Week of 14-September-2020: Transaction Situation Report. www.ishkaglobal.

com
 TRANSACTION SITUATION REPORT Week of 14th September 2020

This is the 26th in a series of supplements to Ishka’s Transaction Economics subscription-based service. It delivers
‘the Ishka View’ on events that have a bearing on the near-term performance of aircraft values, lease rates, and the
market dynamics that matter, under today’s extraordinary market circumstances.

Drawing on market events and aircraft activity, this report examines how aircraft types are faring through the crisis, which types are
in favour or ‘on watch’ and which are most exposed and impacted by the evolving aircraft environment. First identified in Wuhan,
China, COVID-19 quickly spread globally, severely impacting the airline industry. Airlines have made drastic changes to their networks
and operations. Airline survival and economic recovery will be instrumental in shaping asset value and lease performance.

IMPACT INTELLIGENCE 14th – 18th SEPTEMBER 2020

LUFTHANSA, IAG VOICE THEIR CONCERNS

The slower rebound is making key airlines revise their recovery plans and ambitions. Next week Lufthansa decides how
many more A380s will be ‘phased out’, joining its A340-600s and B747-400s. IAGs rights issue also comes before what
the Group now expects to be a weaker winter 2020/21 than anticipated. Confidence regarding 2021 remains in place.

THE ISHKA WORLD TOUR….Our Virtual Aviation Finance Networking Series from 12th-23rd October 2020 promises
to be the Q4 event - focused on the issues that matter - from investors and financiers to lessors and airlines. Building
on the experiences of our 10,000 registrants to the Ishka 2020 Digital series, we have assembled 10 days of quality
sessions on a custom-built bespoke platform, offering four hours of content per day, across the continents and tailored
to regions, with 150 speakers on the topics you want to hear and engage on. Click here for details.

AIRCRAFT VALUES & RENTS – 5-YEAR-OLD TWIN-AISLE AIRCRAFT

In the latest of our series of charts, we have elected to look at 5-year-old widebody (twin-aisle) aircraft and show our
view of the month-by-month market value and rent progression of aircraft from January up to August 2020. The values
and lease rates assume aircraft off lease and available at each point in time, and we hope illustrate how we are making
incremental step changes to CMV and MLR to reflect our view of directional trend, and what we see in the range of
movements in used aircraft deals that are happening. July and August were ‘months for pause’ as lease data for some
types is still being processed, however the expectation is for further near-term adjustments in values and rentals.

As always, we hope these numbers are not the end of a discussion, but the start of one. We look forward to our
readership keeping us informed – if you are paying more (or less) on a new deal, please let us know! Bear in mind
these numbers reflect unencumbered assets; aircraft already on decent leases with good credits can generate a
different set of results.
5 Yr old WB Aircraft CMV Progression in 2020 5Yr old WB Aircraft MLR Progression in 2020
120 (in $m) 0.850 (in $m)
115 0.800
110
105 0.750
100 0.700
95
90 0.650
85 0.600
80 0.550
75
70 0.500
65 0.450
60
55 0.400
50 0.350
45 0.300
40
35 0.250
30 0.200
25
20 Airbus A330 200 Boeing 787 8 0.150 Airbus A330 200 Boeing 787 8
15 Airbus A330 300 Boeing 787 9 0.100 Airbus A330 300 Boeing 787 9
10 0.050
5 Airbus A350 900 Boeing 777 300ER Airbus A350 900 Boeing 777 300ER
- -
jan feb mar apr may jun jul aug jan feb mar apr may jun jul aug
CMV = Current Market value MLR = Market Lease Rate

NOTE: The Values behind the above data reflect unencumbered aircraft and reflect what might be achievable based on the
prevailing market conditions. ISTAT definitions apply. Values reflect Basic Configuration aircraft in ‘half-life’ or better condition.
In reality, many aircraft are likely to be of a higher than basic specification. This data is for comparative and trend observation
purposes. For more detailed appraisal and valuation information please contact the Ishka team.
CONFIDENTIAL © Ishka Ltd Ishka Transaction Economics www.ishkaglobal.com 1
 TRANSACTION SITUATION REPORT Week of 14th September 2020

THE ISHKA INDICATORS

TERMINATIONS, PAYOUTS AND WARNINGS

South African Airways' Business Rescue Practitioners have reportedly terminated the leases on 33 of the airline’s 40
leased aircraft and aim to finalise terminations on the rest by the end of the month. Data suggests that still in store,
including at Johannesburg, are 3 A319s (Castlelake), 2 A320s (Goshawk) an A330-300 (Aergo) and an A340-300 (AFS).
The High Court of Delhi has given SpiceJet six weeks to deposit INR2.43bn ($33m) in interest payments for warrants
and non-convertible cumulative preference shares that were allegedly agreed and paid for but not issued to an Indian
media tycoon.
Prague Business Journal notes that SmartWings filed a lawsuit against Boeing in August 2020, after "unsuccessful"
negotiations over a 15-month period regarding compensation for losses resulting from the grounding of 737 MAX
aircraft. Smartwings had reported in March that the shutdown had caused losses worth CZK2bn. The airline had seven
B737 MAX aircraft at the time of shutdown in March 2019 and were expecting another 15 by January 2020. Air Lease
Corp’s CFO has confirmed that airline requests for rental deferrals are possible, but that “it's not one way. We want to
see extensions as well”. The leasing company has also mentioned that it has engaged with some airlines for a second
round of discussions on payment deferrals. Meanwhile, Aeromexico is seeking bankruptcy court approval to alter the
lease agreements on 72 aircraft from monthly rental terms into ‘Power By the Hour’ (PBH) arrangements.

THE EETC AWAKES

Air Canada plans to raise $552.6m through the sale of enhanced equipment trust certificates (EETC) to pay down a
bridge loan facility secured by 16 aircraft. The EETC includes nine A321ceos, one B777-200LR, three B777-300ERs and
three B787-9s.

THE TRANSACTION VACUUM…

TrueAero has announced a sale/leaseback transaction for 13 A320ceos with JetBlue. The Hungarian Government
has confirmed the acquisition of an Airbus A330F from Qatar Airways, initially to transport medical supplies amid the
pandemic, and which will be operated by Wizz Air on the government’s behalf. The Gov’t also has access to two ex-
Air Berlin A319s operated by the Air Force since 2018. Nepal Airlines has not been able to conclude the sale of its
B757-200 to CSDS Aircraft Sales and Leasing. The airline had apparently sold the aircraft back in December 2019 for
$5.7m after several unsuccessful attempts. The buyer transferred a pre-payment of $281,000 in January 2020,
however, the final purchase agreement has not been formalised.

Taiwanese authorities have started to auction off Far East Air Transport (FEAT) assets to pay off some of the
company's debts, including an MD-82. FEAT owes labour and health insurance, labour law fines, airport service fees,
building tax, and other taxes and fees totalling more than TWD96m ($3.28m). Skyworld Aviation was appointed by
Investec to assist with the sale of six ATR 72-500 turboprops. All six were built in 2010 and are located in Europe.
The aircraft are "primarily" being offered for sale, although "limited finance arrangements may be considered".
Iran Air is offering for sale by auction twelve of its older aircraft, comprising three Boeing B747SPs, one B747-100,
one B747-200B, two B727-200s, three A300B2Ks and two A310-200s. The minimum bid price for these collectables is
around $10,000 (B727) and the highest is approx. $27,000 (B747SP). GOL is expected to use Ex-Im Bank financing
should it resume direct B737 MAX deliveries with Boeing. The carrier is under no obligation to take deliveries of MAX
aircraft until 2022.

SPOOLING UP….
Florida-based Via Airlines is set to relaunch under a new brand - Sterling Airlines - using Embraer ERJ145s. The
airline was bought by Wexford Capital in July 2020, while in Chapter 11 proceedings. Global Crossing Airlines plans
to spin out its wholly owned subsidiary Canada Jetlines, which had originally intended to operate ultra-low-cost services
using A320s. JetSMART Argentina has resurrected Norwegian Air Argentina (NAA) for deployment from December
1st. Since the JetSMART subsidiary is unable to fly from Buenos Aires Aeroparque, it is now selling flights from that
airport under Norwegian Air Argentina flight numbers. Jetsmart acquired NAA in late 2019, both now operate a fleet of
young A320ceos.
Uganda Airlines' long-haul plans remain on track with the delivery of two A330-800neo due in December 2020. The
aircraft will enter service in February 2021. Arik Air is expanding its fleet of nine B737-700s with a tenth unit under a
long-term wet-lease arrangement from Mongolia's Eznis Airways. The 2004 vintage aircraft is leased through Carlyle
Aviation Partners and had been inactive since February 2020. Nigerian airline Ibom Air plans to double its fleet within
three years, from five to ten CRJ900s.
CONFIDENTIAL © Ishka Ltd Ishka Transaction Economics www.ishkaglobal.com 2
 TRANSACTION SITUATION REPORT Week of 14th September 2020

Despite the reduced demand, new aircraft deliveries continue. IndiGo recently took delivery of three more A320neos,
while GoAir has taken two more A320neos. Wizz Air Abu Dhabi has received its second A321neo while Frontier
Airlines took delivery of one A320neo, the seventh such aircraft to be leased by Frontier from Avolon. China Eastern
Airlines received one new A320neo and now operates 39 A320neos. In the twin-aisle sector, Virgin Atlantic Airways
recently received an A350-1000, its fifth of the type. Up and coming A350-1000 deliveries will include French Bee
who are expanding their fleet next year with two leased Airbus A350-1000s. The airline already operates four A350-
900s with the latest having arrived in August. Recent non-Airbus deliveries included Red Wings who took delivery of
another SSJ100.

In the secondary market, Xiamen Airlines recently took back two B737-700s that had been placed with Hebei Airlines
in 2011. Xiamen had originally acquired the aircraft new in 2005. Estonian airline NyxAir has added a third Saab
2000, previously operated by Loganair.

Those still formulating plans include Vietnam Airlines, who have recently released an RFP for the dry or wet-lease of
an unspecified number of regional jets, to be delivered in Q1 2021. The airline did not reveal any details regarding the
exact type or even the number of seats, nor the number of aircraft it is planning to operate. Greek operator Lumiwings
is planning to launch scheduled passenger flights out of Italy from December 2020, connecting northern Italy with
destinations in Central-Eastern Europe. The ACMI airline operates two B737-300s. Samoa Airways is studying Dash
8-100 and ATR 42 turboprops, as well as CRJ100/CRJ200 regional jets. The airline currently uses three DHC-6-300
Twin Otters to operate services to and within American Samoa. The airline used to wet-lease a B737-800 from Malindo
Air, but in June secured another B737-800 on a five-year dry lease. The Brazilian carrier Itapemirim has acquired
America do Sul Taxi Aereo, putting the start-up airline one step closer to receive an AOC.

SPOOLING DOWN…
Brazilian airline GOL plans to be operating 74 of its 130 B737s in September (close to 40% of its September 2019
schedule) and up from 60 aircraft in August. Nine leased B737s were returned in August and seven more will be
returned by year end. Another 30 can be returned in 2021-22 if needed. B737 MAX deliveries due in 2020-2022 have
been reduced by 47 aircraft. The airlines’ fleet is 100% leased and GOL notes it has “received support from its (leasing)
partners in the form of deferrals, discounts, and variable PBH payments on some aircraft.” RwandAir is reported to
be re-considering taking leased A330neos (from ALC) or B737 MAX 8s (from SMBC). Qatar Airways is still in discussions
to acquire up to a 49% shareholding in the airline, which could lead to a change in fleet mix – Qatar currently has
surplus aircraft in its fleet including Airbus widebodies and ex-Air Italy B737 MAX 8s.

Cathay Pacific has plans to park up to 40% its fleet for the immediate future, with a full restructuring plan due in
October. The carrier has already sent aircraft to storage at Alice Springs in Australia and more of its 225-strong fleet
(Cathay Pacific, Cathay Dragon and HK Express) could follow. Cathay has also switched two A350-1000 orders to the
smaller A350-900 and is said to be looking to delay the arrival of its B777-9s. It is understood that Starlux Airlines
plans to add eight A330-900s on lease, with deliveries starting from Q4 2021, with the airline deferring deliveries of its
own A350-900s to 2022. The airlines fourth A321neo arrives in October 2020.

Air New Zealand plans to ground its B777 fleet for nearly one more year, as it notes that recovery from the pandemic
will be “slower than initially thought”. Four of the airline’s seven B777-300ERs will be moved to Victorville, USA, while
the remaining three will remain parked in Auckland. Virgin Australia is returning a third of its fleet of B737s to lessors
and financiers as part of the turnaround plan under new owner Bain Capital. Financing terms for 56 of the 85 B737s
have been re-negotiated. Japan Airlines has retired a second B777-200ER, following the first 777-200ER in July 2020.

CARGO CORNER

ST Engineering is to almost triple its capacity for Airbus A321 P2F conversions annually. The company is planning to
increase conversion capability from nine a year to 25 a year by 2023 by adding the capability to existing MRO facilities
in the USA (San Antonio) and China (Guangzhou) to complement the current sites in Singapore and Germany (EFW).
Currently, all the company’s nine slots for 2021 conversions are full, including those for the A320. Air Transport
Services Group has announced it will operate six more B767Freighters on behalf of Amazon Air through an existing
CMI (Crew, Maintenance, and Insurance) agreement with ATSG’s subsidiary, Airborne Global Solutions. Turkish
Airlines has added more freighter capacity through two B747-400BDSFs operated on an ACMI basis by Turkey-based
ACT Airlines. The aircraft were both previously operated for Saudia Cargo. Aerotranscargo has reactivated another
B747-400BDSF after a year in storage at Liege. SprintAir has taken delivery of an ATR 72-500 which, following
conversion will become the airline's first ATR 72-500(F).

CONFIDENTIAL © Ishka Ltd Ishka Transaction Economics www.ishkaglobal.com 3

 1
2T ER
H-
23DO
R T
COB

We
’r
eexc
it
e dtoa
nnou
nceou
rglob
alev
entextr
ava
ganz
a.Co
mewithusona
vi
rt
ualwor
ldto
urwi
tho
utlea
vin
gyourhome,
withhe
adl
inei
ndus
try
h
eavy
we i
ght
ssho
wcas
ingth
ehott
estto
pic
sandconn
ectwi
ththe
av
iat
io
nfi
nanc
ec o
mmuni
tyfro
ma r
oundth
eglo
be.

F
RE
ERE
GI
STR
ATI
ON
FO
RAI
RLI
NE
S
A
NDI
NST
IT
UT
ION
AL
I
NV
EST
ORS

UNRI
VA
LL
ED
NET
WOR
KIN
G
O
PPO
RTU
NI
TI
ES

F
INDO
UTMO
RE
 Break through the opaque
world of aircraft pricing

Transaction Economics
Two integrated modules
Powerful new analysis

TRANSACTIONS + VALUATIONS
Access unique aircraft trading data
at a click of a button to confidently
evaluate future transactions and
benchmark against actual deal trends
Trusted, independent aircraft values
data to evaluate risk and make
informed decisions about buying,
trading and managing aircraft assets

REQUEST A DEMO TODAY

London. New York. Tokyo. Ishkaglobal.com

A new era of transparency in
aircraft values and deals data Transaction
Our powerful new intelligence source delivers: Economics

Ishka Transactions
Unique intelligence on trends in aircraft transactions
comprised of real pricing and deals data.

28,000+ 310 82
Data Points Airlines Countries

• Aircraft purchase prices

• Lease rates
• Security deposits
• Maintenance reserves
• Loan terms and amounts and much more.

Ishka Valuations
Real deals data supports Ishka’s granular and trusted
analysis, together with a fresh approach to methodology
for today’s transaction environment.

Ishka delivers:

• Half-life and full-life current market and base values

• Generic values searchable by type, variant, build year,

engine, MTOW and specification

• Generic monthly lease rates

• Forecast base values and lease rates looking

ahead up to 20 years • Includes lease encumbered valuation capability

Take your analysis to a deeper level

Book your FREE demo today

Edward C. Sikorski CFA Chris Keene Noriko Nozaki

Americas Worldwide Japan and Korea
Call +1 631 983 6512 Call +44 (0)20 3176 6392 Call +81 (0)3 3216 73392
esikorski@ishkaglobal.com chris@ishkaglobal.com noriko@ishkaglobal.com

London. New York. Tokyo. Ishkaglobal.com