ISTAT Jetrader - Summer 2019 - 46

APPRAISAL

Boeing 737-800BCF
Lindsey Webster
ISTAT Certified Senior Appraiser
VP Asset Valuations
Morten Beyer & Agnew

lwebster@mba.aero
www.mba.aero

Photo courtesy of Getty Images

I

n April 2018, 20 years into
production, the first 737800 passenger-to-freighter
conversion STC was certified by
the FAA and EASA. Referred to
as the 737-800BCF, or Boeing
Converted Freighter, the aircraft
offered the first sign of relief in the
narrowbody freight market, which has
been running short on feedstock for
the past several years. Two additional
conversion programs are now also
offered: AEI's 737-800SF, which
received certification in February 2019,
and IAI Bedek's 737-800BDSF, which
is aiming to receive certification in
June 2019.
With 11 main deck 88" x 125"
positions, one more than the 737400PF, the 737-800BCF is able to fly
more cargo, further, with better fuel
burn. However, the main reason for
the drive in demand isn't entirely due
to superior operating economics of the
-800 but rather a lack of supply for the

-400. The 737-400 feedstock has been
limited by a decline in eligible aircraft
with suitable total flight cycles, with
some operators having no option but to
go up to 30,000FCs or more in order to
fill demand. While many early build 737800s are also above the typical cycle
threshold, there are still considerably
more aircraft below the mark.
Further complicating the problem,
the 737-800 is also dealing with
feedstock issues related to prohibitive
acquisition costs and limited availability
of older -800s in the secondary
market. Looking at the 16 737-800s
available as of April 2019, most are
late 2000 vintage aircraft and thus too
expensive to convert, or only available
for short term ACMI leases. For this
reason, most conversions on order are
for existing aircraft in an operator's
fleet or coming off lease in a lessors'
portfolio. However, even if an aircraft
were procured today, most near-term
conversion slots are reserved by

GECAS, which has 35 737-800BCFs on
order with Boeing, with an additional
15 737-800SFs on order with AEI.
A recent Prime Air aircraft redelivered to GECAS in March 2019
was a 2002 ex-China Southern aircraft
with around 21,000FCs. The 16-yearold age for a converted freighter has
been questioned by some when the
average age of narrowbody freighters
is typically between 22 and 27 years,
with the exception of the 82 727Fs still
flying with an average age of 40. The
investment for a 737-800BCF including
heavy check maintenance is slated
to be around US$17M-$19M for the
oldest vintage or US$1.72M per pallet
compared to the US$7-$8M investment
for a late-'90s vintage 737-400F, or
around US$0.8M per pallet. European
freight operators could make the
argument for the 737-800BCF due to
the 5.5 percent fuel burn difference
and lower emissions, which are both
taxed heavily. As for Chinese freight

Boeing 737-800BCF

46

YOM

Market
LRs

CMV

CBV

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

1998

$213,000

$16.40

$16.57

$16.09

$15.74

$15.34

$14.91

$14.44

$13.94

$13.41

$12.87

$12.30

$11.73

$11.14

2000

$217,000

$18.10

$18.32

$17.85

$17.55

$17.21

$16.81

$16.37

$15.89

$15.37

$14.83

$14.25

$13.66

$13.05

2002

$222,000

$20.03

$20.32

$19.80

$19.51

$19.16

$18.76

$18.30

$17.80

$17.26

$16.68

$16.06

$15.42

$14.76

2004

$227,000

$22.25

$22.60

$21.74

$21.41

$21.00

$20.54

$20.02

$19.44

$18.84

$18.18

$17.48

$16.76

$16.04

2006

$238,000

$25.22

$24.78

$24.41

$23.98

$23.48

$22.91

$22.29

$21.61

$20.89

$20.13

$19.33

$18.50

$17.65

* T H E O F F I C I A L P U B L I C AT I O N O F I S TAT
http://www.mba.aero
ISTAT Jetrader - Summer 2019

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