www.afm.aero

INDUSTRY DATA: Deals Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals 12 September to 23 October MSN Manu- facturer

Model

Event

Current Owner/Operator

Date

123 Airbus 394 Airbus 477 ATR 421 Airbus 1439 Airbus 3834 Airbus 29918 Boeing 548 Airbus 2791 Airbus 26200 Boeing 270 Airbus 400 Airbus 30642 Boeing 28100 Boeing 36115 Boeing 5758 Airbus 33490 Boeing 41307 Boeing 1444 Airbus 42230 Boeing 39333 Boeing 40954 Boeing 41791 Boeing 38484 Boeing 40790 Boeing 39931 Boeing 41309 Boeing 42231 Boeing 30431 Boeing 230 ATR 3050 Dornier 20163 Fokker 24325 Boeing 1288 Airbus 53001 Boeing 412 ATR 37669 Boeing 274 Airbus 477 ATR 25234 Boeing 621 ATR 447 ATR 14501133 Embraer 55069 Boeing 7162 Bombardier 193 Airbus 5252 Airbus 387 Airbus 35304 Boeing 35305 Boeing 4543 Airbus 3661 Airbus 3447 Airbus 3689 Airbus 3096 Airbus 409 Airbus 419 Airbus 373 ATR 23306 Boeing 24332 Boeing 25177 Boeing 27346 Boeing 255 Airbus 24757 Boeing 383 Airbus 481 Airbus 931 Airbus 1164 Airbus 23032 Boeing

A300B4-200(F) A340-500 72-200 A320-200 A320-200 A319-100 737-800 A320-200 A320-200 767-300ER A320-200 A320-200 737-700 737-700 737-700 A321-200 737-800 737-800 A330-200 777F 737-800 737-800 737-800 787-8 737-800 737-800 737-800 777F 767-200ER 42-300 328-110 50 767-200ER A320-200 MD81 72-212 747-800F A300B4-200 72-200 737-500 42-500 72-200 E135BJ 717-200 CRJ-100 A340-300 A320-200 A340-300 787-8 787-8 A320-200 A319-100 A319-100 A319-100 A319-100 A320-200 A320-200 72-200 767-200ER 737-400 737-400 737-300 A330-200 767-200ER A340-600 A310-300 A330 A330-200F 747-300

Retired MNG Airlines 19/09/2013 Retired Emirates 23/09/2013 Retired Aviation inventory rescources 30/09/2013 Retired Indonesia Air Transport 04/10/2013 Returned 16/09/2013 Returned 16/09/2013 Returned Aircastle. Returned from GOL 16/09/2013 Returned White 23/09/2013 Returned Titan Airways. Returned from Jet2.com 27/09/2013 Returned GECAS 30/09/2013 Returned ALS Aircraft Lease Sercuritisation 01/10/2013 Returned ALS Aircraft Lease Sercuritisation 01/10/2013 Returned ILFC. Repossessed from Yakutia 09/10/2013 Returned Germania. Returned from Air Berlin 30/10/2013 Returned Germania. Returned from Air Berlin 30/10/2013 Sale & Leaseback Finnair. Leased from NBB 12/09/2013 Sale & Leaseback American Airlines. Leased from Aercap 13/09/2013 Sale & Leaseback Air China. Leased from ALC 14/09/2013 Sale & Leaseback Air China. Leased from China Aircraft Leasing Company 16/09/2013 Sale & Leaseback Emirates Airline. Leased from DAE 20/09/2013 Sale & Leaseback Malaysia Airlines. Leased from BBAM 23/09/2013 Sale & Leaseback JAL Express. Leased from Avolon 26/09/2013 Sale & Leaseback Xiamen Airlines. Leased from ILFC 26/09/2013 Sale & Leaseback LAN Airlines. Leased from Avolon 30/09/2013 Sale & Leaseback Copa. Leased from MCAP 09/10/2013 Sale & Leaseback Xiamen Airlines. Leased from SMBC 12/10/2013 Sale & Leaseback Air China. Leased from ALC 17/10/2013 Sale & leaseback Emirates Airline. Leased from DAE 18/10/2013 Sold off lease Wells fargo 16/09/2013 Sold off lease Nordic aviaiton capital 17/09/2013 Sold off lease USAF United states air force 17/09/2013 Sold off lease Air Panama. Brought from NAC 18/09/2013 Sold off lease Jet Asia Airways. Brought from Jet Midwest 23/09/2013 Sold off lease Allegiant Air 24/09/2013 Sold off lease Delta air lines. Brought from SAS 24/09/2013 Sold off lease Intertrade Supply chain. Brought from NAC 27/09/2013 Sold off lease Sberbank leasing 27/09/2013 Sold off lease Southern Aircraft Charters 30/09/2013 Sold off lease Aviation inventory rescources. Brought from Antriam 30/09/2013 Sold off lease GECAS 30/09/2013 Sold off lease Phoenix Aircraft Leasing. Bought from Air Takiti 06/10/2013 Sold off lease Rheinland Air Service. Brought by NAC 08/10/2013 Sold off lease Avcon Jet. Brought from London Executive Aviation 08/10/2013 Sold off lease Delta Air Lines 10/10/2013 Sold off lease South Supreme Airlines 11/10/2013 Sold off lease Aerolineas Argentinas 12/10/2013 Sold off lease CALC 18/10/2013 Sold off lease Philippine Airlines. Brought from Iberia 22/10/2013 Sold with lease DP Aircraft Reland Leasing. Brought from ILFC 10/10/2013 Sold with lease DP Aircraft Reland Leasing. Brought from ILFC 10/10/2013 Transferred LAN Airlines. Leased from BOC. Transferred from LAN Ecuador 13/09/2013 Transferred Air Berlin 08/10/2013 Transferred Air Berlin. From Niki 14/10/2013 Transferred Air Berlin. From Niki 21/10/2013 Wet-leased Afriqiyah Airways. Leased from Tunisair 13/09/2013 Wet-leased Air India. Leased from Avion Express 16/09/2013 Wet-leased Air India. Leased from Avion Express 16/09/2013 Wet-leased Darwin Airline 16/09/2013 Wet-leased Air india. Leased from Dynamic Air 18/09/2013 Wet-leased FlyGeorgia. Leased from Go2Sky 23/09/2013 Wet-leased FlyGeorgia. Leased from Sky Jets 23/09/2013 Wet-leased Trans air cargo. Leased from Star Air 23/09/2013 Wet-leased Saudia. Leased from Jordan Aviation 24/09/2013 Wet-leased Saudia. Leased from Jordan Aviation 24/09/2013 Wet-leased Ceiba Intercontinental. Leased from Hi Fly Malta 26/09/2013 Wet-leased Sudan Airways. Leased from Jordan 26/09/2013 Wet-leased Senegal Airlines. Leased from Air Europa 30/09/2013 Wet-leased Turkish Airlines 30/09/2013 Wet-leased Air Niamey. Leased from Air Atlanta Icelandic 02/10/2013 Source: IBA’s JetData.

afm • Issue 87 – November–December • www.afm.aero

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