Delta’s CEO Richard Anderson comments about a widebody bubble coming soon has been picked up by a number of news outlets over the past week. In an earrings call on October 14, Anderson stated that there was a “huge bubble in excess wide-body airplanes around the world” that will impact sales of 777s and value of used widebodies. His comment that a 10-year old 777-200s has been priced at $10million, compared to the appraised value of five times that has been greeted with doubt by some industry observers. Gary Liebowitz, analyst Wells Fargo, said that the $10million was “hard to believe, as the sum-of-the-parts alone - i.e., two average-condition engines + airframe scrap value - is in the $25M-$30M range”.
Our view is a little more pessimistic and the market is well aware that there is pressure on older widebody aircraft types, particularly the 777, which is why Airline Economics and IBA are holding a 777 investor day in London on December 2, 2015. There delegates will hear about the macro view of the widebody market as well as learn how to extract more value from existing equipment, not least during the reconfiguration process, the management of the engine assets, and we also take a view on the end-of-life opportunities available today.
This event is free to attend but pace is limited; if you are interested in attending or speaking at the event please contact me as soon as possible. The venue details are below.
Financing & Investing in mid-to-late life 777s day at the Hyatt Regency London Hotel – The Churchill, 30 Portman Square, London, W1H 7BH, UK, on December 2, 2015 (the same day as the ISTAT Holiday reception). This is a full one-day conference, which will include lunch and an after forum reception. Contact Philip Tozer-Pennington to secure your placephilipt@aviationnews-online.com or call: +44 (0) 1630 647 259.