Monday, June 28, 2004
Emergence of 'A330-200 Lite' Unlikely to Impact Existing Values
The reduction in the maximum takeoff weight of the A330-200 to produce a "Lite" variant to meet the needs of regional operations is not expected to impact the values of the existing A330-200.
The competition to equip premier carrier Singapore Airlines (SIA) has resulted in the development of enhanced products, and the latest round of offerings by Boeing [BA] and Airbus [EADS] is no exception. SIA is in the process of ordering up to 50 aircraft comprising either the B7E7/B777-300ER or the A330/A340-600. Airbus, in seeking to counter the offer of the B7E7, has proposed to reduce the weight of the A330-200 to 202 tons, a reduction of 28 tons or nearly 62,000 lbs. SIA has already ordered the A380.
SIA desperately needs a replacement for aging A310-300s but the A330-200 is deemed too heavy.
De-rating the engines of the A330-200 and lowering the weight would offer a solution, although the empty weight would not be optimized. With the -200 already representing a smaller A330, the structural weight of the -200 Lite would be considerable. Airbus still has to fully define the specifications of the A330-200 Lite. The reduction in weight and engine thrust could result in the price of the A330-200 being reduced by possibly $10 million or more. The standing of SIA, the importance of the order, and the quantity involved would likely involve considerable discounting. Any net pricing would likely be less than $70 million, the benchmark price for B7E7 launch order customers.
Residual values of lighter versions of baseline models, unless accompanied by a shortening of the fuselage, have not performed well. Residual value calculations are partially dependent on the perceived ease of marketing. A higher gross weight translates into operational versatility. Greater payload/range performance will be attractive to a wide range of operators. A widebody with more restricted range will usually only be attractive to a few operators.
SIA has not been adverse to type abuse, using lower-weight B777-200ERs for regional operations, resulting in higher-than-average utilization. Despite the earlier availability of the A330-200, the B7E7 would more meet the needs of SIA. The airline has not been adverse to switching manufacturers on relatively short notice or introducing equipment for a short term. The switch from the MD11 to the A340-300 and the trade-in of A340-300s for B777-200ERs even before delivery are cases in point. SIA therefore may opt for the A330-200 Lite but still choose the B7E7 at a later date, either through a trade-in or buy back arrangement.