Jetrader - Summer 2015 - 46

appraisal

Boeing 777-300ER
Gueric Dechavanne
ISTAT-Certified Appraiser
Collateral Verifications
Tel: 1-888-800-0030, ext 702
gdechavanne@cvllc.net

Current Market Conditions
In the last 12 months, we have seen
values of the Boeing 777-300ER drop by
about 5-10 percent, depending on the vintage, with lease rentals dropping by the
same percentage. In our view, this level
of discounting reflects a normal level of
depreciation; however, we are seeing some
slight softness in the market for the aircraft. With the industry recovery under way,
we feel that this may bring further stability
to the type over the next 12 to 18 months.

Near-Term Future Outlook
The demand for this aircraft, reflected
in the current order book, has remained
fairly strong and should ensure continued
stability of the future values for the type.

One of our concerns may be the Airbus A3501000 which is slated to enter service in
the second half of this next decade. With
the improved economics of the A350, this
may slow potential orders for the 777 but
we do not see any immediate impact on
residual values for quite some time. Once
the replacement for the 777, the 777X, starts
to deliver in larger numbers, this may then
impact the future of this aircraft but it is
much too early to tell as to if and when
this will take place. There may also be some
near term pressure on values due to some
of the airline campaigns Boeing is pursuing
but the aggressive pricing offered may not
directly impact values which will reflect
what the market is willing to pay to invest
in these aircraft.

Longer-Term Outlook
With the potential production gap
between the current Boeing 777 and
when the 777X starts to deliver in
2020, this may also put further pressure on new aircraft pricing as well as
push Boeing to cut production rates.
Should this occur, this may affect current and near term values of the aircraft
negatively. Until then, we feel that this
aircraft will continue to be a desirable
aircraft and a viable option for many
current and future operators. Also in
the longer term, a freighter conversion
program is probable, combining the
popular Boeing widebody volume with
long range and complementing the factory built 777F.

Boeing 777-300ER Values and Lease Rates as of March 2015
Year of
Build

Current
Monthly
Lease
Rate

Future Base Values (millions US dollars) at 2% annual inflation

Current
Market
Value

Current
Base
Value

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2003

725,000

65.4

71.9

68.2

64.7

61.4

55.1

49.5

44.4

39.8

35.8

32.1

28.8

2004

750,000

68.9

75.7

71.8

68.1

64.6

61.3

55.0

49.4

44.3

39.8

35.7

32.1

2005

775,000

72.4

79.6

75.5

71.6

67.9

64.4

61.1

54.9

49.3

44.2

39.7

35.6

2006

800,000

80.2

91.1

86.4

82.0

77.8

73.8

70.0

66.4

59.6

53.5

48.0

43.1

2007

850,000

89.2

101.4

96.1

91.2

86.5

82.1

77.8

73.8

70.1

62.9

56.4

50.7

2008

900,000

95.1

108.1

102.5

97.3

92.3

87.5

83.0

78.8

74.7

70.9

63.6

57.1

2009

950,000

101.3

115.1

109.2

103.5

98.2

93.2

88.4

83.8

79.5

75.4

71.6

64.2

2010

1,000,000

109.2

122.6

116.3

110.4

104.7

99.3

94.2

89.4

84.8

80.4

76.3

72.4

2011

1,050,000

117.4

130.4

123.7

117.4

111.3

105.6

100.2

95.0

90.2

85.5

81.1

77.0

2012

1,100,000

125.3

137.6

130.6

123.9

117.5

111.5

105.7

100.3

95.1

90.2

85.6

81.2

2013

1,150,000

133.4

140.4

133.2

126.3

119.8

113.7

107.8

102.3

97.0

92.0

87.3

82.8

2014

1,200,000

140.9

153.2

145.3

137.8

130.7

124.0

117.6

111.6

105.9

100.4

95.3

90.4

2015

1,250,000

162.6

176.8

167.7

159.0

150.9

143.1

135.8

128.8

122.2

115.9

109.9

104.3

Aircraft values and lease rates assume MTOW of 775,000 lbs and GE90-115BL engines
The future values are inflated at 2% per annum.
Except for new aircraft, values reflect a half-time condition.
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.
46 The official publication of the International Society of Transport Aircraft Trading
Jetrader - Summer 2015

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