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The strengthening of the world economy, specifically in the U.S. and China, continues to generate demand for airfreight capacity, despite the high price of oil.
The appetite for freighter capacity is, however, selective. There is greater enthusiasm for more modern equipment, especially in a period of higher fuel prices. The placement of orders for conversions points to a need for more modern aircraft rather than illustrating a lack of capacity. A number of B747-200SFs remain parked. Of these, some are destined for the junkyard due to rising maintenance costs, lack of range, three-person cockpits and higher fuel consumption.
The third and fourth quarters of each year are traditionally periods of higher demand for freight operators. Consumer spending increases in the run-up to the end of the year. Suppliers are anxious to ensure that the latest goods are available. The electronics industry, specifically makers of computers, cellular phones and televisions, are enjoying some renewed demand. These goods are ideal for airfreighting. The usual increase in cargo traffic during the latter half of the year will likely disguise the impact of higher fuel prices on the global economy. The demand for out-of-season produce that is flown in from warmer climates shows little sign of abating despite news stories about the extensive supply chain.
The net effect of this demand allows newer freighter values to enjoy a measure of stability. Although lease rentals are rising, any significant reversal in freighter values, akin to that experienced in the late 1990s when B747-200SFs were attracting values in excess of $50 million, is not expected. The aging B727 fleets continue to be the most exposed despite the growing popularity of Internet shopping.
Should the price of oil remain at current levels, there is a danger that the global economy will face a slowdown. However, the momentum generated by the juggernaut of economic growth takes time to slow, and the demand for airfreight is likely to continue rising even if fuel prices remain at $45 a barrel through November.
The Aircraft Rating below reflects the considered suitability for asset-based financing over a five to seven year period. Ratings range from A++ to E--. For more information on the Aircraft Value Analysis Rating, visit www.aircraftvalues.net.
Freighter Current Values US$ millions - September...