ISTAT Jetrader - Winter 2020 - 44

APPRAISAL

Boeing 767-300ER
Gueric Dechavanne
ISTAT Certified Senior Appraiser
Vice President
Collateral Valuations LLC

gueric@cvllc.net
www.cvllc.net

Photo courtesy of Bert van Leeuwen.

T

he extended
range 767-300ER
competes with
the A300-600R,
A330-200/300, 787
and A330neo. The
-300ER has been
the primary small widebody twinjet on
transatlantic routes and also operates
U.S.-South America, Middle EastEurope, intra-Europe, intra-U.S. and
Asia-Australasian routes. It has played
an important role in both scheduled and
charter markets.
The variety of weights and engine
choices - GE, Pratt & Whitney
and Rolls Royce - does mean that
remarketing can be more challenging.
Replacement by the A330 (neo and
ceo) and 787 continues, but a full
phaseout of the type as a passenger
aircraft is unlikely to occur before
a true recovery in traffic and full
production rates return on the 787
and A330neo. Looking near to medium
term, with the -300ER proven as an
attractive long-range 50-ton freighter,
Collateral Valuations expects freighter
conversions to continue as -300ER
values fall to levels that make even
more conversions viable. The -300ER
should, however, continue to play a
role in the passenger market with
secondary and tertiary carriers.
Due to the COVID-19 crisis, as of
mid-year, values for the -300ER have
declined by 25-30% with monthly

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* 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

Due to the COVID-19 crisis, as of mid-year, values
for the -300ER have declined by 25-30% with monthly
lease rates declining by a similar percentage.
lease rates declining by a similar
percentage. Due to the lower fuel price
environment since 2015, the -300ER
had remained quite attractive for many
of the existing operators. However,
in the current environment of weak
demand and uncertainty going forward,
many operators have announced the
phaseout and/or retirement of their
-300ER fleets. Going forward, we
still believe that many operators will
continue to replace these aging aircraft
with newer more efficient aircraft,
such as the 787, younger A330s
and A330neos.
The current and expected continued
strength in the cargo market is
providing demand for additional
freighter capacity, and the 767-300ER
is well positioned and appropriately
priced to be converted. With aircraft
in fair condition becoming available at
less than US$10 million, this should
make the -300ER even more attractive
for conversion, when taking into
account the US$15 million cost to do
so. As demand for freighter conversions
continue, this should provide some
stability in values and lease rates of

passenger -300ERs in the mid to long
term. As the passenger fleet continues
to age, however, even with an expected
recovery in traffic over the next several
years, we expect that many of the older
-300ERs will be parked permanently,
parted out and/or scrapped to support
the remaining fleet of both passenger
and freighter aircraft.
Demand for -300ER, powered Pratt
& Whitney PW4060 and GE CF6-80C2
engines, picked up dramatically in
2019, leading to values holding quite
well for both aircraft and engines.
This, in turn, resulted in an increase
in the price part-out firms were willing
to pay. Demand for the Rolls Royce
RB211 is much more limited based on
the less than handful operator base.
However, due to the lack of good
RB211s being available, values had
been somewhat stable based on the
demand from existing operators. Once
COVID-19 reached pandemic status,
demand for the -300ER as a passenger
aircraft came to a grinding halt almost
overnight, with much of the fleet being
parked. The groundings and uncertainty
regarding the timing of demand
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ISTAT Jetrader - Winter 2020

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