Jetrader - November/December 2012 - 19

appraisal

Boeing 747-400
Angus Mackay Principal, ICF SH&E Senior Appraiser, ISTAT Tel: +1-617-218-2121 angus.mackay@icﬁ.com

Background
Boeing began development of the 747400 in May of 1985 and Northwest Airlines took delivery of the ﬁrst 747-400 aircraft in January 1989. Compared to previous 747 derivatives, the 747-400 represented a major improvement over its predecessors through its enhanced technology, economic efﬁciencies and performance which, until recently, have proved unmatched. While the 747-400 cabin is identical in size to that of the 747-300, the 747-400 is distinguished by external winglets, a twocrew cockpit and by increased fuel capacity and MTOW, providing a long distance range capability of approximately 7,400 nautical miles. The 747-400 passenger capacity is 416 in a standard conﬁguration. The engine market share leader on the active ﬂeet is the Pratt & Whitney PW4000 series (37 percent) followed by General Electric CF6-80C2 series (35 percent),and the Rolls-Royce RB211-524 series (28 percent). China Airlines took delivery of the last passenger aircraft produced in 2005. profound economic malaise, market values have deteriorated by more than 30 percent over the past two years with a similar drop in lease rentals. With more than 12 percent of the existing ﬂeet parked, any possible improvement in returns for the type on the back of an improvement in economic conditions in the near term is expected merely to slow the precipitate decline in fortunes for the type. The Boeing 747-400 aircraft had been in production largely unchanged for more than 20 years — a relatively long time for any aircraft. The commercial success of the type has been due in large part to historical restricted market structures and the absence of a direct competitor that has allowed the 747-400 to dominate its passenger and freighter aircraft market segments throughout the 1990s and 2000s. Signiﬁcant competition now stems from the Boeing 777300ER with its compelling Total two-engine operating eco149 nomics and the more modern 130 Airbus A380, while sales of 67 Boeing’s replacement passen18 ger model, the 747-8, have proved slow. 3 367

Current and Future Market Outlook
ICF SH&E considers Boeing 747-400 passenger aircraft current market conditions to be soft and further deterioration is likely in the near term with 43 aircraft in storage and 17 aircraft available for sale or lease. Most recent market activity has surrounded aircraft sold for part out or freighter conversion rather than incremental lift for existing operators. With a general exit of the type from ﬁrst tier carriers such as United Airlines, Japan Airlines and Singapore Airlines, and reduced freighter conversion opportunities in a period of

Current Boeing 747-400 Passenger Fleet Status (As of June 2012)
Region Europe/CIS Asia/Paciﬁc North America Africa/Middle East South America No. of Operators 12 17 10 6 2 Active Fleet 131 115 45 13 1 Retired 8 3 6 2 Stored 10 12 16 3 2

Totals

47

305

19

43

Boeing 747-400 (CF6-80C2) Appraisal Half-Life Values Year of Delivery   1989 1991 1993 1995 1997 1999 2001 2003 2005 CMV US$ MM 2012 14.0 16.5 19.3 22.5 26.0 30.1 34.6 39.7 45.5 BV US$ MM 2012 20.7 23.6 27.6 32.1 37.2 43.0 49.4 56.8 65.0 Future Base Values - Inﬂ ated at 2.5% per annum 2015 2016 2017 2018 2019 2020 18.5 17.7 16.9 16.1 15.3 — 20.1 18.9 17.7 16.5 15.3 14.5 23.3 21.8 20.4 18.9 17.4 15.9 26.8 25.0 23.1 21.3 19.4 17.6 31.2 29.1 27.1 25.0 22.9 20.9 36.0 33.6 31.2 28.9 26.5 24.1 41.4 38.7 36.0 33.3 30.6 27.9 47.8 44.8 41.7 38.7 35.6 32.6 55.0 51.6 48.2 44.8 41.4 38.0

2013 20.1 22.5 26.3 30.4 35.3 40.7 46.8 53.9 61.7

2014 19.3 21.4 24.8 28.6 33.2 38.4 44.2 50.9 58.4

2021 — 13.8 14.5 15.9 18.9 21.8 25.3 29.6 34.6

2022 — — 13.1 14.2 16.9 19.5 22.7 26.7 31.4

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 - November/December 2012

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