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Breathing new life into a timeless twin

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At AerFin, we’re focused on maximising value from every aviation asset, and to do that requires expert understanding of every aircraft lifecycle.

The bestselling Airbus 330 is an enduring icon of the aviation industry and has evolved with the times, maintaining its relevance and remaining a key player in the aviation industry. As airlines grapple with the challenges of fleet management, the A330 continues to offer significant value, whether through continued service, conversion or teardown.

In this article, we explore the ongoing legacy of the A330 and how our expertise brings a new lease of life to mid-life aircraft, maximising value for asset owners and turning challenges into opportunities.

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The A330, a legacy of evolution

The A330 has been around for twice as long as AerFin, having entered service in January 1994 with Air Inter.

Unusually, due to continuous upgrades by Airbus, production actually spanned over a quarter of a century, concluding only in 2020. So, while the older, Low Gross Weight (LGW) variants from the 1990s have been mostly retired, the rump of the fleet, which comprises ‘Enhanced’ A330s, is just entering their teens.

AerFin is already familiar with the type through the A340, which was a core product for us in the 2010s when many airlines opted to phase-out early. This counter-cyclical move yielded well for us given the high levels of commonality between the A340 and the A330.

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Today, the A330 presents significant opportunities in itself, having a truly global footprint and high lessor penetration. At the point of disposal, most A330s can go one of four routes:

  • Transition to another airline or;
  • Conversion to Freighter or;
  • Conversion to Multi-Role Tanker-Transport (MRTT) or;
  • Teardown.

Plus, it so happens that the A330 evolved into another derivative, the A330Neo, which is catalysing an increasing number of fleet rollovers.

A strategic approach to the A330 market

AerFin specialises in recycling mid-life assets; those which prove surplus to secondary market demand, where the opportunity cost of redeploying them in service outweighs what they can yield as a sum of their parts. These are assets which can draw attention from the market given their young age at retirement, but which on balance do not necessarily shift the retirement age curve over time.

The A330 marks a change for AerFin. Unlike the 4-engined A340, it’s a mature but not a sunset programme. Over 1,000 aircraft remain in service with over 110 operators worldwide. And the fleet with ‘Enhanced’ Landing Gear fitted (comprising 80% of the total) is only 13 years old on average, which means there’s plenty of runway ahead.

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For comparison, the average age of the 90+ aircraft AerFin has acquired to date since 2010 has been 12 years of age, which supports our claim as an ‘end-of-life player in the mid-life space’.

Why we focus on early recycling

  1. Natural ‘attrition’

Aircraft are built to last 20-25 years or more, but not all will reach that age. Some airlines may simply favour an early fleet rollover to keep a young fleet; then there are bankruptcies, scheduled lease returns and other factors that may lead to early retirement. Each event means aircraft will come to market, and while there may be demand, it can be more as a sum of its parts than as a flyer. Each owner will have their own view and, in some cases, an early exit enables them to extract the most value.

  1. First mover advantage

Historically, there has always been a so-called ‘first mover advantage’ for the first of any aircraft type to be recycled, as they signify the first injection of used serviceable material (USM) to the market. The USM from these aircraft usually sells quickly and at a premium. This does taper off as supply catches up with demand in the secondary market, but only once a significant volume of aircraft has been retired.

  1. Hedging against obsolescence

Younger aircraft contain younger components which tend to have more life remaining in them, making them less prone to obsolescence.

  1. Capital efficiency

For the reasons mentioned above, demand is stronger for young, high quality USM, leading to faster turn on inventory and return on invested capital (ROIC).

  1. Sustainability

The more of an aircraft’s components we can recycle, the less goes to waste. Older aircraft may be available at a lower price point, however because they are more technologically obsolete, components are less cost-effective to remove, store, repair and repurpose given the dwindling demand, and as a result tend to end up in landfill, rather than sitting on shelves, taking valuable storage space for years.

A nuanced position

The position of the A330 in the market is however, more nuanced. Despite entering into service 30 years ago and the first retirements already taking place from 2011, production was ‘backloaded’, with 55% of A330s delivered since 2011. Specifically, the ‘Enhanced’ Landing Gear fleet has seen very few retirements to date.

The same is true for the A320ceo and 737-NG, which were both produced in higher volumes during their final decade than in previous years, with hardware upgrades distinguishing their respective sub-fleets within each platform.

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Golden opportunities in a dynamic market

The market before us is unlike any the aviation industry has ever witnessed. The current fleet of jet airliners is 10% larger than in 2019 and continuously growing. However, dependence on the previous generation of aircraft such as the A330ceo, A320ceo, 737-NG and 777-300ER (which form a combined fleet of nearly 15,000 aircraft), remains high. The secondary market is roaring, through a mix of lease extensions, continued operation and rapid placement of off-coming aircraft. Feedstock is scarce, while USM demand is high.

At AerFin, we see this as a good thing.

Aligning with sustainability goals through intelligent asset management

From a sustainability perspective, producing a new aircraft carries an obvious environmental impact. Once produced however, it is less sustainable to trigger a wave of premature retirements to meet ESG targets than it is to operate the aircraft for as close as possible to its intended economic useful life. Too much supply of USM on the market ultimately leads to wastage.

the way ahead

The more efficient route therefore, is to provide more bespoke solutions to the airline industry – offering USM more closely aligned to an airline’s needs and planned operating horizons rather than offering components with a longer lifespan than the airline can practically utilise.

The industry is also blessed that the previous generation platforms remain relatively young as a function of higher production in those latter years, while being more technologically mature (and for now, reliable) than their successors. The reality is that there is still plenty of hay to be made both today and for the coming years, with yesterday’s technology, until the market is ready to make room for the new (and able to rely on it just as fully).

Realising value for our customers

The A330, with its unique position as a mature but not yet outdated model, represents a significant opportunity for the aviation aftermarket. But navigating the complexities of its life cycle requires deep understanding and foresight, in order to realise maximum value from assets.

As we continue to provide strategic solutions for managing mid-life assets, we remain committed to bringing clarity to these complex decisions. At AerFin, our purpose is ‘to breathe new life into aviation’, and we remain dedicated to delivering reliable, effective solutions that meet the evolving needs of our customers, allowing them to move forward with confidence.

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