Does a Market Value for a brand-new aircraft (valued on build date) reflect the purchase price from the OEM or the value in the open market?

Our Market Value definition is reflective of the purchase price that we believe an aircraft can achieve
in the current open market. This also applies to brand new aircraft. The Market Value is therefore not necessarily reflective of the contractual purchase price that the purchaser is paying the aircraft
manufacturer.

Under most circumstances, especially for a mature aircraft programme, there are several reasons
why the Market Value may differ from OEM delivery pricing:
• The delivery pricing is derived from a contract which is usually negotiated and signed several
years prior to delivery under different market conditions
• The delivery pricing has been subjected to contractual escalation which may exceed the
general rate of inflation
• The delivery price typically includes some degree of customisation for the original customer.
If the original buyer defaults around the time of delivery, the aircraft must be re-marketed in
the open market with this customised specification. Even if it is new chronologically, there will
likely be additional cost to reconfigure some of the interior items, even if it is just placards and
signage on a commercial single-aisle or regional aircraft. The gap between delivery price and
Market Value can grow much wider for commercial twin-aisle aircraft where the BFE is more
costly and customised, and the need for reconfiguration becomes more likely.
• The Market Value is affected by overall availability of the type and extant market conditions,
which may differ from supply and demand conditions when the order was placed.

The Market Values that we provide for a brand new aircraft are therefore not intended to be reflective
of the contractual purchase price from the manufacturer, but take into account all of the above
considerations, as well as availability of other examples of the type, including any new “white-tails”
which are newly built aircraft without a customer to take delivery, and thus marketed by the
manufacturer for sale or lease. The most appropriate proxy for the typical delivery price of a new
aircraft is Full Life Base Value.