Jetrader - July/August 2012 - 19

appraisal

Boeing 777-200ER
Steve Rehrmann ATP/FE, ISTAT Certiﬁed Appraiser CK Aviation Services Tel: 571-249-8800 steve@ckas.aero

Background
One of the most successful widebody aircraft programs of all time, the Boeing 777 family of aircraft has achieved a total of 1,367 orders and 1,009 deliveries as of April 2012. The 777-200ER has a current order/delivery count of 428/416 aircraft compared to its sister the -300ER with 607/332 aircraft. Engines for the -200ER are divided as follows: 39.4 percent for General Electric GE90, 40.4 percent for Rolls-Royce Trent, and 20.2 percent for Pratt & Whitney PW4000. The current production rate of 777 family is 8.3 aircraft per month and with only 12 777-200ER aircraft remaining to be delivered, the aircraft looks set to exit as its mantle is passed to the -300ER.

Market
Wor ldw ide Revenue Passenger Kilometers (RPK) increased an average of 7.3 percent per month for the ﬁrst three months of 2012 relative to 2011, while Freight (FTK) averaged only 0.4 percent per month. IATA’s Airline Business Conﬁdence Index reports 56 percent of respondents to

its survey recorded trafﬁc improvement in Q1 2012 although only 40 percent of these respondents expected a further increase in the next 12 months. The cargo market reported similar results with 43 percent of respondents expecting improvement in the coming year. It is important to remember the context within which these numbers should be viewed: the extraordinary events of Q1 2011—Arab Spring and the Japanese earthquake—plus the ongoing economic worries in the Eurozone. There are currently no -200ERs listed as available for sale or lease. Aircraft that have appeared on the market, usually in ones or twos, have been taken up within a “normal” marketing period of 6 months or so. Despite low availability, the market has not awarded the aircraft any premium and prices reﬂect a typical aging process. Going forward, the market will be very interesting as there are approximately 50 aircraft per year that will reach 15 years of age in each of the next ﬁve years (2013–2017) from the 251 aircraft deliveries of 1998–2002. Approximately 20 percent of these aircraft have been

delivered to Paciﬁc Rim/Asian operators. The period 2018 to 2022 will see the average aircraft per year that reach age 15 drop to 21 aircraft per year from the 106 deliveries in the period 2003 to 2007. If Boeing’s plan for the 777 replacement (777-8X and -9X) receives the goahead in the fourth quarter of this year, then expect the market to respond to future aircraft availability in the usual manner when an aircraft type is superseded. This will be tempered by the point in the economic cycle when the -200ERs become available and the timing of a freighter conversion program. In any event, with the last order having been placed in December 2009, the -200ER will be essentially out of production (although still available) after the last 12 airframes have been delivered. A Freighter Conversion (BCF) for the 777-200ER has not yet been announced but is expected when feedstock becomes much more available. The 777F factory freighter, based on the -200LR, was launched in 2005 and its order book currently numbers 127 orders and 57 deliveries.

Current Market Prices (CMP), and Current and Future Base Values ($m)
777-200ER CMP Build 2012 107.4 92.3 79.2 68.0 58.9 51.7 45.4 43.0 2010 2008 2006 2004 2002 2000 1998 1997 2012 128.20 113.00 99.50 87.60 77.10 67.70 59.70 52.7 50.0 2013 121.9 108.9 96.5 84.1 73.7 64.7 57.0 50.3 47.7 2014 117.2 105.4 93.0 80.5 70.4 61.8 54.3 47.9 45.5 Base Values, 2% Average Annual Inﬂation 2015 113.1 102.2 89.4 76.8 67.2 58.9 51.8 45.6 43.3 2016 109.6 98.6 85.4 73.3 64.1 56.1 49.3 43.4 41.2 2017 106.3 94.6 81.6 70.0 61.1 53.5 47.0 41.3 39.1 2018 102.3 90.6 77.9 66.7 58.2 50.9 44.6 39.1 36.9 2019 98.1 86.4 74.4 63.5 55.4 48.3 42.2 36.8 34.7 2020 93.7 82.6 70.9 60.5 52.6 45.8 39.9 34.6 32.5 2021 89.5 78.7 67.6 57.5 49.8 43.2 37.4 32.3 30.3 2022 85.4 75.1 64.3 54.6 47.0 40.4 34.8 29.9 27.9

Values as of H1 2012. Copyright CK Aviation Services. The aircraft values stated herein are the product and the property of independent third-party sources, and ISTAT neither approves nor endorses the information contained herein or the use thereof for any purpose whatsoever. Jetrader 19

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Jetrader - July/August 2012

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