Oriel market values By: Les Weal, 3 rd October 2017, AE Finance and - PowerPoint PPT Presentation

Oriel market values By: Les Weal, 3 rd October 2017, AE Finance and Leasing School,Dubai

Methodology:Current Market Values Market research • – Public sources: company reports, SEC filings, news – Private sources: OEM briefings, market stakeholder interaction, valuation assignments Data analysis • – Normalising data: for specifications, maintenance condition, transaction volumes, deal specifics – Extrapolating data: extending values to each aircraft type/variant/vintage combination 2

What is it worth today? Built 1992 Cost new $100m Passenger load 400 Range 8000nm Speed 600mph Weight 870,000lb number built 700 3

What is it worth today? Built 1992 Cost new $3m Passenger load 19 Range 700nm Speed 150mph Weight 11,500lb Number built 700 4

Total Fleet 2014-17 Source: Oriel, CAPA Fleets 5

Single aisles 2014-17 Source: Oriel, CAPA Fleets 6

A320-200 MV & LR ( k .ages) Source: OrielVIP 7

737-800 MV & LR ( k .ages) Source: OrielVIP 8

Twin aisles 2014-17 Source: Oriel, CAPA Fleets 9

A330-300 MV & LR ( k .ages) Source: OrielVIP 10

777-300ER MV & LR ( k .ages) Source: OrielVIP 11

Aircraft specifications: for better or for worse? Extra weight Airbus easyJet increases selection exit limit Extra capacity Source: Oriel 12

Lesson: subfleets best isolated early Aircraft age Source: OrielVIP 13

Source: Aircastle’s Investor & Analysts Day Presentation April 2013 Investor Rationale For Early Part-out

What are LLPs worth? Part life - Part life - Part life - Cycles Cycles Cycles Potential part- Potential part- Potential part- USM USM Part-out Part name Part name Part name Cycles Cycles Cycles remaining remaining remaining out value out value out value adjusted adjusted valuation Fan Fan Fan First glance: $425k Fan Disk Fan Disk Fan Disk 24,900 24,900 24,900 9,867 9,867 9,867 $ $ $ 64,829 64,829 64,829 $ $ 38,897 38,897 $ 9,198 Booster Spool Booster Spool Booster Spool 30,000 30,000 30,000 5,610 5,610 5,610 $ $ $ 44,076 44,076 44,076 $ $ 26,446 26,446 $ 8,815 Fan Shaft Fan Shaft Fan Shaft 30,000 30,000 30,000 2,072 2,072 2,072 $ $ $ 10,484 10,484 10,484 $ $ 6,291 6,291 $ - HPC HPC HPC HPC Fwd Shaft HPC Fwd Shaft HPC Fwd Shaft 20,000 20,000 20,000 2,772 2,772 2,772 $ $ $ 14,276 14,276 14,276 $ $ 11,421 11,421 $ - HPC Spool S1-2 HPC Spool S1-2 HPC Spool S1-2 20,000 20,000 20,000 8,735 8,735 8,735 $ $ $ 67,958 67,958 67,958 $ $ 54,367 54,367 $ 10,892 USM discount: $296k HPC Disk S3 HPC Disk S3 HPC Disk S3 20,000 20,000 20,000 2,772 2,772 2,772 $ $ $ 7,195 7,195 7,195 $ $ 5,756 5,756 $ - HPC Spool S4-9 HPC Spool S4-9 HPC Spool S4-9 20,000 20,000 20,000 2,772 2,772 2,772 $ $ $ 51,282 51,282 51,282 $ $ 41,026 41,026 $ - HPC CDP Seal HPC CDP Seal HPC CDP Seal 18,000 18,000 18,000 2,063 2,063 2,063 $ $ $ 8,190 8,190 8,190 $ $ 6,552 6,552 $ - HPT HPT HPT HPT Fwd Shaft HPT Fwd Shaft HPT Fwd Shaft 17,300 17,300 17,300 1,815 1,815 1,815 $ $ $ 13,502 13,502 13,502 $ $ 10,802 10,802 $ - HPT Fwd Air Seal HPT Fwd Air Seal HPT Fwd Air Seal 15,800 15,800 15,800 13 13 13 $ $ $ 112 112 112 $ $ 90 90 $ - Real demand: $40k HPT Disk HPT Disk HPT Disk 18,500 18,500 18,500 2,240 2,240 2,240 $ $ $ 29,580 29,580 29,580 $ $ 23,664 23,664 $ - HPT Rear Shaft HPT Rear Shaft HPT Rear Shaft 20,000 20,000 20,000 2,772 2,772 2,772 $ $ $ 13,584 13,584 13,584 $ $ 10,867 10,867 $ - LPT LPT LPT LPT Disk S1 LPT Disk S1 LPT Disk S1 25,000 25,000 25,000 1,018 1,018 1,018 $ $ $ 4,593 4,593 4,593 $ $ 2,756 2,756 $ - LPT Disk S2 LPT Disk S2 LPT Disk S2 25,000 25,000 25,000 1,018 1,018 1,018 $ $ $ 5,265 5,265 5,265 $ $ 3,159 3,159 $ - LPT Disk S3 LPT Disk S3 LPT Disk S3 25,000 25,000 25,000 1,018 1,018 1,018 $ $ $ 5,318 5,318 5,318 $ $ 3,191 3,191 $ - LPT Disk S4 LPT Disk S4 LPT Disk S4 25,000 25,000 25,000 7,772 7,772 7,772 $ $ $ 35,098 35,098 35,098 $ $ 21,059 21,059 $ 6,322 Painful reality: $0k LPT Shaft LPT Shaft LPT Shaft 30,000 30,000 30,000 2,818 2,818 2,818 $ $ $ 20,722 20,722 20,722 $ $ 12,433 12,433 $ - LPT Stub Shaft LPT Stub Shaft LPT Stub Shaft 25,000 25,000 25,000 610 610 610 $ $ $ 1,788 1,788 1,788 $ $ 1,073 1,073 $ - LPT Conical Support LPT Conical Support LPT Conical Support 25,000 25,000 25,000 7,772 7,772 7,772 $ $ $ 27,214 27,214 27,214 $ $ 16,329 16,329 $ 4,902 Total Total Total $ $ $ 425,068 425,068 425,068 $ $ 296,177 296,177 $ 40,130 Source: Oriel data 15

Maintenance component in leases Lease-end compensation • Restores to “full - life” Lease-end comp/ condition Maintenance reserves • • Are pre-agreed rates Calculated at lease- Physical return sufficient? end prices conditions • • Are escalation rates Do return conditions realistic? allow minimum • Do return conditions build? • allow minimum What is the build? maintenance condition worth? Source: Oriel VIP 16

What is the value of RCs? Case study $15m $2.5m Return Conditions $5.5m upside • “fresh” 12 -year $10m downside airframe check • Landing gear half- $5m life • Engines / Engine LLPs minimum $0m 3,000 cycles Half-Life Base "Owner" Adjusted Adjusted Base remaining Value Base Value Value Source: Oriel, CAPA Fleets 17

Thank you. Les Weal Olga Razzhivina Tel: +44 3330112129 Tel: +44 3330117676 Mobile: +44 7913845440 Mobile: +44 7715868776 les.weal@oriel.aero olga@oriel.aero