Barclays on Industrials: Parked Planes: Large Numbers Hide Improving Trends
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Price: $214.20 -0.42%
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32 Buy, 12 Hold, 2 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
32 Buy, 12 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on Industrials: Parked Planes: Large Numbers Hide Improving Trends
Analyst, Carter Copeland, said, "In this update to our analysis of parked planes (aircraft which some investors view as an important supply/demand "buffer"), we note a further decline in the total parked planes fleet (permanent and temporary combined) with the fleet falling 189 aircraft for the year (through October) to 2,397 airplanes. While the absolute number of parked planes still remains historically high, we think it is important to note that as a percentage of the fleet, the parked fleet is approaching the low levels observed during the last upturn; we think that a focus on the large absolute number ignores some interesting and bullish trends for the cycle, which include the following: 1) There are few parked new generation in-demand aircraft with most of the large parked number being made up of older generation less efficient airplanes - aircraft that are unlikely to return to fleet in a "$90+" oil price environment; 2) We have seen a divergence among the main components of the parked fleet, with the temporary parked fleet actually increasing in 2011 (+45), offset by the declines in permanently stored aircraft (-234), as these aircraft are essentially retired; 3) In production/in-demand planes make up less than 10% of the total parked fleet (211a/c). This sub-fleet of in-demand aircraft has declined by 14% in 2011. Nearly 60% of these aircraft are A320s. Although we consider the A320 to be an in-demand model, we note the growing fleet of 20+yr A320s (currently ~250 planes; 4) Total Airbus and Boeing (NYSE: BA) parked planes have declined by 217 in the year to 1,826 airplanes (76% of the total)."
"We believe that parked planes data trends continue to support the view that new aircraft demand remains robust; parked aircraft as a % of the fleet are approaching lows of last cycle and sub-segment trends reveal high demand for aircraft efficiency, as newer parked aircraft make up a very small portion of the parked fleet. Marginal "losers" revealed by the data are older-generation aircraft and small RJs; however, we think aftermarket impacts to these aircraft should be small, as marginal movements in the fleet of these aircraft are small relative to the overall totals."
Analyst, Carter Copeland, said, "In this update to our analysis of parked planes (aircraft which some investors view as an important supply/demand "buffer"), we note a further decline in the total parked planes fleet (permanent and temporary combined) with the fleet falling 189 aircraft for the year (through October) to 2,397 airplanes. While the absolute number of parked planes still remains historically high, we think it is important to note that as a percentage of the fleet, the parked fleet is approaching the low levels observed during the last upturn; we think that a focus on the large absolute number ignores some interesting and bullish trends for the cycle, which include the following: 1) There are few parked new generation in-demand aircraft with most of the large parked number being made up of older generation less efficient airplanes - aircraft that are unlikely to return to fleet in a "$90+" oil price environment; 2) We have seen a divergence among the main components of the parked fleet, with the temporary parked fleet actually increasing in 2011 (+45), offset by the declines in permanently stored aircraft (-234), as these aircraft are essentially retired; 3) In production/in-demand planes make up less than 10% of the total parked fleet (211a/c). This sub-fleet of in-demand aircraft has declined by 14% in 2011. Nearly 60% of these aircraft are A320s. Although we consider the A320 to be an in-demand model, we note the growing fleet of 20+yr A320s (currently ~250 planes; 4) Total Airbus and Boeing (NYSE: BA) parked planes have declined by 217 in the year to 1,826 airplanes (76% of the total)."
"We believe that parked planes data trends continue to support the view that new aircraft demand remains robust; parked aircraft as a % of the fleet are approaching lows of last cycle and sub-segment trends reveal high demand for aircraft efficiency, as newer parked aircraft make up a very small portion of the parked fleet. Marginal "losers" revealed by the data are older-generation aircraft and small RJs; however, we think aftermarket impacts to these aircraft should be small, as marginal movements in the fleet of these aircraft are small relative to the overall totals."
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