Jetrader - Winter 2018 - 39

Background
Story has it that Joe Sutter, chief engineer of the Boeing 747 program, and his
team sold Pan Am on the widebody's design
by extending a 20-foot piece of twine in a
New York board room - a representation of
the 747's unprecedented cabin width. Take
that same string and attach it to the back
of Boeing's baseline 787-8 model and you'll
get its stretched middle brother, the 787-9.
And while the 787-9 may be the middle
child of the Dreamliner family, it is surely
not the forgotten one. As of 31 August,
2018, Boeing had delivered 363 787-9s,
the most of all family variants. The 787-9's
776 total orders account for 56 percent of all
Dreamliner orders with the remainder split
between the smaller 787-8 and larger 787-10
at 32 percent and 12 percent, respectively.
Airlines and lessors alike view the 787-9
favorably given its operating economics
and expected secondary market. Just seven
years following its introduction into service
with ANA, the 787-9 is already operated
by 35 different airlines and, at least 16
more have confirmed orders or planned
lessor placements. By comparison, seven
years following entry into service of the
A330-300, there were 16 operators and
four more with confirmed orders. More
than 20 lessors currently have a total of
120 aircraft in their portfolio, and eight
lessors have confirmed orders for more than
100 additional units in aggregate.
The Boeing 787-9 measures 207 feet
in length and offers operators capacity
for 290 passengers in a typical two-class
configuration. With a marketing range
of 7,635 nm and competitive operating

RICKDEACON/SHUTTERSTOCK.COM

economics, the 787-9 is a formidable opponent in the long-haul market.
However, the 787-9 does face stiff
competition from the A350 XWB. Relative
to predecessors, both aircraft offer significant per-passenger fuel savings and,
among other new technologies, more corrosion-resistant constructions. To a lesser
extent, new Airbus A330neo and used
A330ceo aircraft also present as competitors on certain missions. While a significant amount of demand for the aircraft is
for growth, the 787-9 and its competition
will replace significant volumes of aging
Boeing 767 and Airbus A330ceo aircraft in
the coming years.
Boeing selected General Electric's GEnx
engine and Rolls-Royce's Trent 1000 engine
for the 787 program. Of the 787-9 aircraft in
service today, GE holds a 60 percent share
compared to 40 percent for Rolls-Royce.
While 17 percent of the total 787-9 order
backlog has not declared an engine selection, of those known commitments, GE
enjoys a 75 percent share to 25 percent
for Rolls-Royce.
With new technologies come inherent
challenges, and neither program has been
completely immune. Recently, compressor
blade durability issues in the Rolls-Royce
Trent 1000 engines have required operators to perform repeat inspections as often
every 80 flight cycles. Rolls-Royce has been
actively working to remedy the situation
and estimates it may take several more

months until the shop visit queue for defective engines reduces to single digits.
Despite some near-term challenges,
Alton anticipates appetite for the 787-9
to remain strong over the next 10 years
with the fleet projected to grow 13 percent
annually during this time period.

Boeing 787-9 Fleet Forecast
The nature of today's market is such
that there are limited comparable standalone transactions for the 787-9 aircraft.
Pricing for recent deliveries from Boeing
have largely been from orders placed many
years ago and not reflective of spot market supply and demand today. While the
sale-leaseback market has been active with
over 60 recorded for the 787-9 to date,
pricing has varied meaningfully in each
depending upon credit, lease term, lease
rate factor, expected reconfiguration costs,
etc. Sales of aircraft with leases attached
has been limited with most lessors having
the aircraft unwilling to trade, perceiving
them to form part of their core portfolio
for many years to come.

SOURCE: ALTON AVIATION CONSULTANCY

John Mowry
ISTAT Certified Appraiser
Managing Director
Alton Aviation Consultancy
1-212-256-8477
john.mowry@altonaviation.com
www.altonaviation.com

Boeing 787-9 (GEnx-1B74/75) Current Market & Future Base Values
2018 Current Market

Future Base Values

Vintage

Lease Rates

Value

2018

2019

2020

2018

$925,000-1,025,000

2016

$875,000-975,000

2014

$775,000-875,000

$107.6

2021

2022

2023

2024

2025

2026

$139.3

$130.5

$126.3

$118.8

$107.6

$101.6

2027

2028

$122.3

$114.6

$107.3

$100.6

$94.2

$88.3

$82.7

$77.5

$72.6

$111.8

$105.2

$98.9

$93.0

$87.5

$82.3

$77.5

$72.9

$68.5

$95.9

$90.6

$85.6

$80.8

$76.3

$72.1

$68.1

$64.3

$60.7

Note: Values in USD millions in full-life condition for new aircraft transitioning to half-life condition for used aircraft.

Jetrader * Winter 2018 39

SOURCE: ALTON AVIATION CONSULTANCY

appraisal

Boeing 787-9

http://www.altonaviation.com

Jetrader - Winter 2018

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