Aircraft Value News

January 26, 2015 Vol. XXIV No. 2 www.aviationtoday.com Airbus List Prices for 2015 Rise by 3.3% Difficulty Lies in Translating Rise into Net Pricing Airbus list prices for 2015 show Airbus 2015 2014 2015 a rise of nearly 3.3 percent across all 2012 2013 2014 2015 Est. Est. 2014-15 List/Net aircraft types but the difficulty will be in AV AV AV AV Value Value % RISE Disc translating this rise into net base pricing (New) (New) 67.7 70.1 71.9 74.3 26.2 26.5 3.3 64 for new orders and in achieving an A318 A319 80.7 83.6 85.8 88.6 35.7 35.7 3.3 60 increase in profitability. 88.8 92.0 94.4 97.5 40.5 40.8 3.3 58 The rise in list prices quoted by A319NEO* 88.3 91.5 93.9 97.0 41.1 42.2 3.3 56 Airbus are largely an arithmetic exercise A320 96.7 100.2 102.8 106.2 48.5 50.5 3.3 52 reflecting the rise in labor, material and A320NEO* A321 103.6 107.3 110.1 113.7 48.3 49.7 3.3 56 energy costs. With both material and A321NEO* 113.3 117.4 120.5 124.4 56.3 57.9 3.2 53 energy costs on the slide, the rise for A380 389.9 403.9 414.4 428.0 218.0 222.0 3.3 48 2016 may be less significant. A significant 211.5 219.1 224.8 232.2 97.2 93.1 3.3 60 change for Airbus however, lies with the A330-200F A330-200 208.6 216.1 221.7 229.0 93.9 93.7 3.3 59 weaker Euro compared to the dollar. In A330-800NEO 249.6 101.2 February 2014 the Euro:Dollar exchange 231.1 239.4 245.6 253.7 109.0 108.8 3.3 57 rate amounted to approximately 1.35:1 A330-300 A330-900NEO 284.6 118.9 but as of January 2015 this had fallen to A350-1000 332.1 340.7 351.9 175.5 3.3 50 only 1.12:1 representing an approximate A350-800 245.5 254.3 260.9 269.5 129.0 N/A 3.3 20 percent decline. While Airbus acquires A350-900 277.7 287.7 295.2 304.8 136.0 140.1 3.3 54 some of its components and subassemblies in dollars, with the actual selling price of the aircraft in dollars, the impact on profit is significant if the exchange rate is adverse for too long. Hedging will go some way to mitigating such a risk. The production of the A320 family in the U.S. will also go some way to improving the situation. Nonetheless, Airbus may have to seek to firm up net base pricing which may result in lesser number of aircraft being sold though given the extensive backlog, deliveries for any orders placed during 2015 will not take place for a number of years. With values of newly delivered aircraft increasing by less than 3.3 percent, then the level of discounting has increased such that this is now in excess of 50 percent for virtually all aircraft types. The net value of a new A321 has increased by some three percent but the value of a new A330-200F has fallen over the last year. List prices are quoted for the A330-900neo for the first time which show a $30 million premium over the A330-300 while the net value differential is some $10 million. The value of a new A380 has increased by less than two percent between 2014 and 2015 which reflects the lack of airline orders during 2014 though 20 were secured from Doric with seven being cancelled resulting in a net orderbook for the A380 of 13. Airbus are indicating that 2015 may be a better year for airline orders and may even progress the -900 and re-engining. The values of the A350-900 reflect the lack of problems for the type having been delivered to Qatar and starting service. The absence of high profile issues with the development of the A350 contrasts ●. Backlog & Lower Fuel Price Keep Values & Lease Rentals on Even Keel. . . . . . . . . . . . . . . . Page 2 ●. Mid Life Aircraft Demand Seen As Stabilizing Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3 ●. Aircraft Value Review – The B737-800. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6 ●. B747-8F Values Continue to Decline As Fuel Prices Tumble . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8 © 2015 Access Intelligence, LLC. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines of up to $150,000 for violations. Hedging against currency fluctuations may only go some way to easing the burden with smaller airlines particularly vulnerable. Digital Media & Design: Michael Kraus SVP. then the benefit of lower fuel prices will be less significant.400 and Boeing 5. Europe and Asia will likely seek to improve yields from existing traffic rather than seek to expand services that may dilute yields. Airbus recorded orders for 1. 30 A321neos.S. With lower fuel prices comes lower inflation. 20898-8927 +1-301-354-2101 • 888-707-5812 • FAX: +1-301-309-3847 Telex: 358149 • E-mail: clientservices@accessintel. A350-1000 values reflect 2017 deliveries. n Backlog & Lower Fuel Price Keep Values & Lease Rentals on Even Keel The prospects for values and lease rentals for 2015 remain stable though any further significant strengthening is unlikely with the Mid Life Aircraft (MLA) perhaps offering some opportunities.com Send press releases to: Paul Leighton. 2015 with the problems that beset the B787-8 and A380. Lessors can actually benefit from higher inflation but with still low interest rates.com VP. a trend that continues to encourage an increase in production.Page 2 AIRCRAFT VALUE NEWS. While fuel prices may have fallen the strengthening of the dollar compared to a range of other currencies over the last year. MD and TX. see the attached coupon. For photocopy or reuse requests 800-772-3350 or [email protected] Please ❏ enter ❏ renew the following subscriptions: ❏ Aircraft Value News – 1 year for $1599 (25 issues) ❏ MasterCard ❏ VISA ❏ AMEX ❏ Discover Card No. However. the lower fuel price. the legacy carriers in the US. Box 8927 Gaithersburg. shipping is additional at $20/yr domestic. Editor FAX: +44 (0) 203 468 5596 or [email protected] Publisher.S. Conversely.000 for violations. hence the predilection for acquiring the smaller B777-300ER to replace the once ubiquitous B747-400. This will make it even more of an imperative for operators to seek lower rentals. The price of fuel may have fallen by some 50 percent but with a 20 percent increase in the U. Indeed.A. the airlines are focusing on improving yields and carrying a few more marginal economy passengers may not be seen as attractive. 2nd Floor. The stimulation of the world economy through lower fuel prices should generate additional traffic particularly if accompanied by lower ticket pricing from expanding carriers._____________________________ Exp. The orders for Airbus widebodies were significantly below those placed for Boeing widebodies. dollar and 100 percent with respect to the Ruble. Sloma-Williams Director of Marketing: Kristy Keller kkeller@accessintel. Another 20 A330-300s were cancelled along with 18 A350-800s. not least the Euro and Ruble. This will keep the pressure on values of newer aircraft as operators scramble for limited availability. 35 A321ceos. The Airbus backlog now numbers nearly 6. *A320neo family values reflect 2016 deliveries. 51 A350900s. LLC is prohibited. Rockville. MD 20850.550 gross orders and 1. Airbus surpassing A320neo family orders compared to those placed for the B737MAX. The net effect of such an extensive backlog is to ensure that there remains an imbalance between supply and demand. Federal copyright law prohibits unauthorized reproduction by any means and imposes fines up to $150. Reproduction of this newsletter in whole.796 aircraft but after 340 cancellations net orders amounted to 1. 20 A350-1000s and seven A380s. thus helping to determine interest rates. will limit the beneficial effect of lower pricing on airline economics. The lower price of fuel will improve airline profitability and allow the expansion of the low cost airlines. Stable new net prices will in turn prevent used values from increasing. or part. There remains a question mark over the A350-1000 given the lower capacity compared to the B777X but Airbus maintain that there has been little demand for extra capacity. will constrain net delivery pricing due to lower escalation.com or 301-354-2101. The cancellations involved 138 A320ceos.789.456. $49/yr foreign. Production. MD U. Boeing had 1. please add applicable sales tax). January 26. 21 A319ceos.432 net orders.O.com. To order reprints contact Client Services at clientservices@accessintel. Operators outside of the US will also suffer from the adverse exchange rates when paying lease rentals. (outside North America add $99 for airmail. in CO. The year 2014 continued to see strong demand with both Airbus and Boeing yet again recording orders that were more double their output. The cost of new aircraft will also rise in comparison. For reprints. there is not expected to be much improvement in 2015.net President & CEO: Don Pazour Chief Operating Officer: Heather Farley Subscription: $1699 per year. The delivery rates for the narrowbodies are set to increase in the coming year despite the transition to newer types. LLC NC/RC P. n To: Access Intelligence. The US airlines will be the main beneficiaries of lower fuel prices though airlines such as British Airways who derive income from US ticket sales will gain some advantage. Airbus delivered 629 aircraft in 2014 compared to 723 for Boeing. contact: Client Services at clientservices@accessintel. Date____________ Signature_ ________________________________________________ Name_ ___________________________________________________ Title______________________________________________________ Organization_ _____________________________________________ Address___________________________________________________ City____________________ State__________ ZIP_______________ E-mail Address:____________________________________________ Aircraft Value News ISSN 1071-0655 Editor: Paul Leighton +44 (0) 203 468 5594 pleighton@aircraftvalues. the difference being accounted for by the 99 deliveries for the B777 whereas delivery rates for the A330 and B787 were similar at 108 and 114 respectively. Phone: 301-354-2000. Chief Information Officer: Robert Paciorek For advertising call: Daniel Chase 1-301-354-1673 or dchase@accessintel. Subscription and business offices: 4 Choke Cherry Road.com . if sustained through 2015. A330neo values reflect 2017/2018 deliveries. without prior written consent of Access Intelligence. For subscription information. Defense and Healthcare: Thomas A. Allegiant has seen a permanent decline in the B757 market. even MLA types. can exceed $4 million.50 a gallon then the 15 percent efficiency improvement is less significant when also compared to comparatively higher lease or finance payments. The maintenance issues surrounding the B757 have been increasing and the overhaul of a RB211 engine. Yet. Not only will second tier operators be interested in MLA aircraft – British Airways has just leased a 2002 A320 from AerCap that was previously operated by Wizz Air. to a more fragile carrier over a shorter term with parting out thereafter can generate enough revenue to cover the capital cost and generate a sizeable profit. This makes it possible to more efficiently operate less fuel efficient aircraft. the 50 percent reduction in the price of fuel makes it possible to contemplate retaining MLA aircraft for longer.2 million impairment as a result of an assessment of how the aircraft will fit into the fleet in the coming years. The values of the B737 Classic have been particularly exposed to the replacement process in recent years and have therefore fallen by a significant amount. If Allegiant had previously expected values in 2021 to be $7 million then the readjustment to $3 million is understandable. The market for the B757 has been deteriorating as Airbus in particular has been increasing the range and capacity of the A321 to make it more of a direct B757 replacement. The fuel component of direct operating costs of narrowbodies in particular represents a lesser proportion than for widebodies. The MLA such as A320s and B737-800s built in the late 1990s are also being more sought after given the potential for greater margins compared to new aircraft and facilitate early asset release.2 million noncash impairment charge on its six winglet equipped B757s which are used for Hawaii operations and which are approximately 21 years of age. n .5 million for an engine overhaul which powers the A321. Instead of assuming that the aircraft will be retired around 2021 Allegiant will seek to dispose of the aircraft sooner. Such value perhaps reflects the parting out value. Allegiant has arrived at the $43. n B757 Values Face Tough Times as Allegiant Halves Book Value The values of the B757 have been deteriorating in recent years as the type has lost its relevance in a changing market structure and as maintenance issues have taken their toll. However. 2015 Page 3 Mid Life Aircraft Demand Seen As Stabilizing Values The values of Mid Life Aircraft (MLA) such as the A319 and even B737 Classics may enjoy a measure of stability as the lower price of fuel makes it less of an imperative to seek replacement for 10-14 year old equipment. Seven Five Partners has just acquired 18 ex United B757s to either remarket or part out. the dramatic decline in the Ruble combined with the loss of revenue due to the decline in oil prices as well as sanctions has seen traffic and yields fall. Notwithstanding the detrimental effect of a stronger dollar and thereby relatively higher lease rentals. Saudi Arabia and OPEC only need to reduce production for oil prices to rise gain though this will stimulate the production of shale oil and the pursuit of alternative energy once more. However. with a fuel price of less than $1. This compares to $2-2. Lease extension options may be exercised in the short term rather than seek an expensive replacement.AIRCRAFT VALUE NEWS. operators would unlikely to be willing to make long term fleet decisions based on short term fluctuations on the oil price. The MLA including such types as the A340-600 may be seen as more attractive to second tier operators. A higher rental. January 26. The limited demand from this segment of the market represents a minor blow for some lessors. The fall in the price of fuel combined with rentals well below $100. Aergen of Ireland has just been formed to take advantage of the lack of appetite among mainstream lessors to acquire MLAs. In this context of disposal before 2021 the airline has determined that the residual value of its B757aircraft need to be reduced from $6 million to $3 million. A 15 percent fuel efficiency gain achieved by operating a newer aircraft will therefore result in a significant cash reduction. Allegiant Air announced in late December 2014 that it was taking a $43. The last few years has seen Russia take a number of such as the A319. at least those in good condition. excluding Life Limited Parts. Operators unable to wait three years for new equipment will acquire MLA. For example the fuel component in operating a B757 may represent some 50 percent of total operating costs when based on $3 a gallon. For a B777-200ER. Current values of 20 year old B757-200ERs approximate $6-7 million with the residual value of such aircraft in 2020 forecast to be fortunate to exceed $3 million. A 97 tonne version of the A321neo has just been launched based on a large commitment from ALC. combined with maintenance reserves. This makes it more difficult for Russian airlines to contemplate acquiring Western equipment. the fuel cost may represent 70 percent of the total operating cost.000 per month has more recently seen renewed interest in acquiring such MLA. there has been little incentive to reintroduce used freighters still languishing in the parking lot. This follows October which saw a 5. The regional airfreight market is showing some signs of improvement and the -600RF is well placed to take advantage of the traffic along with the B767F.net. As lease terms gets shorter. n Freighter Lease Rates (Dry) US$ ‘000s pm – January 2015 Aircraft A300F4 Age 1976-79 Rental 70-90 1980-84 80-100 A300-600RF 1994-98 1999-06 90-200 155-325 A310-300F 1985-97 80-115 rd Trend Analysis The lease rentals of the A300F4-200 are not expected to show any improvement except in the context of placement with more fragile operators.aircraftvalues. lease rentals can rise but then so too do the risks. preferably with bi-directional capability whereby the aircraft can be at least partially filled on the return trip. The type is being replaced. 2015 Lease Rentals Start to Strengthen Freighter Lease Rates The airfreight market has shown some consistent improvement over the course of the last few months and this. require long haul routes with dense traffic patterns. Freight Market Analysis The fall in the price of fuel. This is the most important mostly because a large part of the world’s manufacturing takes place in this region but . this needs to be seen in the context of a similar level in 2007 at the peak of the previous cycle. provides a measure of relief forAir airfreight operators and should allow November 2014 the removal of fuel surcharges. ere only the 3 fastest growing region in the FTKs they carried in November. While traffic is improving. The market for the aircraft is dwindling as operating the type requires longer and thinner routes which are increasingly moving towards larger equipment.2 percent compared to a year ago. but carry only a small part of the world’s air freight and moreover their growth has been slowing. With lower fuel prices comes the ability to carry less valuable cargo which otherwise may have travelled by surface transportation.3 percent rise. Finnair for example has announced its intent to stop offering a dedicated freighter service and will instead rely more on the A350 which are due for delivery this year. notably the B747-400F. January 26. Rentals provided by The Aircraft Value Analysis Company Limited www. this needs to be seen in the context of still parked B747-400Fs and under-utilization of other equipment.Page 4 AIRCRAFT VALUE NEWS. if sustained. but that still represented over 55% of the total expansion in the market. particularly in the context of Middle East transit activity. While load factors may seem low at just over 45 percent. The lack luster Chinese market is partly responsible for subdued appetite for large freighters but so too is the increased emphasis on on-shoring manufacturing whereby production is focused on the markets where they goods are being sold rather than seeking offshore facilities which offer the lowest labor costs. The larger freighters. www. IATA reports that the freight traffic for November 2014 increased by 4. the type can be categorized as being more of a niche rather than marginalized aircraft. combined with lower fuel prices. With no new production aircraft of this size. African airlines experienced the second strongest year-on-year growth rate in November.aircraftvalues. with over 90% of November’s 4. The 1990s saw a flurry of activity when a large number of A300B4s were converted partly because the price of feedstock fell to levels that made it possible for conversions to be economic. The air freight upturn has not been evenly spread.com. The focus is more on dedicated freighters as passenger narrowbodies have very limited cargo capability.2% year-on-year growth carried by airlines in just two regions: Asia Pacific (55% of the growth) and the Middle East (38%). is allowing some measure of stability for lease rentals. The growth of belly hold traffic continues apace with the delivery of so many new examples. The following lease rentals reflect average lease terms to a medium credit. The demand for new and converted medium sized freighters remains limited but the -600RF is replacing earlier medium sized widebodies. Combined with the delivery of new dedicated freighters. 2015 Page 5 A330-200F 2009-15 395-830 With the fall in the price of fuel and the availability of other equipment there is lesser enthusiasm for the aircraft. The aircraft arrived just at the wrong time and as such has found the market difficult with the contraction of orders all too evident. For those that spent $20m+ on conversion a decade ago – or even more recent – the returns have been dismal.AIRCRAFT VALUE NEWS. as there is nothing to replace it then demand will remain in place with lease rentals also consistent. the payload and volume of the aircraft is still significant. B747-8F 2011-15 1600-1900 The lease rentals of the -8F are under pressure as the fuel efficiency of the type loses its significance. The small package operators are playing a major role which in time will see the opposite effect. Lease rentals are holding steady though there has to be some realism regarding the length of lease terms. Lease rentals are stable which is expected to continue into the short term. However. The lease rentals have long been at levels that make the type suited to low utilization operations or as back up aircraft for when the primary aircraft is unserviceable. January 26. B727-100CH 1965-71 20-35 The aircraft can be bought for small change but maintenance and operating takes rather deeper pockets. The lease rentals for the older aircraft still have the capability to fall further. Boeing is probably having to offer incentives to secure orders. B757SF 1986-93 90-120 1994-98 105-150 1981-92 90-120 B767-300F 1995-99 2000-07 170-285 240-380 B777-200F 2009-15 695-1550 B767-200SF The conversion of the B757 continues and demand remains strong. Winglets can be economic on both types as long as utilization is sufficiently high. The rates represent a sizeable premium over the passenger version that goes beyond the cost of conversion. The rise of the Middle Eastern carriers has an impact on the need for large dedicated freighters. . Rates are becoming more realistic. B727-200FADV 1972-78 20-45 1979-83 20-45 1972-78 25-40 1979-83 40-50 B737-300SF/QC 1986-91 1992-97 70-90 85-120 B737-400SF 1988-97 80-130 B747-100SF 1969-76 N/A B747-200SF 1971-78 65-90 1979-84 70-100 B727-200FHA A great aircraft still in terms of the ability to perform a variety of services to a range of operators. Still a good aircraft in the freighter role and very much in demand with conversions taking place as long as the right feedstock can be obtained. The later aircraft will be more desirable for conversion given the lower number of hours and cycles. Rates higher than those quoted are possible. The -400SF is more desirable given the grater capacity. The leasing of the aircraft still takes place given that it is an inexpensive alternative to the B757 and other younger freighters. B747-400F 1993-98 1999-09 140-170 285-585 While the market for the -400F may be improving once more due to the lower price of fuel there has been some deterioration at the upper end of the indicated ranges. B727-100C 1965-71 15-30 With so many scrapped and in storage there is no upside for lease rentals. More examples need to be placed back into service before rates rise. There is no place for the -100F in todays market. Rates have to be realistic to achieve placement. However. The lease rentals are largely whatever a lessee is willing to pay. There are only some 26 -100s and -100CHs left in service with airlines. The -200SF is a specialist aircraft suited to a limited number of routes and operations. Rates have declined slightly. Rates at the upper end of the scale are considered to have eased down slightly as convergence takes place between the newer and older. There must be an expectation that more -300ERs will be converted in the coming years but the question is whether there will be demand from beyond the small package operators. The aircraft has been in service for some years and the time is drawing close when conversion of passenger B777s will take place. not that the B757F is that young given that production ended more than a decade ago. Identifying B757 candidates that offer a long term future as a freighter has become more difficult. The hushkits were previously a necessity but have been of little relevance for many years. The B777F still very much a desirable aircraft even if there are relatively few carriers with the density of traffic to make it pay. The lower price of fuel may on the surface indicate renewed interest but there are more capable –400Fs laying idle. The power by the hour arrangements are perhaps more relevant for the aircraft that was first converted some 40 years ago. The B737-800 has now been in service for some 17 years and there exists an extensive difference in terms of performance between those produced in the early years of the program and those being delivered today.1 0. Many of these will not return to service.3 0. representing a major fall within eight years.B737-800 B737-800 Values Attract Premium Over A320 The B737-800 may have been in service for some 17 years but on a comparable year basis values of the -800 are still showing a premium over a similar aged A320.2 0.1-0. Lease rentals however have reached a level which makes sense.1-0. Noise though is of minor importance when compared to operating costs and reliability. .1 0.7 There is little relevance to the -100 as the market has long since moved to newer and more economic types. higher maintenance costs and greater fuel cost. Not since the 1990s has there been any attraction.1-0.1-0.aircraftvalues.1-0. notably the avionics for RNP approaches. The cost of the hushkit in the 1990s seemed to offer a much extended service life but in reality provided for only an extra five to seven years instead of the expected 10-15 years.1-0.2 Fokker managed to continue to build the Chapter 2 -4000 through to the late 1980s by which time the Spey engine was facing criticism due to noise.3 0.1-0. Values are at scrap levels. 2015 BAe146QT 1984-89 50-65 MD11F 1990-93 100-165 1994-99 120-220 There are some 30 in service as freighters which is a reasonable number but placing the type may be a drawn out process requiring persistence.1-0.2 0.1-0. The DC9-10 has no virtue and like the B737-200 features in history books rather than be viewed as part of todays fleet.2 0.1 0. The figures still relate to the price to be paid by the seller rather than the buyer. B737-200 HADV 1968 1971 1977 1983 1966 1968 1974 F28-4000 E-- 1976 1980 1986 0.2 A good aircraft but not the type of choice today given advancing years.net.2 0. The Aircraft Rating (Value Rating courtesy of The Aircraft Value Analysis Company Limited www.3 0.1-0.3 0. The B737-800 has managed to retain the crown for so many years and still achieves top billing but as the product life cycle extends and newer versions edge ever nearer values and lease rentals have begun to slip. With the likely increase in availability of used aircraft and the limited appetite for financing such aircraft. January 26. The aircraft had its supporters for many years but these have gradually faded with the passing of time. Values are for indicative purposes and should be used for guidance only.com) reflects the considered suitability for asset based financing over a five to seven year period.1-0. This experience should be applied to types currently held in high regard but which may require modification the coming years to remain compliant.1-0. Commentary reflects change from the last update to Freighter Rentals of October 2014 Price of Stage 2 Aircraft Irrelevant Chapter 2 Narrowbody Current Values Placing a value on an asset suggests that it has some appeal beyond that of an existing operator or owner but unfortunately in the case of Chapter 2 aircraft interest is so limited as to make most types unsuitable for asset based financing.1-0.3 B727-200 HADV E- 1972 1978 0. www. aircraftvalues. a 1998 B737-800LGW was worth nearly $33 million.1-0. The parting out of the DC9 is progressing given that the type has little attraction to operators.1 DC9-30H E- DC9-40 DC9-50 E-E-- 1967 1975 1970 1977 0. values of the older aircraft have inevitably fallen. In late 2007.1-0.1-0.2 0. There are a myriad of MD11 freighters in the parking lot and the number is set to increase.1-0.Page 6 AIRCRAFT VALUE NEWS. Ratings range from A++ to E--.1 Placing a value on the aircraft has no relevance. The type has some utility but not much in the context of new generation regional jets. Today the value more approximates less than $14 million.2 0. n Chapter 2 Passenger Narrowbody Current Values – January 2015 (Values in millions of US dollars) Aircraft A/C Rtg Age Value Trend Analysis B727-100 E-- 1965 1971 0.1-0. B737-200H E-E- BAC1-11-400 E-- F28-1000 E-- 0. DC9-10 E-- 1968 0.1-0. AIRCRAFT VALUE REVIEW . The commentary highlights the change in fortunes since the last update of October 2014. A fleet of nearly 30 -40s are in service albeit with only a few operators. over a more modest distance may be more vital.468 RANGE–TYP PAX 2925nm VALUE TREND Decline BACKLOG 1. While Boeing has made considerable improvements to the basic design. The passenger capacity is much increased compared to its predecessor – the B737-400. Boeing paid close attention to improving serviceability on virtually all areas of the B737NG. rather than a more advanced product when compared to the A320 family. In todays environment. The payload/range capability of the compromised B737-400 was inadequate on a number of routes. The current value of a new B737-800 with a reasonably high specification is around $47 million. Absolute ranges are something of an irrelevance on all but a handful of routes. The ability to carry a full passenger load. The payload capability can however. around 3.3m ORDERS (all –800) 4.000lbs RENTAL TREND Stable D CHECK COST $1. Aircraft fitted with winglets are considered the baseline fit. opinions can differ markedly even for such a popular model. still represent . The increase in the average passenger weight used to calculate payload has already had an effect on payload/range capability of earlier aircraft. January 26.8m CABIN WIDTH 138inches Aircraft Rating B. which offers a range of 2. further differentiating the B737-800 from its predecessors and encouraging replacement.(LGW) The B737-800 also offers improved performance in terms of maintenance intervals on the engine and airframe.40m MLW-STD 144.7m ENGINE TYPES CFM56-7 /3 PAYLOAD (MAX) 45.000 per aircraft. However. However. The -800 has succeeded despite the comparative lack of orders from the U. Costing around $900. complete with baggage and even some cargo.450ft 2018 F/V – Y1998 $9.S.000nm with the same number of passengers. The longer range of the –800 more matches the A320 family without incurring the need for extra fuel tanks. the result is more of a comparable.3m FIRST FLIGHT 07/1997 OPTIONAL MTOW 174. The improvement in fuel burn may be relatively minor but payback can be achieved in less than four years though this is dependent on the price of fuel. 2015 Page 7 Despite the extensive number of deliveries the type continues to be viewed with considerable enthusiasm by operators and investors alike.000 ENG O/H COST $0.200lbs TYPICAL DISCOUNT 50.282 RUNWAY LENGTH 7. The highest MTOW of the –800 also allows operators to carry a maximum payload of some 45. Most aircraft types are produced with a variety of MTOWs and the B737-800 is no exception. legacy carriers. Compared to the B737400.000pm AVAILABILITY 30 (<1%) MZFW. However.000nm with a payload of 162 passengers through to 174. Either operators can have a material improvement in performance or a measure of commonality can be maintained. The MTOW ranges between 155. the –800 can fly many more passengers the same distance. This is due to demand from a myriad of operators worldwide rather than a few mega carriers located in a single region. thereby matching that of the A320 family and allowing far greater point to point service.000nm versus less than 1.200lbs serving to increase the range to around 3.768 FUEL – OPTIONAL N/A VALUE Y2005 $24.000lbs 2018 LEASE RATE –DoM1999 $140. For once Boeing failed to leapfrog the competition in terms of overall performance capability and operating economics. The –800 offers much improved range. Some operators require capacity but not range while others need both. B737-800 Vital Statistics LAUNCH 09/1994 STANDARD MTOW 155. The creation of new financial instruments to finance aircraft has been partially responsible for this wide variation in values. the latest /E engines offers longer on wing time. The low and high MTOWs. be more important to operators. constant use of engines at maximum power will inevitably see a quicker deterioration in performance. Rarely can both demands be accommodated. as well as different engines. Though the CFM56 was upgraded to meet the needs of the B737NG. The B737-800 overcomes the lack luster performance of the –400 by offering much improved range and payload capability.500lbs LIST PRICE 2014 $93. the payback can be substantially reduced.000lbs LEASE RATE– 1999 $160.0m CUSTOMERS 98 CARGO CAPACITY 1591cf 2018 F/V – Y2005 $16.500lbs.5% SERVICE ENTRY 04/1998 FUEL CAPACITY 6878usg VALUE Y1998 $14. The B737-800 does not need extra fuel tanks to be installed to achieve the longer range. The design of the B737-800 still owes much to the original B737 of the 1960s.STD 136.8-2. Instead of the 169 passengers of the –400. the winglets can be fitted during or after production.200nm for the lowest gross weight version. The -800 features higher weights and winglets both of which provide operators with range and efficiency.AIRCRAFT VALUE NEWS. The reason for the popularity of the B737-800 is due to a number of factors.000lbs over 2.000 nautical miles. Performance and fuel efficiency has been enhanced as a result of the incorporation of winglets making it the option of choice. Boeing was constrained by issues of commonality.2m DELIVERIES 3. the –800 can carry a maximum of 189. Hot and high operations also increase engine temperatures and higher temperatures usually result in wear and tear. Unlike the B737-400. If the difference between the existing model and the intended replacement was more significant. Safety. However. by visiting www.” Bookmark this site today and make it your first informational stop of the day! ■ . Many future value projections will have already compensated for the introduction of a re-engined aircraft. Production rates of the B747-8 have fallen to virtually uneconomic levels. Just click on “Daily News Archive. New stories are posted daily. it is more incremental than evolutionary. under the categories of Avionics.com. January 26. the re-engining can be more likened to the change from the CF6-80A powered B767 to one powered by the CF6-80C2B1F.4 million but values have long failed to exceed $200 million. The total backlog is therefore 36 units allowing production to continue through to June next year based on 2014 production rates. In the context of re-engining from both manufacturers. The problem in seeking customers for the B747-8/-8F lay in the more efficient A380 and B777-300ER and now the fall in the price of fuel. Rotorcraft. While re-engining offers improvement. the effect on residual values of the A320 and B737 could be relatively modest in terms of deviation from existing projections. Of the 19 deliveries in 2014 ten were for the passenger variant. The airfreight market remains fragile and while Cargolux has recently reported a significant improvement. n B747-8F Values Continue to Decline As Fuel Prices Tumble Even the potential order for three more B747-8Fs from Silk Way Airlines cannot disguise the difficulties facing the B747-8. n Aircraft Asset Assessment B737-800 Market Presence. there have been 51 orders for the B747-8 of which 27 have been delivered leaving a backlog 24. it remains possible that the stimulation of the economy will lead to a shortage of high volume capacity in the coming years and combined with higher fuel prices. Instead values have approximated $180 million but investors may feel more comfortable with $165 million and even then requiring a 75 percent loan to value debt level. don’t worry. then the values of both variants may be further impacted. there is ever likelihood that production rates will fall further. and Regional Airlines. it appears that increasing the MTOW of the –800 at a later date will represent a paper rather than structural change. the fall in the price of fuel makes the use of expensive B747-8Fs less economic. Previous popularity should not be automatically extrapolated for the future. residual values of new -8Fs have to be realistic such that by 2022 uninflated values of a 2015 aircraft may be less than $100 million representing a 40 percent fall in only seven years. A higher price of fuel will accelerate this replacement process thereby causing values of existing products to fall that much faster. the values of these products will likely remain stable in the short term due to limited availability. n Go Online for Breaking Aviation News In addition to reading the in-depth analyses featured in each issue of Aircraft Value News. Once the A320neo and B737MAX enter service. Orders for the B747-8F now total 68 of which 56 have been delivered leaving a backlog of 12. so too are -800s. Suppliers of components for the B747-8 cannot be expected to be offering discounted prices unless offset against orders for other Boeing equipment. The expected future decline in values of existing products needs to be seen in the context of prevailing forecasts. However.Page 8 AIRCRAFT VALUE NEWS. representing less than two per month. Market Outlook. With the prospect of B777-300ER conversions taking place early in the next decade. Whereas the move from the B737-200 to the B737-300 represented a significant change. Aircraft being delivered will likely be used just as much as replacement as growth capacity and will therefore displace existing equipment. Previous popularity should not be automatically extrapolated for the future. If you forget to visit the web site for a day or two. The launch of the B737MAX represents a significant improvement in performance and just as values of the early A320s are facing weakness. you can now access the latest aviation news from this newsletter’s sister publications. then there would be less incentive to order both the existing A320 and the A320neo so close together in terms of delivery dates. In 2014 only 19 were delivered.aviationtoday. the pressure to do so may be less muted than if an all new aircraft was under development. so too are -800s. Maintenance. While Boeing will still have to discount the B737-800 to maintain production through to the service entry of the B737MAX. The launch of the B737MAX represents a significant improvement in performance and just as values of the early A320s are facing weakness. The list price of the B747-8F in 2014 may have been $368. 2015 a significant difference in terms of payload range capability. that the -8F will be in short supply allowing values to recover just as they did for the B747-400F in 2006-2007. The B747400Fs that remain idle or under-utilized make better freighters when the price of fuel is so low. In the event B747-8 production deteriorates further or the line is mothballed.