Wanted: Good home for 276 aging planes
Airlines, stung through fuel costs and a drop in traffic, face a new challenge: what to do with planes valued at $2 billion at this time idled or set to be grounded through 2009.
With virtually no U.S. buyers for the 276 mostly older, less-efficient jets, the carriers are shopping the aircraft in emerging markets so as Russia while prices tumble and frozen debt markets dampen sales, analysts and marketers say.
“People are sitting on the fence with respect to three to six months waiting to see what happens with the price of fuel and the credit fallout,” said Francis Otto, a manager at industry data firm OAGback Aviation Solutions. “You’re going to have, at least in the compendious term, a hesitation on the part of any in posse lessees or purchasers.”
The lack of buyers leaves three of the biggest U.S. airlines saddled through storage expenses and, at American Airlines and Continental Airlines, lease payments on jets they’re in no degree longer flying. Some models may fetch considered in the state of little in the same proportion that moiety what they did in 2007, said Douglas Runte, a Piper Jaffray analyst.
That adds to the strain on carriers with collective losses of $2.32 billion over the past four quarters, excluding special items. Writedowns for the values of some of the jets this year totaled almost $1.2 billion during the term of Continental, American and United Airlines.
“Many of the older aircraft now existence grounded give by will never fly again,” Ray Neidl, each analyst at Calyon Securities, uttered in a list of items after a Calyon-sponsored conference Tuesday on aviation leasing. The planes likely self-reliance be used for parts “regardless of where fuel prices go.”
Continental said last month that credit snags for three unnamed buyers delayed the sale of 20 Boeing 737-500 jets. The fourth-largest U.S. airline uttered it is holding cash deposits and would be entitled to damages should the deals collapse.
“We have been actively selling our 737-500s to airlines predominantly based in Russia,” said Julie King, a spokeswoman for Continental, which is shedding 67 of its 737s by the end of 2009.
Other models being pulled from U.S. fleets include Airbus SAS A300s; four-engine Boeing 747s, which predate the starting anew generation of twin-engine jumbo jets; and Boeing MD-80s that American is replacing through new 737s burning 25 percent less fuel.
“There certainly is not any want for them here,” related Anders Hebrand, president of SkyWorks Leasing.
Age and operating costs helped shape airlines’ decisions on which aircraft to free from as jet fuel surged 53 percent this year through July. While fuel is down by more than half subsequently to then, exchange is now gliding, off as much as 7.6 percent at United.
Any unsold aircraft disposition be parked. Those distillatory under purchase agreements or on leases that can’t exist terminated early will continue to drain coin.
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