Jetrader - Spring 2015 - 42

appraisal

Boeing 747-8I

Mark Halsor
Dave Miller
ISTAT-Certified Appraisers
AISI
Tel: (404) 870 2474
mail@aisi.aero

Background
The 747-8 Intercontinental, Boeing's
competitor to the A-380, entered commercial service in 2012. Sales of the aircraft
have been anemic; just 27 in service with
only two major airline operators; Lufthansa
having 15 aircraft and Air China with four.
Orders stand at 24 as Korean Air has booked
ten but the remaining operators with
orders, Transaero (four), and Arik Air (two)
could be considered to be less-than-sure,
future operators of the 747-8I.

Market Outlook
Both Airbus and Boeing have apparently
misforecast the actual demand for very
large four engine passenger aircraft as it
now looks like only 500 to 600 A380s and
747-8s will eventually be built. Boeing has
cut 747-8 production rates from the initial
two per month to the current 1.5 aircraft
per month, and with no orders placed in

2014, now plans to produce just 1.3 aircraft
per month beginning in September of this
year. It is clear that for the 747 program
to survive, more orders will have to materialize for either the passenger or for the
freighter version of the 747-8.
Compared to the 747-8I, almost twice as
many 747-8F freighter aircraft have been
delivered. Having very similar freighter
aircraft stationed around the globe does
make it easier for passenger airlines to
support the 747-8I. But with a total of
only 86 747-8 aircraft in service for both
the passenger and freighter variants, and
a remaining order book of 33, the aircraft
suffers from a small operator base and a
dearth of opportunities for secondary lease
placements.
Technologically, the 747-8 is impressive. The aircraft incorporates a new wing
(compared to the 747-400), fuselage plugs
forward and aft of the wing root, a 787-type

cockpit, and is delivered with many of the
new cabin interior features found in the
787. Boeing has stated that compared to
the 747-400, the -8I is 30 percent quieter,
16 percent more fuel-efficient, and has
13 percent lower seat-mile costs with nearly
the same cost per trip.
But the aircraft suffers in seat-mile cost
comparisons to both the A380 and to the
large, wide-body twins like the Airbus A350
and Boeing 777. Additionally, the lack of
market penetration by the 747-8I appears
to be due to a distinct preference by most
passenger carriers for a long-range wide
body aircraft smaller than the 747, and only
a few carriers with dense, long-range routes
are interested in new aircraft as large as
or larger than the 747-8I. Values of the
aircraft reflect these realities.
We could be near to the end of the
long and glorious run of the "Queen of
the Skies."

Boeing 747-8I Values as of January 2015, US$ million
Current
Market Value

2015 Base
Value

2012

$147.1

2013

Year of Build

Future Base Values at 1.5% Inflation
2016

2017

2018

2019

2020

2021

2022

2023

$141.6

$134.7

$128.3

$122.2

$116.6

$111.4

$105.8

$100.7

$96.0

$153.3

$148.2

$140.7

$133.8

$127.3

$121.3

$115.7

$109.8

$104.4

2014

$160.2

$155.6

$147.5

$140.0

$133.0

$126.5

$120.5

$114.2

2015

$174.6

$168.4

$154.6

$146.8

$139.5

$132.7

$126.3

$119.7

2025

2026

$91.6

$87.6

$83.9

$99.4

$94.8

$90.5

$86.6

$108.5

$103.2

$98.3

$93.8

$89.7

$113.5

$107.9

$102.7

$97.8

$93.4

Aircraft Specification: GEnx-2B67 engines, 975,000 lbs. MTOW
Maintenance Assumption: Aircraft base and current market values are "new" in 2015, full life in years 2012 through 2014.
42 The official publication of the International Society of Transport Aircraft Trading

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