Because the status of parked airplanes can change over time, getting a current snapshot of aircraft retirements is notoriously tough; this month’s stored airframe could join the “retired” category next month. Still, small data samples tracked by Canaccord Genuity suggest that factors are converging to help keep more older aircraft—and, notably, widebodies—from leaving the fleet.
"While retirements can turn relatively quickly, there was a marked decline in retirements in Q2/17, with total Airbus and Boeing retirements down 35% over Q2/16,” Canaccord writes in a recent research note. Notable declines were cited among specific narrowbodies and widebodies, including the 737 Classic, 757, and 747.
“[W]e appreciate that the data for retirements can also get revised,” Canaccord adds. "However, it is interesting to note that while narrowbody retirements are still trending down, it appears that widebody retirements may be troughing.”
The biggest reasons: stable fuel prices and strong demand for lift. Fuel prices have settled in about $50/barrel, while revenue passenger kilometers were up 7.7% year-over-year through May, International Air Transport Association (IATA) figures show.
Canaccord tracks retirements in several ways, including a running 12-month average that it updates monthly. The figure, up at about 450 retirements in the previous 12 months at the beginning of 2014 and above 400 in mid-2016, has fallen to below 350 in recent months.
The retirement of narrowbodies—the oldest 737s and A320s—will likely pick up steam as production rates on those lines ramp up and more 737 Maxs and A320neos are delivered. However, the widebody figures suggest that the twin-aisle capacity glut may slowly be changing.
“[W]e do expect widebody retirements to stabilize or decline as the expected production cuts in key platforms, such as the 777, take effect into 2018-2019,” Canaccord says.
This, coupled with recent IATA data showing a steady uptick in large widebody freighter utilization — 747s and 777s — bodes well for MRO providers that count legacy widebodies in their service portfolios.