Airline Fleet Magazine - Issue 94 by AFM Magazine

The business and financing of airline operations AIRLINE FLEET MANAGEMENT

Leasing & Airline forecasts Predicting MRO needs Commercial space flight Managing ageing fleets

Forecasting the future: It’s in the stars ISSUE 94 January–February 2015

Published by

January–February 2015 Issue 94 www.afm.aero

Foreword The start of the year is a good time for planning, which is why this issue is all about forecasts and predictions.

Editor Mary-Anne Baldwin mary-anne@afm.aero +44 (0)208 831 7511 Contributors Mary-Anne Baldwin, Justin Burns, Mario Pierobon and John McCurry.

While there’s no crystal ball here, we have pulled in some industry front runners to give their thoughts on the year ahead.

Advertising Manager Alan Samuel alan@afm.aero +44 (0)208 831 7519

Global aviation lessor, CIT, provides its insight into the leasing market, uncovering demand for aircraft, the cost of borrowing and the impact of fuel prices on the market.

Editorial Director Joe Bates joe@aviationmedia.aero Design Erica Cooper erica@afm.aero Website Jose Cuenca jose@aviationmedia.aero Michael Sturman michael@aviationmedia.aero Published on behalf of MRO Network by 91 - 93 Windmill Road, Sunbury-on-Thames, Surrey, TW16 7EF Managing Director & Publisher Jonathan Lee jonathan@aviationmedia.aero AFM IS A FULLY AUDITED MAGAZINE Website: www.afm.aero AIRLINE FLEET MANAGEMENT (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.

Subscriptions department MRO Network: subscriptions@mro-network.com Subscription records are maintained at MRO Networks. MRO Network, 4th Floor, Tallis House, 2 Tallis Street, London, EC4Y 0AB, UK annual subscription cost is £150. Overseas annual subscription cost is £170 or $300. Airline Fleet Management™ is a licensed trademark of MRO Networks. All trademarks used under licence from MRO Networks Limited.

AFM does its best to use recycled products or those from renewable sources.

We also examine fuel – and give predictions for its price in the year ahead – as we forecast the flightpath for airlines. Will airlines have a year of high profits as IATA forecasts, and will they take all the aircraft they have on order? We examine all that in our review of the market. But all this talk about fuel could carry us away. Part of planning for the future is remembering the cyclical nature of the market, so while fuel costs are low, airlines should invest in reducing long-term costs. That’s why Boeing explains how metrics and analysis can deliver considerable fuel savings through pre-flight planning. The need for forecasting also plays out on a day-to-day basis with companies planning ahead for their personal requirements and situations. For example, aircraft owners and operators need to predict their MRO needs, scheduling appropriate checks, working out how to cover flights during AOG periods and predicting the associated costs. We look at all those considerations in our maintenance forecasting article on page 30. Of course, some predictions don’t pan out. The DeLorean and hoverboards were just two of my personal favourites never to come to fruition. But looking ahead can be fun, especially when the stuff of science fiction becomes the stuff of fact.

Take, for example, the ability to go into space. Since the birth of man, we’ve marvelled at the mysteries of space and, finally, those childhood ambitions of being an astronaut are on the cusp of being achieved. Commercial space travel is becoming a reality and you can read all about it on page 20. We hope you enjoy. In other news, our own Lauren Murtagh, event executive at Aviation Media, will jump from a plane to raise money for a new chemotherapy unit at the hospital that treated her mum for cancer. We’re very proud of Lauren and the challenges she’s set herself to raise money for this great cause. So far, she’s faced the ice baths and electric fences of Tough Mudder, an SAS-style assault course, and walked a midnight marathon. She will also climb the three highest mountains in Scotland, England and Wales in 24 hours, trek the Inca trails and – being a dedicated aviation geek – do a hair-raising, heart-thumping skydive! We’ll be following her progress on Twitter but for now, and on behalf of the team, I’d like to wish the very best in her endeavours. If you’d like to help Lauren, you can donate at www.justgiving.com/climbforacure Editor Mary-Anne Baldwin

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 94 – January–February • www.afm.aero

Contents 16

05 Foreword

08 News The latest on deals, mergers, appointments and more.

Focus

Fleet operations

Confronting prosperity: The aircraft leasing outlook From consolidation to the cost of credit, Damon D’Agostino, chief commercial officer at CIT Commercial Air, provides his analysis of the aircraft leasing market for the year ahead.

Airline market forecast: Now and the year ahead Mary-Anne Baldwin examines the airline market for the year ahead, including airline growth, aircraft orders, and predictions on how long those low fuel prices will last.

Join the conversation with afm online. Find us on:

The AFM website:

Twitter:

www.afm.aero

@AirlineFleetMag

Facebook:

LinkedIn:

www.facebook.com/ airlinefleetmanagement

Airline Fleet Management group

The race to space: Commercial space travel Commercial space travel has long been a dream of both individuals and our civilisation as a whole, but never before has it been this close to reality. Justin Burns and Mary-Anne Baldwin report.

26 Managing ageing fleets Debra Erni, partner at Pillsbury Winthrop Shaw Pittman, examines the relative merits of owning and operating older aircraft and evaluates why, for many, it’s the perfect choice.

afm • Issue 94 – January–February • www.afm.aero

Maintenance operations

Trading, legal and finance

Looking ahead: Maintenance forecasts Aircraft maintenance is costly but essential, so planning ahead is key. Airlines must forecast both the costs and time needed to carry out maintenance work. Crystal balls won’t work here, but thankfully there are a number of solutions and practices both the airline and the MRO can undertake, as John McCurry finds out.

Fuelling cost savings While fuel prices are currently low, they are also transient, which is why it’s now a good time to look at your fuel consumption data and analytics with a view to ensuring low costs for the long-term. Boeing’s Professional Services team offers insight into what airlines can do to lower those costs.

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

36 Cabin refits: Cost and benefits Space is the most precious commodity on board an aircraft and managing it can maximise revenue and create much sought after passenger comfort. However, retrofitting is a complicated exercise for any fleet manager. Mario Pierobon reports.

Data

44 Sharia leasing: Will it change the market? AviaAM Leasing examines the role of Sharia-compliant aircraft leasing and, in particular, Sukuk financial certificates, to find out how these relatively untouched forms of finance are being increasingly used throughout the aviation industry.

afm • Issue 94 – January–February • www.afm.aero

NEWS

Airbus hikes list prices

irbus, which exceeded its delivery targets for 2014 and recently launched the A321neo programme, has increased the average list prices of its aircraft by 3.27 per cent across the product line. Airbus handed over 629 aircraft to 89 customers, eight of which are new. It is the 13th year of delivery increases. It also achieved 1,456 net orders from 67 customers (of which 14 were new), its second best year. It officially launched the A321neo having secured the first commitment from Air Lease Corporation (ALC). The Los Angeles based lessor signed a memorandum

of understanding for 30 more A321neos, upsizing its commitments at the 2014 Farnborough Air Show from 60 to 90 and becoming the launch customer for Airbus’ increased range option. With 97 tonnes MTOW (maximum take off weight) the A321neo will have a range of 4,000nm – the longest of any single-aisle aircraft. Airbus has positioned the aircraft to take a strong market share on transatlantic routes, allowing airlines to tap into new long-haul markets. “The longer haul single-aisle market is a lucrative one that the A321neo will now dominate,” argued John Leahy, Airbus’ chief operating officer, customers.

NEWS IN BRIEF Vistara takes maiden flight India’s new domestic airline, Vistara, has taken its first flight after a series of setbacks and delays. The carrier, a joint venture between Tata Group and Singapore Airlines (SIA), flew from Delhi to Mumbai, signalling Tata’s return to the airline industry after more than six decades. The launch follows a number of unsuccessful attempts between Tata and SIA to form an airline in the mid-90s. Vistara also faced initial trouble when a number of private airlines lobbied against it, delaying its entry into service.

Octagon to join leasing community A group of Irish aviation executives are reportedly forming a new leasing firm, Octagon Aviation Capital. The leasing company, which will focus on the Asian market, allegedly includes Eamonn Cronin, former VP of finance at AWAS. Octagon’s website, which is under development, simply stated: “Octagon Aviation Capital Ltd. is a holding company for its subsidiaries, which will hold portfolios of commercial jet aircraft and lease them under long-term leases to a diverse group of airlines throughout the world, with a focus in Asia.”

Avianca orders 100 A320 neos Avianca has signed a MoU with Airbus for 100 A320 neo Family aircraft, which it will use to renew its fleet. In 2012, Avianca ordered 51 A320 Family aircraft, including 33 A320 neos. The airline group has combined orders for nearly 200 Airbus aircraft, with nearly 130 currently in operation. Avianca Cargo has also taken delivery of its fifth A330 freighter from Toulouse, registration N335QT. The A330F, which performed its first flight on the Medellin–Miami route, will replace a 767-300. Víctor Mejía, VP of Avianca Cargo, said: “The company aims to increase its participation in the flower market of Medellin.”

afm • Issue 94 – January–February • www.afm.aero

NEWS

Alitalia reveals turnaround plan

SpiceJet’s rescue plan agreed despite repo threat India’s Civil Aviation Ministry has approved a revival plan for SpiceJets that will allow new companies to acquire up to 58 per cent of the airline. The plan has now been referred to the Security and Exchange Board of India. The Directorate General of Civil Aviation (DGCA) has also lifted a ban on the airline taking advance bookings (beyond 31 March), arguing that it will aid cash flow. However, it has been reported that a number of lessors have

approached the DGCA for permission to repossess aircraft currently operated by the carrier. Robert Martin, CEO of BOC Aviation, which is thought to be considering the repossession of three aircraft from SpiceJet, told Reuters: “Obviously when we lease planes, we like people to pay us. And if they [SpiceJet] don’t pay us, then generally the way an operating lessor reacts is by moving its planes to somewhere else in the world.”

Austrian and Tyrolean set merger date The merger between Austrian Airlines and Tyrolean Airways has been planned for 1 April 2015, the pair has revealed. Following a new collective wage agreement for the flight crew, around 3,200 flight attendants and pilots will transfer from Tyrolean to Austrian Airlines, effective April 2015. The Tyrolean brand will then cease to function. “We consider this merger as a sign of conciliation and as a starting point for a new Austrian Airlines as well. The new Austrian unites the company under a common roof, housing a regional and intercontinental airline. And it is going to fly higher and farther,” said Austrian Airlines’ CEO, Jaan Albrecht.

Alitalia’s board has released its plan to turnaround the airline with a goal to reach profitability by 2017, said James Hogan, president and CEO of the Etihad Aviation Group, which has bought Alitalia. “Anything other than rapid, decisive change is simply not an option,” said Hogan. Chairman of Alitalia, Luca di Montezemolo, said the airline will send all customer-facing staff to a new customer excellence training academy. “Our priority is to put the customer at the centre of everything we do,” he explained. The new Alitalia will have three hubs in Italy. Milan Malpensa and Rome Fiumicino will grow its long-haul routes, while Milan Linate will deliver connectivity through partnerships. Alitalia plans to considerably increase its partnerships and codeshares. One “major new partnership” will be with airberlin and NIKI. It also plans to increase connectivity with Etihad Airways and work “more deeply” with Air Serbia and Etihad Regional. New routes from Rome include Berlin, Düsseldorf, San Francisco, Mexico City, Santiago (Chile), Beijing and Seoul, with increased flights to New York, Chicago, Rio de Janeiro and Abu Dhabi. The carrier is in the process of re-locating 14 A320s to airberlin, and looking to acquire additional widebodies from Etihad. Montezemolo said: “The revitalised Alitalia we envision and have started building will be an asset to this country, and a driver to support the growth of our tourism and our business.”

Airbus sells stake in Patria Airbus Group has agreed to sell its entire 26.8 per cent stake in Helsinki-based Patria back to the Finnish defence, security and aviation services provider. The company’s majority shareholder, the State of Finland, which is represented by the Ownership Steering Department of the Prime Minister’s Office (OSD), will seek a new minority partner early next year. “Industrial partnership has proved an effective way for Patria to engage in international business. Therefore, the state considers it important to find a new industrial partner for Patria as minority shareholder,” said Eero Heliövaara, director general of the OSD.

Qatar buys stake in IAG Qatar Airways has acquired a 9.99 per cent stake in IAG in a bid to strengthen its ties with the airline group. “IAG represents an excellent opportunity to further develop our Westwards strategy. Having joined the oneworld alliance, it makes sense for us to work more closely together in the near-term and we look forward to forging a long-term relationship,” Akbar Al Baker, group CEO of Qatar Airways, said. Qatar said it may consider increasing the stake, however, non-EU shareholders are subject to an overall cap on ownership as EU airlines must be majority-owned by EU shareholders.

afm • Issue 94 – January–February • www.afm.aero

NEWS: People

On the Safran appoints Cueille to head research French OEM, Safran, has appointed Stéphane Cueille as director of its new research and technology centre, Safran Tech. He was previously managing director of Aircelle, a Burnley, UK-based subsidiary. Cueille will report directly to Safran’s VP of research and technology, Eric Bachelet.

STG Aerospace announces appointments Aircraft cabin lighting specialist, STG Aerospace, has appointed Richard Ilett as its COO. Ilett has previously worked for British Aerospace and Safran’s subsidiary, Labinal. In addition, the company has selected Neil Thomas as its engineering director. Thomas has more than 20 years’ experience in the cabin equipment and avionics sectors and joins from inflight entertainment engineering company, InFlight Peripherals.

Aerodynamics picks its CEO Business charter operator and wet lease provider, Aerodynamics, has appointed Darrell Richardson as its CEO, president and chairman. Richardson, who has worked in the industry for more than 45 years, joins from US airline, Silver Airways.

move Williams to head Parker Hannifin

Parker Hannifin’s board of directors has elected, Thomas Williams, as its CEO. Williams takes over from Donal Washkewicz, who will remain as chairman of the board. In addition to Williams’ new appointment, Lee Banks has been elected president and COO.

Prince abdicates Precision role Andrew Prince, CEO and vice chairman of US-based component supplier, Precision Aerospace, is to retire. Prince, who has worked for Precision since 2007, will continue as a member of the company’s board for at least a year. As part of an executive reshuffle, Precision has confirmed that John Wachter and William Golden have joined its board of directors.

Sheridan joins NAC board Aircraft leasing company, Nordic Aviation Capital (NAC), has named Rod Sheridan, a veteran of Bombardier Aerospace, as the vice chairman of its board. Sheridan worked for Bombardier for more than 40 years, before retiring as VP of sales and asset management last October.

EasyJet CFO resigns EasyJet’s CFO, Chris Kennedy, is to leave the low-cost carrier to become CFO at ARM Holdings, a semiconductor manufacturer.

afm • Issue 94 – January–February • www.afm.aero

Kennedy will stay at easyJet until a successor has been found. He has a notice period of up to one year.

ATR appoints SVP of programmes Thierry Casale is to become SVP of programmes for the French turboprop manufacturer, ATR. In this newly created position, Casale will be in charge of supervising and co-ordinating ATR programmes, as well as its fleet in-service activities, such as MRO.

Lowery becomes JetBlue VP JetBlue Airways has appointed Tony Lowery as its new VP of technical operations. Lowery will oversee the US low-cost carrier’s engineering, maintenance, material and quality functions. He moves from Qantas Airways, where he served as head of maintenance operations since 2011.

AJW appoints BD manager AJW Aviation has appointed Danielle Kaskel as its new senior manager for business development for North America. Kaskel, who will be based in Miami, will develop AJW’s relationships with new customers and develop new business in the Americas. Prior to joining AJW, Kaskel worked as the business development manager at AeroTurbine.

FOCUS: Leasing forecast

en years ago, the commercial airline industry faced a crisis because the price of crude oil had soared to $50 a barrel, driving up the price of jet fuel. As we enter 2015, airlines are cheering because in the past six months, oil prices have fallen below that mark. During the interim, airlines have become better at controlling non-fuel costs and managing their capacity, while passenger traffic has continued to rise worldwide, creating a period of relative prosperity. That combination of discipline and demand has spurred a steady appetite for new aircraft, while strong global liquidity has provided the financing to help pay for them. As a major lessor and financier of aircraft, CIT Commercial Air has long believed that the aviation markets are a good investment. These days, the rest of the financial community seems to share our view. With the prospect of low interest rates persisting at least for the first half of the year, and maybe even the remainder, the robust growth the aircraft leasing market experienced in 2014 is likely to extend throughout 2015 as well. Here are some of the key factors we’re watching as we start the year.

Oil prices Declining oil prices represent both a great benefit and a huge temptation for airlines. The big question for carriers in 2015 is whether they can stand this kind of prosperity. In the past few years, carriers have demonstrated strong discipline with regard to capacity (particularly in North America) and profitability has risen as a result. The 50 per cent plunge in oil prices in the last half of 2014 has had – and will continue to have – a tremendous impact on their bottom lines. The concern is that airlines may be irrationally tempted to increase capacity once again. For example, a carrier that was planning to take an older, less fuel-efficient aircraft out of service may decide to extend its use now that it can operate the aircraft at a lower cost. Carriers may also decide to bump up flight hours for these aircraft, or perhaps use them to maintain marginal routes that they might otherwise suspend on a limited basis, but this isn’t negative and in fact would be good for the industry.

However, once one carrier makes such a move, it puts pressures on competitors to follow suit. The question will be how much airlines may begin adjusting their plans for 2015, and even early 2016, based on oil prices. Will airlines enter into an arms race once again and, in an effort to grab market share, flood the market with too much capacity? We already know US carriers plan to increase capacity by roughly six per cent in 2Q 2015 versus three per cent from 2Q 2014. Will they add even more later this year? Furthermore, low oil prices have opened up debate on the impact on new aircraft, specifically the new technology narrow- and widebody programmes due to enter service in the second half of this decade. I believe the overall impact on new aircraft orders is likely to be minimal. Aircraft orders tend to be 10- to 12-year decisions and carriers aren’t likely to change their long-term fleet plans based on a six-month dip in crude oil prices. After all, most airlines know that the best long-term hedge against oil prices is to operate the most fuel-efficient aircraft. While it’s likely that oil prices will rise in the coming years, even at lower prices, fuel remains an airline’s biggest expense,

afm • Issue 94 – January–February • www.afm.aero

FOCUS: Leasing forecast

and burning less fuel (at any price) significantly lowers costs. In addition, newer aircraft offer lower emissions, better range and performance, as well as increased seating capacity from cabin efficiencies. Many carriers order new aircraft to fly routes they can’t fly profitably with their existing fleet. These longer-term concerns will continue to drive demand for new aircraft entering the market. These include the A350, the first of which was delivered at the end of 2014, and the A320 neo, which is scheduled to be delivered by the end of 2015. While lower oil prices reduce costs, they also mean increased traffic for most carriers. Russia may be the one exception to this trend. The country is reeling from the decline in crude oil prices, and it has been hurt by sanctions over the Ukraine and a devaluation of its currency. Those factors will affect Russian airlines, which will have a negative impact on the global aircraft market.

Borrowing costs In terms of debt capital, 2014 was a success. After years of strong activity from export credit agencies and commercial bank lending, airlines’ outlook has improved – and it has caught the attention of bond investors.

Institutional investors have showed an eagerness to buy the industry’s asset-backed securities, primarily in the form of ABS notes issued by several borrowers in 2014, with more expected in 2015. Similarly, the larger lessors have sought to fund through the unsecured markets using corporate ratings and seeking public listings. This is significant as the leasing community accounts for over 40 per cent of the global airline fleet. In December, for example, Jetscape Aviation announced the closing of $380.5m worth of asset-backed securities with a portfolio of a single asset type, Embraer’s EJets. The notes offered some of the tightest aircraft ABS yields since the global financial crisis. Bond investors are showing similar interest in older assets as well. Leasing companies are likely to continue looking for access to the bond markets in 2015 and, in some cases, they may use warehouse facilities as bridge financings for anticipated ABS exits. In addition, new developments in Islamic financing may lead to increased activity in 2015 as well.

afm • Issue 94 – January–February • www.afm.aero

FOCUS: Leasing forecast The rise in financing from debt capital markets comes as the use of export credit has declined. While more carriers turned to export credit during the global financial crisis, in the past 18 months, financings from the US Export-Import Bank and the European credit agencies have declined by about 10 per cent.

This is especially true in the US, where the smaller LCCs find themselves battling for a smaller slice of the overall market. The Asian market is also ripe for more consolidation as carriers scramble to capture larger shares of this rapidly expanding market.

The US Federal Reserve is expected to begin allowing interest rates to rise in the second half of the year. However, lower oil prices, combined with concerns of deflation in Europe and slowing growth in Asia, could help maintain the current worldwide low interest rates in 2015. While interest rates have remained low heading into 2015, the US Federal Reserve is expected to begin allowing rates to rise in the second half of the year. However, lower oil prices, combined with concerns of deflation in Europe and slowing growth in Asia, could help maintain the current worldwide low interest rates in 2015.

Consolidation The early part of 2014 was marked by a major merger in the aircraft leasing space. AerCap Holdings completed its $2.6bn acquisition of International Lease Finance Corp in May, significantly increasing AerCap’s size in the industry. More consolidation is likely to follow in 2015, although it will likely be on a smaller scale. To better capitalise on global aviation growth opportunities, CIT formed a joint venture in October with Century Tokyo Leasing. The venture will initially purchase 14 aircraft from CIT at a value of about $500m with the goal of reaching $2bn in assets by March 2017. CIT will manage the venture while Century Tokyo Leasing will provide debt and equity. The wave of consolidation could extend to airlines too. The US market has finally achieved the level of consolidation that many experts had been predicting for 20 years or more. With the 2014 merger of American Airlines and US Airways, the four largest US carriers now fly about 90 per cent of the passengers in the market. In Europe, about 40 airlines carry 90 per cent of the market, which underscores the opportunities for consolidation. In the first sign that European markets could face a shake-out, Cyprus Airways succumbed to years of mounting competition and persistent losses, shutting down in early 2015 after falling foul of European Union restrictions on state aid. Worldwide, low-cost carriers (LCCs) may resort to mergers to give them more market leverage against the larger airlines.

Looking to the future Asia was the world’s fast-growing aviation market in 2014, and it is forecast that the growth in 2015 will be on a par with 2014 – the region will continue to surpass the growth in other markets. Asian carriers have implemented more capacity discipline in recent years than they have in the past. Of the top 50 carriers in the region, 70 per cent reduced their capacity growth rates in the 3Q 2014. Nevertheless, demand for new aircraft remains robust. CIT estimates that, to meet the growing demand from the region, Asian carriers will need more than 13,000 aircraft during the next 20 years. Our supply and demand models point to several sub-regions in Asia that are significantly behind on new aircraft orders, including China and east Asia. These areas represent significant growth opportunities for leasing companies. Further afield, low interest rates and increased competition for financing will ensure that the growth of the leasing market experienced in 2014 carries over into 2015. The strength of the financing market depends largely on oil prices and how airlines respond to them in the short-term. Interest rate changes and geopolitical events could also affect the industry’s purchasing decisions. The airline industry has long been a cyclical business, one in which huge losses can suddenly overwhelm years of profitability. At CIT, our long history as an airline lessor has taught us to look beyond these short-term reactions and consider the industry’s long-term needs. New aircraft that offer greater fuel efficiency, lower emissions, improved technology and better performance will allow carriers to meet the changing regulatory, political and geographic needs of the market for the next decade and beyond.

afm • Issue 94 – January–February • www.afm.aero

MTU – Maintaining your power

to r a t E x h i b i m e ri c a s A 015 ISTAT - 10, 2 na 8 h c r o Ma e , A ri z l a d s t S c ot

At MTU Maintenance, we believe that customized and alternative solutions bring the most beneﬁts. As one of the world’s leading MRO providers for commercial engines, we aim to reduce MRO costs while maximizing asset value. With class leading repair technologies and decades of expertise, customers are increasingly taking advantage of MTU’s ever growing service portfolio. We offer more. www.mtu.de

FLEET OPS: Airline forecast

irlines have seen a slow and steady pick-up since the pit of the recession, but not until now have they celebrated such progress. Fuel prices are low, orders are hitting record highs, and the availability and cost of financing are also very good. All this means things are looking good for the industry, both now and for the year ahead. Some 78 per cent of airlines expect to rake in more profit in the year ahead, according to IATA’s quarterly survey of airline CFOs and heads of cargo. And, the latest data suggests that air transport continues to expand at five to six per cent. It’s particularly good news for the cargo sector, which has been in a somewhat dire state since the start of the recession but saw improvements in late 2014. Of those surveyed, 71 per cent said they expect increased cargo demand in the year ahead, driven particularly by demand in North America and the Asia-Pacific region.  So what’s changed and why are airline bosses confident their luck will stick? IATA’s Airline Business Confidence Survey for January 2015, which polls 250 airlines, shows that performance will continue to improve thanks to a decline in costs, largely due to the fall in crude oil prices.

“Input costs have declined during the past three months, continuing a downward trend started mid-year. The decline in input costs in 4Q is a result of the fall in crude oil prices over recent months,” IATA experts said in the survey. Other figures produced by the company show that global airline shares soared 40 per cent last year, largely due to lower fuel prices. But this growth was not evenly spread. During 3Q, North American carriers saw operating profits rise 35.6 per cent year-on-year, however, Latin America’s fell by 30 per cent, Asia-Pacific’s 4.7 per cent and Europe’s 3.5 per cent.

Fuel prices Oil prices have fallen almost 60 per cent since their peak last June and now sit at around $50 per barrel (pb). Rocked by a number of factors, prices were extremely volatile during the first month of this year. For example, they fell on 22 January when the European Central Bank announced a €1.1tn quantitative easing programme (under which eurozone governments will sell bonds), but rose again the next day (Brent rose 2.4 per cent, or $1.18 to $49.70pb) when Saudi Arabia’s King, Abdullah bin Abdulaziz, died.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Airline forecast The news of his death added more uncertainty to the market as spectators questioned whether the late King’s brother and heir to the throne, Salman, would retain the nation’s current rate of oil output. Saudi Arabia is the largest producer of oil in the Organization of the Petroleum Exporting Countries (OPEC) and a decision to adjust output would have significant effect. However, OPEC has said it has no immediate plans to cut its output despite some fearing an excess of oil could bring prices down to as low as $25pb. OPEC’s secretary general has said he expects prices to rebound later this year, while the organisation said it is no longer willing to make “sacrificial” cuts when non-OPEC countries continue to increase their production. Among those it’s referring to is North America, whose supply of shale oil has spiralled. Bob Dudley, head of oil at Britain’s fuel supplier, BP, told the UK’s BBC that oil prices could remain low for up to three years. And he’s not the only one to forecast long-term lows. Goldman Sachs has cut its 2015 forecast for Brent from $83.75 to $50.40pb and lowered its 2015 West Texas

Orders and deliveries Of course, anything that affects airline profits and passenger traffic will also affect the carriers’ routes and fleet strategies. But despite ATR having what it called an “extraordinary year” last year – beating its own records on turnover ($18.8bn) and orders (280, including options) – the manufacturer said it thinks demand for turboprops may fall this year as airlines assess changing fuel prices. ATR’s 90 seaters are more fuel-efficient than regional jets – hence their popularity when fuel prices are high. But now that Brent prices have dropped, ATR fears that airlines may change their fleet strategy. Yet demand for ATR aircraft is currently so high that a more immediate concern is its supply stock. In fact, ATR’s output has increased 60 per cent in the last five years and Patrick de Castelbajac, CEO of ATR, says the company will have to support the more fragile links of its supply chain. Not doing quite as well, Bombardier has halted its Learjet 85 programme due to poor demand in the light jet market. The Learjet 85 was launched in 2008 with entry into service due in 2013. The first aircraft completed its maiden flight in April but never made it into commercial service.

JP Morgan

We see significant oil oversupply with risk that Brent falls below $40 a barrel in the near-term Intermediate (or WTI, a benchmark for oil prices) forecast from $73.75 to $47.15pb. It expects that next year those figures will sit at $70pb for Brent and $65pb for WTI, down from $90 and $80 respectively. Similarly, JP Morgan cut this year’s Brent forecast from $82 to $49pb and its 2016 figures from $87.75 to $56.80pb. It said it expects a U-shaped recovery climbing to $90pb in 2019. “We see significant oil oversupply with risk that Brent falls below $40 a barrel in the near-term, should the oil market not be able to accommodate a 1.6 million-barrel-a-day surplus,” JP Morgan said. It added that this trough could fall in March, when it believes prices may hit $38pb. The upshot of this, of course, is a thicker profit margin for airlines and – if they are wise – lower ticket prices, which will in turn increase demand. In fact, last December, IATA predicted a five per cent drop in fares next year due to fuel costs.

The manufacturer will take a 4Q $1.4bn write-off recorded as a pre-tax special charge as a result of the decision and will also have to lay off around 1,000 staff. “Given the weakness of the market, we made the difficult decision to pause the Learjet 85 programme,” said Bombardier’s president and CEO, Pierre Beaudoin. “We will focus our resources on our two other clean-sheet aircraft programmes under development, the CSeries and Global 7000/8000.” But what the industry lost in light jet demand, it more than made up for in narrow- and widebody orders. Airbus had its 13th year of delivery increases in 2014, having handed over 629 aircraft to 89 customers. It also achieved 1,456 net orders from 67 customers, its second best year. But, testing the market’s elasticity, it immediately increased the average list prices of its aircraft by 3.27 per cent across the product line – seemingly confident that demand won’t slip anytime soon.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Airline forecast

Boeing won more widebody orders in 2014 with 328 firm orders, a 10 per cent increase year-on-year. It also beat its rival on deliveries, reaching a record 723 commercial aircraft in 2014.

anticipated growth in passenger traffic, record airline profitability and the continuation of a replacement cycle to improve the fuel and performance efficiency of the global fleet,” said Myers.

However, overall Airbus took 24 more orders (1,456 firm orders compared with Boeing’s 1,432). At the end of 2014, Airbus’ order backlog totalled 6,386 aircraft, while Boeing’s hit 5,789 – both record highs. It reflects strong demand but also the potential for an order bubble.

“The stable performance of aircraft finance and investment over the past few years – particularly through the global financial crisis – is attracting new participants and is driving diversification both geographically and in terms of funding sources. That’s good news for airlines and lessors who will continue to have access to highly efficient financing,” Myers added.

However, if fuel prices remain low, demand for air travel will continue and airlines will still want these aircraft. Financing is set to be both available and affordable, suggesting that the only concern – as already highlighted by ATR – might be the supply chain.

Aircraft financing Despite ATR’s cautiousness in the turboprop market, Boeing forecasts $124bn in deliveries of new commercial aircraft in 2015. “That’s doubled since 2010. And while we expect to see the growth moderate over the next few years, we’re still expecting annual airplane delivery finance requirements to be around $156bn in 2019,” said Tim Myers, VP of Aircraft Financial Services for Boeing Capital Corporation.

As far as Boeing is concerned, there will be more passengers travelling on more flights to more destinations. Flights will be cheaper and options more varied. And, although fuel prices are set to remain low for some time, airlines will always seek to reduce their fuel costs no matter how low that baseline is. Furthermore, those prices rise just as often as they fall – something airlines know all too well, meaning they’re unlikely to make long-term fleet choices based on short-term gains. Boeing believes that funding for deliveries will be shared equally among cash, commercial bank debt and capital markets. Meanwhile, ECA support, which declined faster than was previously forecast, will stay at historically low levels.

According to Boeing, the financing market will benefit from “unprecedented diversity” born of many years of predictable and attractive returns. So, this year we should expect to see more lenders enter or return to the market, bringing with them competitively placed interest rates.

Lessors are expected to support around 40 per cent of new aircraft deliveries, while investor demand and lessor portfolio sell-down initiatives should support continued interest and investment in the used aircraft market.

“The strength we’re seeing in aircraft finance is largely the result of a healthy and balanced global demand for new aircraft, which is being driven by

It seems that both financiers and lessors have appraised the market and found it ripe for investment; no doubt it will be a good year ahead for airlines and their passengers.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Space travel

he prospects of commercial space travel were greatly publicised by Virgin Galactic as it prepared to take members of the public (albeit only the very wealthy) on its first commercial sub-orbital flight. We saw images of the spacecraft, heard what the journey might entail, but also bore witness to the fatal crash of SpaceShipTwo, which disintegrated mid-air during its test flight on 31 October, killing its pilot Michael Alsbury. Suddenly, our hopes were dashed.

A space odyssey Virgin Galactic was due to take its first commercial flight in 2008; that was delayed until 2015, but the incident involving SpaceShipTwo means the project will be on hold indefinitely while investigations take place. The cause of the incident has not been officially confirmed and that will take months of investigation. However, early analysis suggests that the ‘feathering’ system, used to slow down the spacecraft, was activated before it had reached the right speed of Mach 1.4. Of course, this suggests that the incident was due to pilot error, not a technical fault, but the event has opened a floodgate of concerns and revealed questions as to whether space travel is really a safe and viable option for the public. Carolynne Campbell-Knight, who works on rocket propulsion at the International Association for the Advancement of Space Safety (IAASS), told the press that she went to Virgin Galactic with concerns about its use of unpredictable nitrous oxide some four years ago. Indeed, three engineers were killed in an explosion during a test in 2007. Her recommendation now is that the company stops the project to “go away and do something they might be good

at like selling mobile phones – they should stay out of the space business”. With such comments, it seemed our hopes of commercial space travel were crushed. Yet Branson remained firm on his commitment to both safety and the project: “We do understand the risks involved and we are not going to push on blindly – to do so would be an insult to all those affected by this tragedy. We are going to learn from what went wrong, discover how we can improve safety and performance, and then move forwards together,” he told the press. Virgin Galactic has already signed a deal with the US Federal Aviation Administration (FAA) setting out how routine space missions from its $225m New Mexico spaceport will be co-ordinated using the normal air traffic control system. It’s pitched its ticket price at $250,000, and around 700 celebrities and members of the elite have signed up to be transported more than 68 miles up to the edge of space, or to the so-called ‘Karman Line’. However, a number have reportedly since backed out. While Branson is still bullish, it’s important that we don’t pin our hopes on him alone. In fact, there is somewhat of a commercial ‘space race’, with sub-orbital trips being offered by a number of companies and airports – or, in this case, spaceports – doing much by way of preparation. XCOR Aerospace is also close to launching long-awaited flights. The company will charge from $95,000 a ticket for a one-to-one pilot flight aboard its two-seater Lynx shuttle. But, in 2016, a $100,000 ticket will take the passenger 61 miles up, beyond the Earth’s atmosphere, where tourists will spend up to six minutes.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Space travel

FLEET OPS: Space travel Also available from 2016 is The World View Experience. Costing $70,000, it will give passengers the opportunity to fly 100,000ft – almost 20 miles above Earth. Lynx takes off and lands at a horizontal level, but instead of a jet or piston engine, uses its own fully reusable rocket propulsion system. Like an aircraft, it will operate up to four times per day from any licensed spaceport with a 7,900ft runway. The Lynx Mark I, the initial flight test vehicle, is currently under development and will undergo a flight test programme beginning in 2015. The Mark I will be placed into commercial service after being licensed by the Federal Aviation Administration. In addition, a number of private companies – such as SpaceX with its Dragon V2 spacecraft and Boeing with its CST-100 – are building spacecraft so that they can bid on a tender to transport cargo to the International Space Station, something previously performed only by Russia. And, although these flights aren’t for commercial endeavours just yet, they offer the technology to do so at a later date.

200,000 commercial airline passengers were handled in 2013, its most recent figures. Spaceport Sweden has been operating since 2007, and has signed an agreement with Virgin Galactic to be the first location outside the US to operate space tourist flights. Its CEO, Karin Nilsdotter, says the market is expanding fast and the way the new space vehicles fly is a “game changer”. “Aviation was commercialised 100 years ago, and that is what is happening with space. Space is no longer a race between nations – it is a race between businessmen and women. “The estimation of the value of commercial space tourism flights is $1.6bn over the first 10 years, so it’s going to be huge,” Nilsdotter explains. In her view, in order to be successful, spaceports must operate a range of services and space flights form only part of it. Spaceport Sweden boosts revenues by offering educational talks and technical visits, conference facilities, running a spaceflight preparation programme, space camp, and trips to view the northern lights.

A portal to space

Space flights can also present a huge opportunity for regional airports outside big cities as they can be a catalyst for growth. Nilsdotter says: “These space planes cannot fly in a very occupied airspace so need access to underpopulated areas where regionals are situated. It will attract a lot of jobs and we will see more spaceports being built in the regions for sure.”

Europe’s gateway to space is currently Spaceport Sweden, situated 100km above the Arctic Circle, in Lapland, nestled in the land of the midnight sun and northern lights. The facility, which is referred to as a ‘hybrid spaceport’, lies next to Kiruna Airport, where

The passionate CEO is on the list to fly with Virgin Galactic, and says her own interest has been fuelled by chats with former astronaut, Buzz Aldrin: “I think space tourism flights will have a big impact on humanity. It’s so exciting for the world.”

As lift-off draws closer, there has been a groundswell of support to build commercial spaceports, and the US now has nine fully licensed facilities, with a tenth set to follow. And, in almost every continent, infrastructure is either being built or is in the pipeline.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Space travel

Above and beyond Most spaceports are being built in the desert, or on isolated land away from urbanisation, but the first urban space gateway is close to being given the go-ahead near Houston, Texas. Located 15 minutes from downtown at Ellington Airport, the Houston Airport System (HAS) is working with the Sierra Nevada Corporation (SNC) to open the tenth commercial spaceport in the US. HAS is waiting for a launch site licence from the FAA’s Office of Commercial Space Transportation (FAA-AST), and has already submitted an application. Ellington now handles military flights but operated commercial flights until 2004, and according to HAS’ business development manager, Arturo Machuca, it has the infrastructure in place for a successful spaceport. Houston handles more than 50 million passengers through its gateways each year and is connected to 170 different routes, so is a perfect location for tourists to be launched into space, in Machuca’s view. He enthuses: “We believe this will be an excellent location for space tourism and people to have their ‘space experience’. Houston is an attractive destination and we will be very proud to become the first urban spaceport.” Houston Spaceport also aims to create diverse revenue channels to boost funds such as housing aerospace firms, an education facility, a state-of-the-art terminal and hangars for operators. He says operations involving the launch of micro-satellites, astronaut training, zero gravity experimentation and space tourism will also take place. And, commercial space flights from point-to-point are nearing reality, something clearly exciting Machuca, who

says that in 10 to 15 years flights via space will take two hours from Houston to London. But elite space travellers – which at this point are all of them – may want to expand their adventure by combining it with an Earth-bound holiday. For them there’s the Caribbean Spaceport on the Netherlands Antilles island of Curaçao. The spaceport will serve both the personal spaceflight market and the low earth orbit (LEO) small satellite. Meanwhile, Curaçao International Airport aims to be the world’s first regional, self-sufficient green airport city, powered by solar energy and cooled by a seawater air conditioning system. Curaçao’s ambitious airport city development plan is believed to come with a $1.8bn price tag, based on annual investments of $30m per annum over the next few decades. Talking late last year, commercial development manager, Simon Kloppenburg, explained: “It will create around 1,400 jobs, which is not bad for a small island with a population of under 150,000 people.” He added that many people have already signed up for XCOR Aerospace’s space flights from the site. The number of spaceports around the world is growing, and in years to come there is likely to be a wider global network. In fact, every region of the world is gearing up to send tourists into space. Asia has Spaceport Malaysia, located in Selangor, 80km north of Kuala Lumpur; Kazakhstan has Baikonur Spaceport, which is leased by the Russian Space Agency; and the UAE has the $265m Ras Al Khaimah Spaceport. Meanwhile, Singapore has set aside $115m for its own spaceport and last year the UK announced plans for a spaceport in Scotland by 2018. So fear not intrepid space explorers, the race to space is most certainly still on.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Ageing fleets

Managing ageing fleets

Debra Erni, partner at Pillsbury Winthrop Shaw Pittman, examines the relative merits of owning and operating older aircraft and evaluates why, for many, it’s the perfect choice.

anufacturers design modern aircraft with a prescribed lifespan, or ‘design life’ of 25 years. The lifespan includes a specified number of flight hours and flight cycles, which allows the aircraft OEM, owner and operator to expect reliability in terms of service, components and function for a set period of time. However, in reality these 25 years are not set in stone; aircraft last for both shorter and longer periods. And, it’s against the actual lifespan – or the ‘economic life’ – of the aircraft that the owner must write down its costs.

Putting aside countries that prohibit aircraft that are more than 10 years old, any fleet manager or aircraft investor will want to stretch the economic life of an aircraft as far as possible. However, an aircraft’s economic life can only continue for as long as the cost of maintenance, fuel and other operating expenses make it viable. Typically, maintenance requirements, service downtime and fuel costs increase as an aircraft gets older. However, an operator may consider keeping an ageing aircraft for longer if the resulting costs can be set-off by a reduction in lease rates, or if the availability of new replacement aircraft is restricted or too expensive.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Ageing fleets

Wear and tear

aircraft is subject to. In particular, the length of a flight correlates directly with fatigue. As an aircraft ascends on take-off, its structure expands as a result of pressurisation, and as it descends the structure contracts, resulting in fatigue – hence an aircraft that is operated on short flights will be subjected to a higher number of pressurisation cycles, in turn increasing the rate of fatigue.

While there is no denying the importance of chronological age per se, two more important factors that exacerbate aircraft ageing are corrosion and fatigue. While these aspects generally affect the aircraft structure, they can also damage wiring, flight controls and other components. The rate of fatigue depends on the type of operation an

Corrosion also affects the aircraft structure and occurs as a result of the chemical or electrochemical degradation of metal over time. It can also affect electrical connectors and flight control cables. Corrosion is more prevalent in marine and coastal environments with high humidity and salt water.

An aircraft investor with the technical expertise and risk management capabilities needed to participate in the mid-life market (aircraft of 12 years old or more) may find some rewarding opportunities to finance the ageing assets that airlines or other leasing companies are looking to phase out.

afm • Issue 94 – January–February • www.afm.aero

FLEET OPS: Ageing fleets

Maintenance considerations The key to managing an ageing aircraft is the maintenance programme and continual monitoring of that programme to identify hot spots as early as possible. While repairs that are carried out with a view to extending an aircraft’s longevity tend to pay off in the long run, this needs to be balanced against the airline’s cost of running the aircraft, market demand for that asset and the price at which the owner can lease it for. Line mechanics may require more detailed training on troubleshooting defects specific to older aircraft, and may need to become acquainted with heavy maintenance checks to gain experience of the more detailed inspection requirements. Spares inventory will need to come under constant review to ensure that sufficient supplies of rotable and consumable parts are on hand for the increased amount of maintenance needed. However, there are many opportunities to pool parts for older aircraft, making them cheaper than those needed for new aircraft. It’s fair to say that there is no exact science or formula by which to calculate the impact of age on maintenance and operating costs. All aircraft age differently and the aircraft’s type, flight operation and geographical location will have just as much bearing as the owner’s or

operator’s access to spares, replacement parts and labour – and the cost of those. Modifications – whether they be for reason of safety or economics – also need to be considered with ageing aircraft. For aircraft modified due to issues of safety, airworthiness directives, mandatory service bulletins and risk reduction modifications generally tend to increase in frequency and magnitude with age, however they can also apply to younger aircraft and across an entire model, irrespective of age. It should also be remembered that many other modifications result in, or are specifically designed to bring, some form of advantage for the airline, which allows it to re-coup its costs. Again, the magnitude and frequency of such economic modifications often increases with the age of the aircraft and will be of particular concern to those airlines keen to preserve or enhance the image of their product. When such modifications are made, they should create returns for both, or either, the airline and aircraft investor over time. Although the issues involved in operating or owning an ageing fleet are not without complexity, when weighed against the comparative costs of acquiring or financing replacement aircraft, they can be a much more attractive option to many investors and operators. The trick is to acquire the knowledge and skills needed to take on that opportunity.

afm • Issue 94 – January–February • www.afm.aero

MRO: Maintenance forecasts

Looking ahead: Maintenance forecasts

Aircraft maintenance is costly but essential, so planning ahead is key. Airlines must forecast both the costs and time needed to carry out maintenance work. Crystal balls won’t work here, but thankfully there are a number of solutions and practices both the airline and the MRO can undertake, as John McCurry finds out. Collaboration is key For Southwest Airlines, which operates 665 aircraft, MRO costs are high. About 30 of Southwest’s aircraft are undergoing maintenance checks at any given time, so as John Brutag, the company’s director of aircraft standards, puts it, MRO takes up “a considerable chunk of change”.

as an operator are looking for, which are the labour and skill sets to work on our aircraft. If we don’t use their capacity, they will sell it to someone else. All of this makes it difficult to ensure that they are delivering on our expectations to receive their best product.”

Reducing those costs is a priority for any aircraft operator. Brutag says the biggest challenge for an airline that is trying to schedule maintenance is dealing with an MRO’s business model, which sometimes works against the operator’s best interests.

Brutag’s best advice on how to lower maintenance costs is to encourage better collaboration between MROs and operators. This would help create more consistency in the work requirement and help define the most effective package of work, including tracking and understanding previous maintenance visits.

“They [MROs] are trying to take in as much business as they can to fill their barn and utilise all their resources,” he explains. “That doesn’t always play well with what we

“MROs have a vast amount of data, but we don’t always see it being applied to help an operator improve,” Brutag observes. “For operators to lower their costs, you have to find

afm • Issue 94 – January–February • www.afm.aero

MRO: Maintenance forecasts Haeco America’s maintainance facilities

“It’s always a juggling factor to minimise the check duration and get all the work accomplished. If we put a plane into an MRO that doesn’t have a sufficient burn rate, we will have a long duration of check time and that can get the fleet in trouble in terms of other maintenance that needs to happen.” As aircraft age, certain maintenance skill sets become more important, so Southwest takes a keen look at available skill sets versus its requirements. That can dictate where the airline places aircraft. “If a facility has a greater structural skill set, we may put our more demanding aircraft into those locations,” Brutag says. Another consideration is aircraft positioning and requirements versus costs. In other words, whether an MRO station is on Southwest’s network, or whether it’s a location that requires the aircraft to be ferried. “If it’s an overseas station, it’s obviously a long ferry. If it’s a domestic facility but not on the network, we still have a cost. These factors are less controllable, but we do a lot of quality and performance metrics around these facilities and evaluate vendors on a continuous basis.”

Time is money Reducing the AOG (aircraft on ground) time is the primary solution to cutting MRO costs. This time can range from four to 40 days depending on the maintenance package being performed and whether technicians find anything unexpected during a check. Costs can range from $100,000 to $1m or more. And, as aircraft age, there is a corresponding increase in AOG times. “We try to work with our customers to find ways that group maintenance events, creating a bit of a flow to the work,” says Len Kazmerski, VP of marketing and business development for HAECO Americas, which formerly operated as Timco Aviation. “It allows a facility to become more familiar with a fleet. We refer to it as nose-to-tail activity.”

a way for MROs to lower theirs. It has to be a collaboration, and it’s probably not as much of one as it should be now.” Southwest uses MROs to perform about 80 per cent of its heavy maintenance requirements, with the remainder of it performed at its hangar in Dallas. Matching up a job with the available capacity at an MRO can be tricky, Brutag says. An operator must ensure that the capacity an MRO quotes is actually available. Southwest looks closely at the labour rate and availability – or what is referred to as the ‘burn rate’. Brutag explains that this is the number of labour hours per shift, or per day, needed to maintain the fleet – a calculation that is important when assessing costs. “The burn rate helps us understand how they [an MRO] might be able to turnaround the aircraft,” Brutag says.

Kazmerski says the ongoing flow of work allows employees to become experts at handling certain fleets. He cites the company’s lines at its facility in Lake City, Florida, which handled A320 aircraft, as an example. Patterns are noticed, which, for example, could be something unique regarding the way an operator’s aircraft are flown. For example, operators that fly in wet environments might have certain types of corrosion. Having this knowledge in advance can help reduce costs in the future, with preventive work eradicating a problem before it spreads, he says. “By capturing those kinds of events we can, in terms of data, turn them into recurring items,” Kazmerski says. “We are able to share that information with our customers and they are able to plan better. We have invested in this technology over the last five years and it’s

afm • Issue 94 – January–February • www.afm.aero

MRO: Maintenance forecasts

Lufthansa Technik carries out 747-8 maintainance

predictive to the extent that we can gather information from multiple customers. This becomes very powerful information and there is tremendous opportunity to eradicate non-recurring events. There’s a lot of opportunity in that space going forward.” Lufthansa Technik, which serves all of Lufthansa’s fleet in addition to other air carriers, has invested heavily in IT systems and uses programs developed in-house to monitor costs based on the maintenance planning documents provided by OEMs, says Achim Zoller, section manager for maintenance concept management at Lufthansa Technik. Zoller says Lufthansa Technik works with each customer to develop strategies to keep turnaround times as short as possible. This includes using predictive maintenance to forecast the optimum time to replace key parts. “As far as maintenance tracking, we have a good history of previous tail numbers and how many times an aircraft has been in for various checks, says Kevin Larson, chief information officer at AAR, one of the world’s largest MROs. “This is an area where we are starting to mine the data. We are analysing our routine and non-routine maintenance and work cards.” AAR retrieves that data with the goal of eliminating non-routine maintenance and having it become routine.

“The whole goal is getting the aircraft a day or two early,” says Troy Jonas, VP for global sales and marketing, airframe and engineering services. “Time is money for them and it’s very competitive. We try to improve efficiency in conjunction with the airline. This includes planning for parts and tooling to be on hand.” According to Larson, AAR focuses on supply chain inventory management, which ensures the company has the right part at the right location at the right time. But there is more that could be achieved. Jonas notes that airlines could benefit from some type of information-sharing system. If everyone shared data on best practices, it would lower costs and improve the product for customers. But currently there is no such system and of course “airlines would have to take the lead on that”.

Programming progress Software developers in the aviation maintenance sector say the market for products has been volatile over the past few years, but signs of buoyancy have sprung up of late. Aviation MRO software providers generally work closely with the users when developing new products. This is certainly true of providers Rusada, Commsoft and Swiss Aviation Software.

afm • Issue 94 – January–February • www.afm.aero

MRO: Maintenance forecasts

AAR mechanics use the iPad to view data from AAR’s stAAR MRO software platform

“We believe the joint experience of our consultants and their respective clients produces a product that is practical and efficient to use,” says Tim Alden, Rusada’s commercial director. This year, Rusada plans to introduce more web-based user interfaces for Envision, its product for line maintenance and flight operations, Alden says. Enhancements will include scheduling functions such as employee rostering and work grouping. Envision is designed to manage maintenance programmes and out-of-phase requirements. Alden says it is typically the central hub of the operation but may also be called upon to interact with other business systems. “Historically, this used to be a time-consuming and expensive exercise both to initiate and to support,” Alden says. “So we developed web services, and now clients benefit from a streamlined data transfer that is unaffected by local system changes.” Advances in mobile applications are a focus of both Swiss Aviation Software and its product, AMOS. Ronald Schaeuffele, CEO of Swiss Aviation Software, says the upgrades offer increased usability to support line maintenance with tablets. Another development from 2014 aids financial reporting by allowing MRO personnel to work with multiple currencies when required by a client. Swift Aviation Software’s customer base is comprised largely of CAMO organisations, MROs and small to

medium airlines, but Schaeuffele hopes to broaden this to include the much larger Tier 1 airlines. “One of the challenges at the moment is to enable AMOS to be used by Tier 1 airlines,” he says. “We are heavily investing in scalability products. We also want to move more into the pure maintenance provider area and have a full scope of operators and owners up to large airlines and MRO providers.” Commsoft, also based in the UK, is working on upgrades to its OASES software to improve hangar workflow for its customers, its managing director, Nick Godwin, says. This includes a commercial module that allows customers to plan their work in great detail and create reports and invoices for customers. Godwin explains that the OASES system also allows operators to take histories of past MRO work for different projects and use the data as a model to bid on work. Commsoft periodically holds user conferences, which Godwin says often lead to upgrades to OASES, several of which are in the pipeline. These include more mobile interfaces and applications. “The latest developments will allow quotation and bid management and the monitoring of commercial performance,” Godwin says. “It will offer comprehensive maintenance costs monitoring and analysis.” From collaboration and co-operation to data-sharing and predictive maintenance, there is a great deal that both airlines and MROs can do to trim maintenance costs. Where there is a will, there is a way, but it needs a united approach.

afm • Issue 94 – January–February • www.afm.aero

MRO: Cabin refits

Cabin refits: Cost and benefits

Space is the most precious commodity on board an aircraft and managing it can maximise revenue and create much sought-after passenger comfort. However, retrofitting is a complicated exercise for any fleet manager. Mario Pierobon reports.

leet managers have a lot to think about when it comes to updating aircraft interiors. Customers have high expectations for both comfort and technology while airlines have to tackle the need for fleet harmonisation following a merger or rebrand, the introduction of new and sophisticated in-flight entertainment (IFE) systems and the creation of new classes, such as premium-economy. All that must fit with both cost and time restrictions.

changing the seats, galleys and lavatories, in combination with an IFE and a SATCOM upgrade,” he adds.

Cost and time management

The cost of a cabin retrofit varies a lot. “The range could be anything from $50,000 to, in some cases, as much as $5m per aircraft,” explains Jean-Marc Lenz, head of aircraft services at SR Technics.

According to Brady, customisation is built in two main phases. First, changes need to be made to the seat to meet customer specifications, for example a longer armrest or IFE integration. The second phase involves third parties, such as an MRO, to execute the supplemental type certificate (STC) and a design organisation for STC application, integration systems such as IFE, and certification of the layout of passenger accommodation (LOPA).

“It depends on the aircraft cabin size and the degree of the changes that the refit calls for. This could be anything from a simple economy- and business-class seating ratio change, right up to a full cabin installation, which involves

The schedule for performing cabin refits is primarily driven by the effort and time it takes to produce the first aircraft in the modification series. “Mostly, that takes between three to nine months for development of the STC. This type of

Cabin refitting should start with an appropriate consideration of cost, time and the potential issues that could arise.

For a seat installation, says Chris Brady, managing director of ACRO Aircraft Seating, there are three main costs: the cost of the seat, recurring costs and (potentially) non-recurring costs such as hydrogen-induced cracking (HIC) testing, something that a growing number of aircraft are subject to.

afm • Issue 94 – January–February • www.afm.aero

MRO: Cabin refits is to drive it toward higher levels of comfort and entertainment. Depending on the individual airline’s situation, the commercial results are different.” Brady notes that many airlines have chosen to increase seating by adding an extra row. The benefit of more seats is of course more revenue, and the assumption is that comfort is the cost. But that needn’t be the case. For example, ACRO recently worked with a large European charter operator, adding an additional row to its A320 fleet. “It’s fair to say the airline was a little cautious about the diminution of customer comfort but, in fact, the opposite has been the case. Their in-flight passenger surveys show that even though seat pitch was reduced, the legroom score given by their passengers actually increased. This is entirely due to the slim seat,” says Brady. Brady also sees demand for premium-economy seats and the company is currently investing several million pounds (sterling) for research in this area. Another growing market is LED lighting systems, which according to Nigel Duncan, MD of STG Aerospace, not only upgrade an airline’s image, but can also improve passenger well-being. STG Aerospace’s liTeMood lighting system changes the mood of a cabin’s interior

extensive aircraft refit could usefully be done during a slightly extended routine check,” says Lenz. Delivering the seat to specification depends on the amount of customisation required. “It is low risk to put a standard mechanical seat on a plane but, if you alter it – say to have a coat hook put on it – this could invalidate the HIC testing,” says Brady. He explains that the most complex installations are those involving an electronic system. “We need to overlay the ergonomic features of our seat with perhaps a minimum bend of a video screen. Add to that a screen pad and then add some HIC tests and the seat is now a complex installation.”

Updating interiors Although the passenger may not see it, aircraft are dynamic environments. They are often updated under a rebrand, to create new classes, to increase legroom, or to increase seat count. But how can a fleet manager navigate through these changes? According to Lenz, there are different factors at play on long-range and short-range aircraft. “On the short-range, the focus is to increase the seat count. Conversely, on the long-range fleet, the tendency

“Human beings have evolved to thrive in dynamic natural light. Indeed, the colour and intensity of light controls our circadian rhythm, positively affecting our bodies and minds throughout the day. In other words, light isn’t just important for our visual performance, it’s important for our biological performance – that is, our health and well-being. Disturbing our circadian rhythm can result in insomnia, disorientation and fatigue,” Duncan explains. He talks of a “lighting philosophy” whereby lighting systems such as STG Aerospace’s liTeMood addresses the physical and emotional well-being of passengers, while at the same time improving airline metrics. “The resulting weight and energy savings – as well as an enhanced passenger experience – can make a meaningful improvement to an airline’s competitiveness,” says Duncan. liTeMood is a plug-and-play programmable blue and white LED cabin lighting system designed to provide airlines with non-LED-equipped cabins the same standard as brand-new aircraft.

Fleet harmonisation One common reason for retrofitting an aircraft is the need to rebrand following a merger or acquisition of a second-hand aircraft. The costs involved here depend upon both the scope of works and the number of aircraft. Operators want to incorporate their own brand into an aircraft, and that doesn’t stop at the aircraft livery but extends

afm • Issue 94 – January–February • www.afm.aero

MRO: Cabin refits

SR Technics carries out cabin modifications

to the lighting, seating and furnishings. An airline will want all of its aircraft to have the same look, feel and experience. The largest expense is in adapting the IFE and SATCOM systems and that cost will depend on how greatly the existing systems differ from the ones the airline wants to retrofit it with. “Depending on the compatibility, or otherwise, of the new system to the particular aircraft, and the complexities of the work, the costs of refurbishment could be high or relatively low,” says Lenz. For this reason, it’s important that the MRO be broadly skilled and highly knowledgable of the engineering involved in installing systems and their interfaces. “Also a major factor that influences the ease of installation is the degree to which the supplier of the system actively provides support and gets involved,” Lenz explains. When it comes to seating, standardisation is also key; a mixed fleet brings additional costs. For example, when an aircraft includes more than one seat type, there is additional pressure on the technical services department and need for additional component maintenance manuals. In addition, a minimum level of spares will be needed for each seat type at each of the airline’s operating bases around the world. Then, Brady points out, there will be a trail of paperwork such as purchase orders and invoices for each transaction with each seat manufacturer. However, retrofitting with modern, lighter seats can offer better comfort, lower aircraft weight and less need for spares. “This translates as lower spares costs, lower fuel costs [due to a lower seat weight], as well as a great marketing message for an airline. ACRO, for example, focuses very much on lowered cost of ownership for an airline and it’s why our seats

prove so popular with low-cost carriers,” says Brady. “It provides a very cost-effective way to replicate the airline’s standard cabin if it has a mixed fleet following acquisition,” says Duncan. “The key is to ensure that each aspect of cabin lighting is integrated within a holistic cabin view that is aesthetically pleasing in itself, as well as being supportive of the airline’s brand identity.”

In-flight entertainment With regard to cabin modernisation, passengers increasingly expect the latest in inflight entertainment, but the weight of such systems and the time and cost of installing them can be restrictive. “Cabin re-configurations are very costly because they are labour intensive and complex to implement. They are therefore considered viable only every four to eight years. In this timeframe, however, the home high-tech electronics industry has advanced by big leaps. This makes it very challenging to keep up with the latest and best solutions that airline customers expect carriers to provide,” notes Lenz. One bridge to passenger expectation is the ability for them to BYOD [bring your own device], meaning they can ‘selfentertain’ using their own hand-held devices, such as iPads. However, it seems there is no one-size-fits-all solution. “Although, at ACRO, we are seeing a trend for in-seat power, there is still plenty of IFE work going on. BYOD may supplant embedded IFE one day but we’re not seeing that yet,” says Brady. Lenz recognises that right now hand-held devices, WiFi and internal GSM networks are mostly being used in the VIP segment and by premium airlines. “That’s why large OEMs are preparing their environments to cope with the huge transmission rates this will generate.”

afm • Issue 94 – January–February • www.afm.aero

TLF: Fuel savings

ver the past decade, jet fuel prices have taken airlines on a virtual rollercoaster ride. Driven by both sharp increases and rapid declines, it has created an atmosphere of unpredictability and downward pressure on profit margins. In 2013, an Airlines for America (A4A) study cited a 363 per cent increase in jet fuel costs between 2002 and 2012. With today’s lower fuel prices, most airlines are finally seeing some relief. Yet despite significant lows in fuel prices of late, fuel costs remain one of the most significant areas of concern in terms of overall operational expenses. Recent studies by IATA report that fuel expenses represented as much as one-third or more of total operating costs for airlines. Combined, that is estimated to total more than $200bn a year. Bob Muhs, director of Professional Services Business Consulting for Boeing Commercial Aviation Services, has seen first-hand the impact of fuel price fluctuations on airline operations. “Even though fuel prices have dramatically decreased in recent months, airlines are telling us that fuel expenses remain a high impact area, often representing as much as 30 to 40 per cent of their overall operating costs, regardless of what the price of fuel may be on any given day,” says Muhs. “Many of those airlines are now recognising this recent decrease in fuel prices as a window of opportunity to make investments in processes and software solutions that will help target fuel consumption. They are asking our Boeing teams to work with them to look at the entire scope of the different areas in operations that can have an impact on fuel costs.”

Where to cut costs According to Muhs, most airlines often look at common areas such as APU fuel burn and targets to reduce arrival fuel, but may be missing out on other areas where even small incremental changes can have a significant financial impact over the long-term. Other areas such as pre-flight planning and pilot adjustments on takeoff, cruise and descent can also result in very noticeable fuel consumption reductions, both for a single flight and across the airline’s entire fleet operations. Having software tools that provide the metrics and analytics needed to monitor trends and make these in-flight adjustments can help an airline identify and target those

small changes across multiple areas. Based on feedback from the software tools, airlines that also take action to improve their internal processes will have a better chance of success in gaining reductions in fuel emissions and fuel costs. According to Muhs, this dual approach of developing better internal processes supported by analytics can capture noteworthy savings – often hundreds of dollars on a single flight.

Driving down fuel Boeing and its subsidiary, Jeppesen, offer a number of analytics-based software tools, including a fuel dashboard with reporting functionality, which can be tailored to the operator’s preferences, making informed decisions on how to target fuel efficiency improvements. Boeing’s Fuel Dashboard shows existing fuel consumption, information that is generated from operational performance data through all phases of flight. This integrated fuel consumption data is derived from multiple sources, including Flight Data Management (FDM) information, flight plan data and flight management system data to provide operators with accurate, real-time information to help support fuel savings goals. Fuel Dashboard is one component of an end-to-end package of fuel-efficiency solutions that also includes individual consulting services from Boeing. Ian Britchford, product manager for Boeing’s Fuel Efficiency Solutions, commented: “After working with our consulting teams to deploy Fuel Dashboard, our airline customers are reporting significant and noticeable improvements, with an average of approximately 4.5 per cent annual savings in fuel costs.” The performance metrics were captured from analysis of samples from 11 airlines, 600 airplanes and 485,000 flights. Both engine and other aircraft manufacturers have developed other fuel efficiency software, which include similar dashboard capabilities and features, such as map overlays. Although these tools are available, Britchford notes the reality is that a large number of airlines are still primarily using tools or spreadsheets that they have developed in-house. “We have observed that these in-house approaches often only provide a very limited data set and are unable to provide a big picture or a real-time, analytics-based view of the overall trends in the fleet,” notes Britchford.

afm • Issue 94 – January–February • www.afm.aero

TLF: Fuel savings

“It’s not just about capturing data on a single flight or a single airplane. If an airline wants to make a big impact on fuel costs, it needs to look at trend analysis across the entire fleet – and it can’t afford the time it takes for a person to manually enter all of that data. Because the environment is dynamic, with constantly changing variables that impact fuel consumption, by the time you actually get the data entered and analysed, the situation may have changed and the information may not be as useful.”

pre-departure and cruise, ensuring that flight crews have access to the most accurate information for their amended flight trajectory. Derek Gefroh, programme manager for Boeing’s InFlight Optimisation Services, notes that using in-flight optimisation tools can drive a noticeable reduction in fuel consumption. “Our airline customers using Wind Updates have reported savings up to 250kg of fuel per flight, averaged across their annual operations,” he says.

Weather the storm In addition to the internal processes and tools that can be used to heighten fuel efficiency, there are other external factors that can’t be controlled. For example, weather will also impact the fuel efficiency of each flight. Inaccurate, limited or outdated weather data can prevent the aircraft from operating at optimum speeds, altitudes and trajectories. Software tools are available to help pilots monitor real-time situational feedback on factors such as weather changes during the flight. Boeing offers a suite of in-flight optimisation tools, including Wind Updates, which provides automated, individual aircraft and flight-specific wind data to the flight deck in a flight management computer or FMC-loadable format. Tailored for each aircraft and FMC combination, Wind Updates leverages the data for maximum functionality within the specific limitations of the aircraft. By tracking the flight, Wind Updates selects the most appropriate wind and temperature for descent for each flight from the best source of wind data available, automatically sending this data to the flight deck 30 minutes prior to the top of descent. In addition, pilots can request data from Wind Updates at any time during

“Based on our experience with airlines using these real-time optimisation tools, these fuel efficiency gains translate into real savings that can exceed $100,000 every year for each airplane in the fleet.” But not only can airlines gain financial savings by applying fuel efficiency tools and changing their processes to fuel consumption accordingly, they can also benefit from reducing their environmental impact, namely by lowering CO2 emissions. But Muhs emphasises that, by themselves, software tools will not drive fuel cost improvements. “Making changes to influence fuel costs requires a focused and dedicated long-term effort on the part of the airline, and a comprehensive and sustained change management programme is needed in order to have a successful outcome,” he explains. “Those airlines that are willing to spend time and resources will soon see those investments pay for themselves, providing them with a buffer to help control their expenses over the long-term, regardless of the unpredictable and transient nature of fuel prices.”

afm • Issue 94 – January–February • www.afm.aero

TLF: Sharia leasing

Sharia leasing: Will it change the market? AviaAM Leasing examines the role of Sharia-compliant aircraft leasing and, in particular, Sukuk financial certificates, to find out how these relatively untouched forms of finance are being increasingly used throughout the aviation industry.

n mid-November 2014, the UAE’s low-cost carrier, flydubai, issued its first Sukuk – a Sharia-compliant financial certificate – raising over $500m to support its further growth and refinance current obligations. The five-year deal received more than $3bn in orders, with three-fifths of investors from the Middle East. While clearly indicating the investors’ growing confidence in the airline industry, the deal has also fuelled a discussion over whether separate Sharia-based deals might be a rising new trend in the global aviation finance market.

either conducted, or expressed their strong interest in, Sharia-compliant solutions to support their development. In the summer of 2014, the International Air Finance Corporation (IAFC), together with Airbus and the Islamic Development Bank, launched a $5bn Sharia-compliant leasing fund. Supported by a major aircraft manufacturer, the initiative was an acknowledegment that Sukuk deals are no longer a rare alternative and specific to a certain region, but rather a new trend in the global aircraft market.

Pioneering the Sukuk Since Emirates airline pioneered the Islamic capital market back in 2005, many other industry players such as AirAsia, Air Arabia, GE Capital, Royal Jordanian, Ethiopian Airlines, SriLankan Airlines and Pakistan International Airlines have

“Outside aviation, the Sukuk industry has been actively developing since the early 2000s, expanding over 20 times and topping $120bn to $140bn today,” says Tadas Goberis, the CEO of AviaAM Leasing.

afm • Issue 94 – January–February • www.afm.aero

TLF: Sharia leasing

“The boom clearly reflects the growing wealth of the Islamic community, both in the MENA region and outside. However, due to the generally conservative nature of the industry and the latest downfall in the global financial markets, aviation has only recently started exploring the available alternatives to finance its development and refinance current obligations.” At the moment, the total Islamic finance market is estimated at approximately $2tn. Ernst & Young expects that Islamic banking assets will continue to increase by approximately 19.7 per cent, per year, over the next several years. However, when it comes to making the funds work, Islamic investors face specific restrictions and risks.

Complying with Sharia Islam clearly condemns making money from money, for example it forbids interest-based investments. However, it does allow payments for the rental of a property or an asset. With this in mind, the Islamic world has developed

its own investment category, which is generally referred to as ‘Sukuk’ (a plural version of the Arabic word, ‘Saak’, meaning a legal instrument or deed). In its modern shape, the Sharia-compliant deals are based on Sukuk certificates (bonds) backed by the asset they are issued for. Through special purpose vehicle (SPV) companies, lessors receive the ownership rights on the asset and can lease it back to the lessee. In return, the issuer uses the asset and provides the investor with payments in the form of rent. Where this differs from the norm is that, according to the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the payment amount may correlate as investors are expected to share the risks with the Sukuk issuer and are thus dependent on the lessee’s profits and losses arising from the Sukuk assets. Once the certificate matures, the issuer may buy the asset based on its market price, although it’s not obliged, according to Sharia.

afm • Issue 94 – January–February • www.afm.aero

TLF: Sharia leasing

Sukuk-holders (investors)

2. Sukuk Proceeds 1. Sukuk Certificates

11. Dissolution Amount

8. Periodic Distributions

SPV

5. Lease of Assets

3. Sale of Assets 4. Sukuk Proceeds

Airline

7. Appointment of Service Agent

6. Rentals

Airline

10. Exercise Price 9. Purchase of Assets

Airline

as Seller

as Lessee

as Service Agent

as Obligor

Sale and Purchase Agreement

Ijara Agreement

Service Agency Agreement

Purchase Undertaking/Sale Undertaking Basic Ijara Sukuk structure.

“At the same time, there are some extra risks. For example, the law forbids selling an asset at the end of the lease period for a pre-agreed fixed price, as it requires the asset to be sold for a fair price based on its market value at a given time. As the residual value may be either lower or higher than the one expected at the beginning of the lease period, the investor may end up with returns or losses that are hard to predict. However, in reality many Sukuk deals are structured on firmer ground, which ensures investors are not left with nothing,” explains Goberis.

provides them with the chance to invest larger capital while securing it with hard liquid assets that maintain quite predictable residual values, particularly when it comes to newly built aircraft.

Ijara Sukuk

“Will Sukuks make a major impact on the aviation finance industry?” asks Goberis. “Maybe not, but it will certainly broaden the market’s access to large capital while offering new transaction models and structures.”

In some ways, Sukuk certificates resemble enhanced equipment trust certificates (EETC). At some point, they also reflect the model of financial or operating leasing. The final contract depends on the specifics of a particular deal – whether it’s an asset, debt, business or other form of investment. Regarding the aviation industry, Ijara Sukuk (or rent) is considered one of the most optimal lease forms for many airlines, as it closely corresponds to the conventional leasing transactions. Aviation-related Sukuks may be a great opportunity for Islamic investors to diversify their portfolios. Moreover, it

At the same time, while Islamic investors might be looking for more capital-intense investments and airlines (for financiers to support their short-on-cash expansions), Sukuks may be an emerging, relatively unexplored financing source for lessors and other aircraft owners.

He concludes: “In return, the global aviation industry can also make a contribution to the development of Islamic financing. After all, the most common term of a Sukuk’s maturity is up to three years, while in aviation the average finance period is seven to 10 years. What this means is that a successful aircraft-related practice may extend the average Sukuk investment as well as diversify a Sukuk portfolio. In either case, one should bear in mind that today’s alternative may be tomorrow’s mainstream. Whoever catches the wave, wins.”

afm • Issue 94 – January–February • www.afm.aero

INDUSTRY DATA: Deals

Industry data Aircraft deals 47 53

Firm orders

List prices and lease rates

Engine data

Aircraft deals from 28 October to 25 November, 2014

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

MSN

Manufacturer

Model

Event

Owner

Operator

Date

2268 6319 6324 36110 6281 93 27206 32572 2274 977 1564 42233 6302 4137 27468 3626 6315 27376 4367 4368 27205 6320 6342 6139 365 28574 39827 41255 6333 6334 4474 41201 24439 39951 41401 6351 26451 6335 30702

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

A319-100 A321-200 A321-200 787-8 A320-200 ATR42-300 767-300ER 767-300F A320-200 A330-200 A330-300 777 Freighter A320-200 DHC8-400Q 767-300ER A320-200 A320-200 767-300ER DHC8-400Q DHC8-400Q 767-300ER A320-200 A321-200 A320-200 A330-200 737-800 737-800 737-800 A320-200 A321-200 DHC8-400Q 737-800 737-400 737-800 737-800 A321-200 737-400 A320-200 737-800

Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease

SMBC Aviation Capital GECAS Air Lease Corporation AerCap China Aircraft Leasing Regourd Aviation Thomas Cook Airlines Chirihue Leasing Trust GECAS Aercap Air Lease Corporation DAE Capital BOC Aviation Nordic Aviation Capital AWAS SMBC Aviation Capital SMBC Aviation Capital AWAS Smart Aviation (Egypt) Smart Aviation (Egypt) Thomas Cook Airlines AWAS GECAS Aviation Capital Group Deucalion Capital Kahala Aviation Leasing Lion Air GECAS ICBC Leasing Aviation Capital Group Air Cote d'Ivoire Aviation Capital Services Bank of Utah SMBC Aviation Capital BOC Aviation GECAS Penerbangan Malaysia SMBC Aviation Capital AerCap

FastJet Air China Air Macau Thai Airways Int Chengdu Airlines Equaflight Service Condor Federal Express Pakistan Intl Airlines Turkish Airlines SriLankan Airlines Emirates Hong Kong Express Airways Air Berlin Boliviana de Aviacion Air Cairo Juneyao Airlines Boliviana de Aviacion Biman Bangladesh Airlines Biman Bangladesh Airlines Condor Vanilla Air Thomas Cook Airlines Avianca Brasil Azul - Linhas Aereas Eastar Jet Batik Air Okay Airlines Citilink American Airlines Air Cote d'Ivoire Orenair Cello Aviation Sun Country Airlines S7 - Siberia Airlines Thomas Cook Airlines AC Aviatie Peach Sriwijaya Air

28/10/2014 28/10/2014 28/10/2014 29/10/2014 29/10/2014 29/10/2014 30/10/2014 30/10/2014 30/10/2014 30/10/2014 30/10/2014 31/10/2014 31/10/2014 31/10/2014 01/11/2014 01/11/2014 03/11/2014 04/11/2014 04/11/2014 04/11/2014 05/11/2014 05/11/2014 05/11/2014 06/11/2014 06/11/2014 07/11/2014 07/11/2014 07/11/2014 07/11/2014 07/11/2014 07/11/2014 10/11/2014 13/11/2014 13/11/2014 13/11/2014 13/11/2014 14/11/2014 14/11/2014 16/11/2014

Source: IBA’s JetData.

afm • Issue 94 – January–February • www.afm.aero

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

Aircraft deals from 28 October to 25 November, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

3197 37250 6248 6292 449 28872 37166 1540 36112 6349 6346 29001 40550 43664 1834 4973 15341 28609 32885 6311 6343 26467 39828 41845 1579 28979 287 E2347 23810 28574 24676 26451 26466 26467 28609 33793 30702 1068 1303 300 1852 2299 49845 95021 4148 35835 1769 2118 28216 53 27418 7120 30417 434 36848

AvCraft Boeing Airbus Airbus Airbus Boeing Boeing Airbus Boeing Airbus Airbus Boeing Boeing Boeing Airbus Airbus Bombardier Boeing Boeing Airbus Airbus Boeing Boeing Boeing Airbus Boeing ATR BAE Systems Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Airbus Airbus Airbus Airbus Airbus McDonnell Douglas Sukhoi Bombardier Boeing Airbus Airbus Boeing Airbus Boeing Bombardier Boeing Airbus Boeing

328JET-300 737-800 A320-200 A320-200 A340-600 737-300 787-8 A320-200 787-8 A319-100 A321-200 737-400 737-800 737-800 A320-200 A320-200 CRJ-900 737-700 737-800 A320-200 A320-200 737-400 737-800 777-300ER A330-300 767-300ER ATR42-300 RJ85 737-300QC 737-800 737-300 737-400 737-400 737-400 737-700 737-700 737-800 A319-100 A319-100 A320-200 A320-200 A320-200 MD-83 SSJ 100-95 DHC8-400Q 737-800 A320-200 A320-200 737-700 A320-200 737-500 CRJ-100 737-800 A321-100 737-800

Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned

CBG LLC Jetairfly China Aircraft Leasing China Aircraft Leasing Blue Aviation World Star Aviation CIT Aerospace Sunrise Asset Management AerCap Z/C Aviation Partners One Aviation Capital Group Bank of Utah Aviation Capital Group Avolon AerCap Pembroke Group Ltd Delta Air Lines Zibal Aircraft Leasing Aviation Capital Group BOC Aviation BOC Aviation Bin Vali Leasing Lion Air GECAS Intrepid Aviation Partners Thomson Airways Nordic Aviation Capital Triangle (Funding One) Automatic LLC GECAS GECAS Penerbangan Malaysia Bin Vali Leasing Bin Vali Leasing GECAS AerCap AerCap Volito Aviation GECAS ANA Holdings Inc Macquarie Airfinance HKAC Pegasus Aviation VEB-Leasing Nordic Aviation Capital GOL Transportes Aereos Macquarie Airfinance MCAP AerCap GECAS GECAS Avmax Group Arkmagnesium Ltd Aircraft Purchase Co Aviation Capital Group

Key Lime Air Sunwing Airlines Chengdu Airlines Chengdu Airlines Hi Fly Malta Canadian North Royal Jordanian Allegiant Air Royal Jordanian American Airlines American Airlines Unknown Kenya Airways Aeroflot British Airways IndiGo Endeavor Air Southwest Airlines Sriwijaya Air Vistara Vistara AC Aviatie Batik Air China Airlines Sichuan Airlines Thomson Airways Nordic Aviation Capital Triangle (Funding One) Automatic LLC GECAS GECAS Penerbangan Malaysia Bin Vali Leasing Bin Vali Leasing GECAS AerCap AerCap Volito Aviation GECAS ANA Holdings Inc Macquarie Airfinance HKAC Pegasus Aviation VEB-Leasing Nordic Aviation Capital GOL Transportes Aereos Macquarie Airfinance MCAP AerCap GECAS GECAS Avmax Group Arkmagnesium Ltd Aircraft Purchase Co Aviation Capital Group

17/11/2014 17/11/2014 17/11/2014 17/11/2014 17/11/2014 18/11/2014 19/11/2014 19/11/2014 20/11/2014 20/11/2014 20/11/2014 21/11/2014 21/11/2014 21/11/2014 21/11/2014 21/11/2014 21/11/2014 24/11/2014 24/11/2014 24/11/2014 24/11/2014 25/11/2014 25/11/2014 25/11/2014 25/11/2014 30/10/2014 30/10/2014 31/10/2014 31/10/2014 31/10/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 02/11/2014 03/11/2014 04/11/2014 05/11/2014 06/11/2014 06/11/2014 07/11/2014 07/11/2014 11/11/2014 11/11/2014 12/11/2014

Source: IBA’s JetData.

afm • Issue 94 – January–February • www.afm.aero

INDUSTRY DATA: Deals Aircraft deals from 28 October to 25 November, 2014

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

MSN

Manufacturer

Model

Event

Owner

Operator

Date

37361 1846 1626 27094 27248 436 34903 36367 34961 27393 34956 1834 30649 30785 1706 1750 30646 445 29654 35832 29933 668 29934 747 117 561 35836 1873 35162 28148 35157 271 28373 250 879 140 409 244 936 419 501 278 37600 26346 1005 26341 1360 2011 966 27178 26208 35783 26549 6280 6313

Boeing Airbus Airbus Boeing Boeing Airbus Boeing Boeing Boeing Boeing Boeing Airbus Boeing Boeing Airbus Airbus Boeing Airbus Boeing Boeing Boeing Airbus Boeing Airbus Airbus Airbus Boeing Airbus Boeing Boeing Boeing Airbus Boeing Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Boeing Boeing Airbus Boeing Airbus Airbus Airbus Boeing Boeing Boeing Boeing Airbus Airbus

737-800 A319-100 A320-200 737-400 777-200 A340-600 737-800 737-800 737-900ER 767-300ER 737-900ER A320-200 737-700 737-800 A319-100 A319-100 737-800 A320-200 737-800 737-800 737-800 A340-300 737-800 A320-200 A340-300 A320-200 737-800 A320-200 777-300ER 767-300ER 777-300ER A330-200 737-800 A330-200 A320-200 A320-200 A320-200 A300B2-K3C A320-200 A320-200 A330-200 A340-300 737-800 747-400 A320-200 747-400 A330-300 A320-200 A330-200 747-400 767-300ER 777-300ER 747-400 A320-200 A321-200

Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Returned off wet-lease Sold & leased back Sold & leased back

NBB Leasing Co Ltd The Cit Group Inc Avion Express Aircastle Investment Veling AerCap BBAM NBB Leasing Co Ltd BBAM GECAS BBAM AerCap AerCap BBAM Aviation Capital Group Aviation Capital Group AerCap Nordic Aviation Capital Aviation Capital Group Aercap The Cit Group Inc Air Tahiti Nui The Cit Group Inc BBAM Falak Investments VGS Aircraft Holding Ltd Natixis Lease Apollo Aviation Group Delaware Aircraft Lease Air Lease Corporation Delaware Aircraft Lease AerCap Volito Aviation AerCap GECAS Pembroke Group Ltd Aviation Capital Group ALS GECAS Aviation Capital Group AerCap ORIX Aviation GOL Transportes Aereos AerSale Inc Avion Express Atlas Air GECAS Aviation Capital Group The Cit Group Inc Pullmantur Air Lift Missouri, LLC AerCap Pullmantur Air Jackson Square Aviation Aviation Capital Group

NBB Leasing Co Ltd The Cit Group Inc Avion Express Aircastle Investment Veling AerCap BBAM NBB Leasing Co Ltd BBAM GECAS BBAM AerCap AerCap BBAM Aviation Capital Group Aviation Capital Group EuroAtlantic Airways YanAir Ukraine Int Airlines GOL Transportes Aereos Canjet Airlines Air Tahiti Nui Canjet Airlines Avion Express Hi Fly Avion Express GOL Transportes Aereos SmartLynx Jet Airways Orient Thai Airlines Jet Airways Air Transat Kulula.com Air Transat Vista Georgia Pembroke Group Ltd Avion Express SmartLynx SmartLynx Avion Express XL Airways France AirAsia X GOL Transportes Aereos Pullmantur Air Avion Express Atlas Air XL Airways France SATA Int Air Transat Pullmantur Air EuroAtlantic Airways Air Austral Pullmantur Air Lion Air AmericanAirlines

12/11/2014 12/11/2014 13/11/2014 14/11/2014 14/11/2014 14/11/2014 16/11/2014 16/11/2014 18/11/2014 18/11/2014 19/11/2014 21/11/2014 24/11/2014 24/11/2014 24/11/2014 24/11/2014 28/10/2014 29/10/2014 30/10/2014 30/10/2014 31/10/2014 31/10/2014 01/11/2014 01/11/2014 01/11/2014 02/11/2014 03/11/2014 03/11/2014 05/11/2014 06/11/2014 06/11/2014 07/11/2014 08/11/2014 08/11/2014 09/11/2014 13/11/2014 28/10/2014 01/11/2014 03/11/2014 04/11/2014 04/11/2014 04/11/2014 05/11/2014 05/11/2014 05/11/2014 06/11/2014 06/11/2014 07/11/2014 07/11/2014 09/11/2014 09/11/2014 09/11/2014 10/11/2014 28/10/2014 28/10/2014

Source: IBA’s JetData.

afm • Issue 94 – January–February • www.afm.aero

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

Aircraft deals from 28 October to 25 November, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

6328 33329 6304 36705 1185 6173 6332 33330 6309 1577 41347 6345 31205 6356 19000680 29487 683 28550 28013 32572 585 2599 246 1450701 1450755 1450804 27425 33656 25095 27425 28574 24676 55003 23876 7318 19000404 24439 25134 32885 48518 11578 27918 7210 28145 1540 23781 26307 25168 28609 7210 7210 3197 29441 1303 53537

Airbus Boeing Airbus Boeing ATR Airbus Airbus Boeing Airbus Airbus Boeing Airbus Boeing Airbus Embraer Boeing Airbus Boeing Boeing Boeing ATR Airbus ATR Embraer Embraer Embraer Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Bombardier Embraer Boeing Boeing Boeing McDonnell Douglas Fokker Boeing Bombardier Boeing Airbus Boeing Boeing Boeing Boeing Bombardier Bombardier AvCraft Boeing Airbus McDonnell Douglas

A320-200 737-800 A320-200 737-800 ATR72-600 A320-200 A320-200 737-800 A320-200 A330-300 737-800 A320-200 737-800 A320-200 Embraer 190 737-400 A300B4-600RF 737-400 737-700 767-300F ATR72-500 A321-200 ATR72-200 ERJ-145 ERJ-145 ERJ-145 737-500 737-700 737-400 737-500 737-800 737-300 717-200 737-400 CRJ-200 Embraer 190 737-400 737-400 737-800 MD-11 Fokker 70 767-300 CRJ-200 757-200 A320-200 737-300 737-300 737-400 737-700 CRJ-200 CRJ-200 328JET-300 737-700BBJ A319-100 MD-90-30

Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold & leased back Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease

Jackson Square Aviation Wilmington Trust Co Wells Fargo Bank NW Jackson Square Aviation AviancaTaca Holding SA Aviation Capital Group Wells Fargo Bank NW Wilmington Trust Co Transportation Partners Avolon Air Lease Corporation SMBC Aviation Capital Wells Fargo Bank NW SMBC Aviation Capital Aldus Aviation DHL Network Operations Air Hong Kong Salg-7BV Wells Fargo Bank NW Chirihue Leasing Trust Kalstar Aviation Air Lease Corporation Sprint Air Gaztechleasing Gaztechleasing Gaztechleasing European Aviation Ltd Southwest Airlines Safair FMI Air Kahala Aviation Leasing Texas Aviation Group airTran Airways Aero Capital Solutions CAVU Aerospace INC Cobham Aviation Services Bank of Utah DGI II LLC Aviation Capital Group Universal Asset Mgmt Air Niugini CargoJet Airways Beautech Power Systems Federal Express Sunrise Asset Mgmt Southwest Airlines Southern Aircraft Aircastle Investment Zibal Aircraft Leasing Dumont Aircraft Sales Strong Tower Properties CBG LLC Bank of Utah Apollo Aviation Group Delta Air Lines

Iberia American Airlines Spirit Airlines Aeromexico Avianca Avianca Brasil Volaris American Airlines Batik Air Garuda Indonesia Aerolineas Argentinas Spirit Airlines American Airlines Batik Air Royal Air Maroc DHL Network Operations Air Hong Kong Salg-7BV Wells Fargo Bank NW Chirihue Leasing Trust Kalstar Aviation Air Lease Corporation Sprint Air Gaztechleasing Gaztechleasing Gaztechleasing European Aviation Ltd Southwest Airlines Safair FMI Air Kahala Aviation Leasing Texas Aviation Group airTran Airways Aero Capital Solutions CAVU Aerospace INC Cobham Aviation Services Bank of Utah DGI II LLC Aviation Capital Group Universal Asset Mgmt Air Niugini CargoJet Airways Beautech Power Systems Federal Express Sunrise Asset Mgmt Southwest Airlines Southern Aircraft Aircastle Investment Zibal Aircraft Leasing Dumont Aircraft Sales Strong Tower Properties CBG LLC Bank of Utah Apollo Aviation Group Delta Air Lines

29/10/2014 30/10/2014 30/10/2014 05/11/2014 05/11/2014 06/11/2014 06/11/2014 10/11/2014 12/11/2014 18/11/2014 19/11/2014 19/11/2014 20/11/2014 20/11/2014 21/11/2014 28/10/2014 29/10/2014 30/10/2014 30/10/2014 30/10/2014 31/10/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 03/11/2014 03/11/2014 04/11/2014 04/11/2014 04/11/2014 05/11/2014 06/11/2014 06/11/2014 06/11/2014 06/11/2014 07/11/2014 07/11/2014 07/11/2014 07/11/2014 08/11/2014 10/11/2014 12/11/2014 13/11/2014 13/11/2014 14/11/2014 14/11/2014 14/11/2014 14/11/2014 14/11/2014 14/11/2014 17/11/2014 17/11/2014 17/11/2014 17/11/2014

Source: IBA’s JetData.

afm • Issue 94 – January–February • www.afm.aero

INDUSTRY DATA: Deals Aircraft deals from 28 October to 25 November, 2014

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

MSN

Manufacturer

Model

Event

Owner

Operator

Date

28872 33657 23719 1530 25096 29001 27247 1068 33793 24235 26693 25168 799 497 1302 1506 1528 6280 674 1450886 716 30294 32740 35137 535 1185 29919 33022 6139 37077 883 35163 24332 29660 41401 26451 35132 55050 29669 55091 35138 26263 357 39394 273 34253 28865 39404 726 445 28873 24271 33793

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

737-300 737-700 747-400 A320-200 737-400 737-400 777-200 A319-100 737-700 757-200SF 757-200 737-400 A320-200 A330-300 A320-200 A320-200 A320-200 A320-200 ATR72-500 ERJ-135 A320-200 737-800 737-800 737-800 A321-100 ATR72-600 737-800 737-800 A320-200 737-800 A320-200 777-300ER 737-400 737-800 737-800 737-400 737-800 717-200 737-800 717-200 737-800 767-300ER A320-200 737-800 A340-300 737-800 767-300ER 737-800 A320-200 A320-200 737-300 737-400 737-700

Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold with lease Sold with lease Sold with lease Sold with lease Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased

World Star Aviation Southwest Airlines Delta Air Lines Sunrise Asset Mgmt Safair Bank of Utah Universal Asset Mgmt Capstar Aviation Jetairfly Jetran LLC Federal Express V55A-734 LLC Intertrade Ltd Aviation Capital Group Wells Fargo Bank NW Wells Fargo Bank NW Wells Fargo Bank NW Jackson Square Aviation Safair Natixis Lease AerCap Aviation Capital Group GECAS SMBC Aviation Capital AerCap AviancaTaca Holding SA Aircastle Investment The Cit Group Inc Aviation Capital Group Travel Service The Cit Group Inc JIHB Limited AerCap The Cit Group Inc BOC Aviation Penerbangan Malaysia ORIX Aviation Boeing Capital Corporation Air Lease Corporation Boeing Capital Corporation SMBC Aviation Capital AerCap S Group Aviation GECAS ORIX Aviation Air Lease Corporation Thomas Cook Airlines GECAS AerCap Nordic Aviation Capital GECAS Jetran LLC ECAir

World Star Aviation Southwest Airlines Delta Air Lines Sunrise Asset Mgmt Safair Bank of Utah Universal Asset Mgmt Capstar Aviation Jetairfly Jetran LLC Federal Express V55A-734 LLC Intertrade Ltd SAS jetBlue Airways jetBlue Airways jetBlue Airways Batik Air Air Mauritius Equaflight Service Thai AirAsia X Sunwing Airlines Sunwing Airlines Sunwing Airlines Daallo Airlines AviancaRegionalExpressAmericas Palau Pacific Airways Pakistan Int Airlines Oceanair Sunwing Airlines Sky wings Asia Airlines Etihad Airways TACV Cabo Verde Sunwing Airlines Globus Caspian Airlines Sunwing Airlines Delta Air Lines Sunwing Airlines Delta Air Lines Sunwing Airlines Caspiy Buraq Air Czech Airlines Conviasa Pakistan Int Airlines Condor Sunwing Airlines Unknown Kam Air Kam Air Havana Air Jetairfly

18/11/2014 18/11/2014 18/11/2014 18/11/2014 19/11/2014 20/11/2014 20/11/2014 20/11/2014 21/11/2014 21/11/2014 21/11/2014 24/11/2014 24/11/2014 29/10/2014 06/11/2014 07/11/2014 13/11/2014 28/10/2014 28/10/2014 29/10/2014 01/11/2014 03/11/2014 03/11/2014 03/11/2014 03/11/2014 05/11/2014 06/11/2014 06/11/2014 06/11/2014 07/11/2014 07/11/2014 09/11/2014 11/11/2014 11/11/2014 13/11/2014 14/11/2014 14/11/2014 20/11/2014 21/11/2014 22/11/2014 24/11/2014 29/10/2014 29/10/2014 03/11/2014 03/11/2014 06/11/2014 07/11/2014 08/11/2014 08/11/2014 12/11/2014 17/11/2014 21/11/2014 21/11/2014

Source: IBA’s JetData.

afm • Issue 94 – January–February • www.afm.aero

INDUSTRY DATA: Firm orders Firm orders – From 29 October to 19 December, 2014 Manufacturer Boeing Boeing Airbus Boeing Airbus Airbus Airbus Airbus Boeing Bombardier Bombardier Boeing Boeing Comac Comac Boeing Boeing Airbus Boeing Airbus Airbus Airbus Airbus Airbus Airbus Airbus Boeing Embraer Airbus Airbus Airbus Boeing Airbus Airbus Airbus Airbus Airbus Boeing Airbus ATR Airbus Airbus Airbus Airbus Airbus Boeing Airbus Airbus Boeing Airbus Airbus Airbus Airbus Boeing Boeing Boeing Airbus Boeing Airbus Airbus Airbus Airbus

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

Variant

Customer

Order date

No of Aircraft

Engines

737-800 737 MAX 8 A320ceo 777-300ER A319ceo A320ceo A320neo A321ceo 737 MAX 8 CRJ900 DHC8-Q400 737 MAX 737-700 ARJ21-700 ARJ21-700 737 MAX 737 MAX A350-900 787-9 A350-900 A330-900 A321neo A319ceo A320ceo A320neo A321ceo BBJ3 E175 A320neo A321neo A320ceo 737 MAX 200 A321ceo A330-900 A320ceo A320neo A321ceo 737 MAX A350-900 ATR 42-600 A320ceo A321ceo A320neo A321neo A330-300 737 MAX A320ceo A320neo 777F A330-900 A319ceo A320ceo A320neo 737-800 737 MAX 737-800 A330-800 777F A320ceo A320neo A321ceo A330-200

Unidentified Customer Monarch BOC Aviation Business Jet / VIP Customer Undisclosed Undisclosed Undisclosed Undisclosed SMBC Aviation Capital Petroleum Air Services Falcon Aviation Services Unidentified Customer Unidentified Customer Comsys Aviation Leasing Company Republic of Congo Unidentified Customer Business Jet / VIP Customer Air Mauritius Virgin Atlantic Airways Delta Delta JetBlue Airways Undisclosed Undisclosed Undisclosed Frontier Airlines Business Jet / VIP Customer Skywest Azul Finance LLC Azul Finance LLC Undisclosed Ryanair CIT CIT China Aircraft Leasing Company China Aircraft Leasing Company China Aircraft Leasing Company Unidentified Customer Finnair Travira Air Aeroflot Aeroflot LATAM Airlines Group S.A LATAM Airlines Group S.A Lion Air Jetlines Air Lease Corporation Undisclosed Unidentified Customer AirAsia X Undisclosed Undisclosed Undisclosed BOC Aviation Unidentified Customer Unidentified Customer Hawaiian Airlines Qatar Airways Undisclosed Undisclosed Undisclosed International Airfinance Corporation

29/10/2014 30/10/2014 31/10/2014 31/10/2014 01/11/2014 01/11/2014 01/11/2014 01/11/2014 10/11/2014 10/11/2014 10/11/2014 11/11/2014 11/11/2014 11/11/2014 11/11/2014 14/11/2014 17/11/2014 18/11/2014 20/11/2014 21/11/2014 21/11/2014 21/11/2014 21/11/2014 21/11/2014 21/11/2014 24/11/2014 24/11/2014 25/11/2014 28/11/2014 28/11/2014 28/11/2014 28/11/2014 30/11/2014 30/11/2014 01/12/2014 01/12/2014 01/12/2014 01/12/2014 02/12/2014 04/12/2014 08/12/2014 08/12/2014 11/12/2014 11/12/2014 11/12/2014 11/12/2014 12/12/2014 12/12/2014 12/12/2014 15/12/2014 15/12/2014 15/12/2014 15/12/2014 15/12/2014 16/12/2014 16/12/2014 17/12/2014 17/12/2014 18/12/2014 18/12/2014 18/12/2014 19/12/2014

2 30 2 2 2 13 15 10 80 1 3 6 4 20 3 30 2 4 1 25 25 10 6 14 30 9 1 7 25 10 30 100 5 15 16 74 10 4 8 1 14 8 4 9 3 5 1 35 6 55 4 8 17 2 28 10 6 4 5 30 5 5

CFM56-7B CFM LEAP-1B CFM56-5B GE90-115B CFM LEAP-1B CF34-8C5 PW150A CFM LEAP-1B CFM56-7B CF34-10A CF34-10A CFM LEAP-1B CFM LEAP-1B Trent XWB Trent 1000 Trent XWB Trent 7000 CFM56-7B CF34-8E CFM LEAP-1A CFM LEAP-1A CFM LEAP-1B Trent 7000 CFM LEAP-1B Trent XWB PW127M CFM LEAP-1B GE90-115B Trent 7000 CFM56-7B CFM LEAP-1B CFM56-7B Trent 7000 GE90-115B -

Source: IBA’s JetData.

afm • Issue 94 – January–February • www.afm.aero

AIRPORTS INDUSTRY & ROUTES:DATA: Airport List charges prices Data supplied by IBA’s JetData. www.ibagroup.com

List prices and lease rates – January 2015 Current Market Value Manufacturer Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Bombardier (Canadair) Bombardier (Canadair) Bombardier (Canadair) Bombardier (Canadair) Bombardier Bombardier Bombardier Embraer Embraer Embraer Embraer Embraer Embraer Fokker Fokker Sukhoi ATR ATR ATR ATR

Average List Price $74.30m $88.60m $97.00m $113.70m $229.00m $232.20m $253.70m $304.80m $428.00m $78.30m $93.30m $99.00m $368.40m $160.20m $191.50m $193.70m $269.50m $305.00m $309.70m $330.00m $218.30m $257.10m $40.00m $45.80m $48.90m $30.34m $22.20m $29.10m $40.00m $43.10m $47.70m $50.50m $18.10m $18.90m $21.90m $22.70m

Type A300-600R A310-300 A318-100 A319-100 A320-200 A321-100 A321-200 A330-200 A330-200F A330-300 A340-200 A340-300 A340-500 A340-600 A350-900XWB A380-800 B717-200 B737-300 B737-400 B737-500 B737-600 B737-700 B737-800 B737-900 B737-900ER B747-400 B747-8F B757-200 B767-200ER B767-300ER B767-300F B777-200 B777-200ER B777-200LR B777F B777-300 B777-300ER B787-8 B787-9 MD-81 MD-82 MD-83 MD-87 MD-88 MD-90 CRJ-100/200 CRJ-700/705 CRJ-900 CRJ-1000 Q200 Q300 Q400 ERJ-135 ERJ-145 E170 LR E175 LR E190 LR E195 LR Fokker 70 Fokker 100 SSJ 100-95B ATR 42-500 ATR 72-500 ATR 42-600 ATR 72-600

Oldest $3.50m $2.50m $9.00m $7.50m $3.50m $8.50m $13.00m $19.00m $69.00m $16.00m $5.00m $5.00m $18.00m $20.00m $125.00m $5.00m $1.00m $1.40m $1.00m $7.50m $11.00m $13.75m $14.00m $26.50m $7.50m $120.00m $3.50m $2.50m $5.50m $19.00m $16.00m $23.00m $60.00m $125.00m $35.00m $74.00m $93.00m $0.30m $0.35m $0.50m $0.35m $0.60m $3.00m $1.20m $7.00m $9.80m $19.00m $5.00m $6.50m $7.50m $1.50m $2.00m $10.50m $14.00m $16.00m $17.50m $1.50m $1.50m $16.50m $4.20m $6.50m -

Newest $8.50m $5.00m $17.00m $37.00m $44.00m $13.00m $52.00m $93.50m $88.00m $105.00m $7.50m $24.00m $30.00m $42.00m $143.80m $225.00m $9.00m $3.00m $4.50m $2.70m $12.00m $37.00m $48.30m $18.00m $50.00m $27.00m $175.00m $15.00m $10.00m $65.00m $60.00m $37.00m $99.00m $145.00m $167.00m $64.00m $167.00m $120.00m $134.00m $0.50m $0.70m $1.15m $0.70m $1.80m $4.50m $3.80m $20.00m $25.00m $27.50m $8.00m $10.00m $21.50m $4.00m $6.50m $26.00m $29.50m $33.00m $35.00m $2.00m $2.00m $23.50m $12.00m $17.50m $16.00m $21.00m

% Change -4% -5% -5% -1% 1% -4% 0% -1% -5% 0% -3% -7% -4% -5% 1% 0% -10% -10% -10% -10% -7% 1% 0% -4% -2% -7% -3% -10% -4% -2% -1% -10% -8% -2% 0% -5% 0% 1% 1% -10% -10% -10% -10% 9% -9% -6% -4% -2% -3% 1% -1% -2% 0% 0% -2% -1% -1% -1% -3% -8% -1% 0% 0% 0% 0%

Dry Lease Rate Oldest $0.060m $0.055m $0.120m $0.120m $0.060m $0.100m $0.190m $0.225m $0.650m $0.200m $0.160m $0.170m $0.225m $0.270m $1.150m $0.080m $0.040m $0.050m $0.030m $0.110m $0.140m $0.195m $0.125m $0.255m $0.180m $1.300m $0.080m $0.055m $0.150m $0.220m $0.220m $0.360m $0.600m $1.200m $0.380m $0.700m $0.800m $0.020m $0.020m $0.020m $0.020m $0.020m $0.060m $0.035m $0.080m $0.100m $0.170m $0.060m $0.075m $0.090m $0.035m $0.045m $0.115m $0.140m $0.160m $0.165m $0.045m $0.050m $0.140m $0.060m $0.080m -

Newest $0.120m $0.110m $0.185m $0.320m $0.390m $0.200m $0.440m $0.820m $0.800m $0.920m $0.200m $0.300m $0.360m $0.525m $1.250m $2.000m $0.120m $0.075m $0.100m $0.065m $0.145m $0.330m $0.410m $0.200m $0.425m $0.350m $1.500m $0.200m $0.180m $0.480m $0.480m $0.360m $0.800m $1.000m $1.400m $0.640m $1.550m $1.100m $1.200m $0.040m $0.045m $0.050m $0.040m $0.050m $0.090m $0.055m $0.185m $0.225m $0.260m $0.080m $0.100m $0.185m $0.060m $0.070m $0.215m $0.250m $0.280m $0.290m $0.065m $0.080m $0.225m $0.140m $0.170m $0.155m $0.185m

% Change -6% -5% 4% 5% 5% 5% 5% -1% 0% 0% 5% -5% -3% 0% 0% 0% 5% 0% 0% 0% 5% 5% 0% 3% 1% 5% 0% 8% -10% 4% -5% 0% 1% -3% 0% -4% 0% 0% 0% 0% 0% 0% 0% 0% 0% -5% -4% -6% -1% 0% -5% -2% -5% -5% 3% 0% 1% 0% 5% -5% 0% 0% -4% 0% 0%

Source: Source: IBA’s IBA’s JetData. JetData.

afm afm• •Issue Issue 8794 – November–December – January–February • www.afm.aero • www.afm.aero

AIRPORTS & INDUSTRY DATA: ROUTES: Engine Airport datacharges Data supplied by IBA’s JetData. www.ibagroup.com

Engine data – January 2015

Source: IBA’s JetData.

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

Engine data – January 2015 Type B737-300 B737-400 B737-500 A321-200 body A319-100 A340-300 B737-600 B737-700 B737-800 B737-900ER CRJ-200 CRJ-700 E170/175 E190/195 A300-600R B767-300ER MD-11 A330-200 B777-300ER A320-200 MD-82 B747-400 A310-300 B757-200 Fokker 100 A340-600 A330-300 B777-200ER A380-800 ERJ-145 ER B717-200

Engine CFM56-3B1 CFM56-3B2 CFM56-3C1 CFM56-5B3/P CFM56-5B5/P CFM56-5C4/P CFM56-7B22 CFM56-7B24 CFM56-7B26 CFM56-7B27 CF34-3B1 CF34-8C5 CF34-8E5 CF34-10E6 CF6-80C2A5 CF6-80C2B6F CF6-80C2D1F CF6-80E1A3 GE90-115B V2527-A5 JT8D-217C PW4056 PW4152 RB211-535E4 Tay 650-15 Trent 556-61 Trent 772B-60 Trent 895 Trent 970 AE3007-A1 BR715A

Full-life market value January 2015

Current half-life market value January 2015

$0.95m $1.40m $2.00m $8.75m $6.75m $5.40m $7.10m $7.90m $8.65m $8.95m $2.08m $4.90m $5.10m $6.85m $3.90m $5.20m $4.00m $16.00m $31.90m $8.10m $0.85m $5.40m $4.80m $4.05m $2.20m $14.25m $14.95m $21.00m $20.80m $2.15m $3.95m

$0.58m $0.70m $1.20m $6.25m $4.30m $3.65m $4.60m $5.40m $6.15m $6.50m $1.20m $3.25m $3.35m $5.15m $2.40m $3.40m $2.50m $10.20m $24.10m $5.40m $0.55m $2.80m $2.00m $2.60m $1.30m $8.30m $8.60m $13.50m $14.10m $1.15m $2.45m

Market lease rate $0.020m $0.022m $0.028m $0.065m $0.045m $0.045m $0.047m $0.056m $0.065m $0.066m $0.017m $0.045m $0.045m $0.065m $0.040m $0.055m $0.045m $0.120m $0.250m $0.060m $0.023m $0.055m $0.045m $0.050m $0.025m $0.110m $0.120m $0.170m $0.170m $0.025m $0.042m Source: IBA’s JetData.

afm afm •• Issue Issue94 94––January–February January–February••www.afm.aero www.afm.aero

WHAT DO YOU SEE? At STG Aerospace, we see cabin lighting in multi-dimensions. Our experience in producing emergency lighting installed in a third of the world’s aircraft has helped us develop liTeMood® – an LED cabin lighting system that’s both functional and beautiful in equal measure. liTeMood® delivers a range of stunning cabin environments, as well as the optimum amount of light to power the photoluminescent emergency floorpath marking. liTeMood® from STG Aerospace, the makers of safTglo® and safTsign™. Find out more at stgaerospace.com Vision beyond.

Visit us at Stand 6B41

from