But 2006 Has Yet to See Any New Orders The buoyancy of the international scheduled market and the predilection for twin engined widebodies continues to allow B777-200ER values a measure of improvement. The B777-200ER has been favored by operators and the financial community for many years, allowing values to...
For immediate service; more information; and multi-user access (site license), non-profit organization, educational institute pricing, contact Karen Garner kgarner@accessintel.com at (301) 354-1612.
This story is only available to paid subscribers. Please login below with your username and password if you are a subscriber.
Subscribe Trial
But 2006 Has Yet to See Any New Orders
The buoyancy of the international scheduled market and the predilection for twin engined widebodies continues to allow B777-200ER values a measure of improvement.
The B777-200ER has been favored by operators and the financial community for many years, allowing values to register a material improvement since the trough of the previous recession in 2002-2003. The twin engined economics of the B777-200ER have been particularly favored during this period of high fuel prices. The B777-200ER has therefore secured considerable success with orders amounting to 425, of which 379 have been delivered, leaving a backlog of 46. Lease rates of the B777-200ER have also increased to levels that can now nudge $900,000 per month. This suggests that values of five year old aircraft should attract values of at least $100 million.
Earlier in the year, Aviation Lease and Finance Company (ALAFCO) acquired two 1997 B777-200ERs (serial numbers 27604, 27605) with attached leases to China Southern Airlines from International Lease Finance Corporation (ILFC) for a total of $190 million. At $95 million per aircraft, even inclusive of the lease rental and maintenance reserve stream, the pricing reflects considerable demand for the type. Values for such aircraft were fortunate to exceed $80 million at the beginning of the year. ALAFCO also acquired in early 2006 an ex-United Airlines 1999 PW4090 powered B777-200ER (serial number 28714) for $75 million which it then leased to Air-India in early 2006. The comparatively low pricing of this aircraft may have reflected the need to undertake remedial work.
The market for the B777-200ER has improved further since the beginning of 2006, allowing used values to increase again. CSDS Aviation of Colorado, U.S. is advertising a 2001 B777-200ER powered by GE90 engines (fresh from a shop visit) and complete with a fresh C check, for a hefty $110 million while the "book value" is quoted by CSDS as $120 million. Any purchase price will likely be less than the offer price but the pricing still suggests that the market has moved up from earlier this year. Values have perhaps been slow to appreciate that the market for the -200ER has improved from earlier years. Pricing of $100 million now appears to be more the norm for the -200ER.
The competing but four engined A340-300 is no longer viewed with particular favor, although the used market is still sufficiently active as to prevent an appreciable fall in value of the Airbus product. The international scheduled market is enjoying considerable growth and the -200ER is suited to a large number of routes, allowing operators to mitigate some of the effect of high fuel prices. For a variety of reasons, the market for the B777-200ER appears to be at its peak. The type has been in service for over a decade and a replacement is already being considered. The service entry of the still-to-be launched B787-10 could still be some six years away.
However, orders for the B777-200ER during 2006 have been distinctly lacking. While three orders have been placed for the A340-300E, none have been secured for the -200ER. The preference seems to have shifted to the B777-300ER, which has seen 24 orders. Operators are also perhaps awaiting the launch of the A350XWB and the B787-10, both of which will act as replacements for the B777-200ER in the long term. Despite the paucity of orders over the last year for the B777-200ER, the overall demand and status of the B777-200ER should ensure that values will edge higher in the near term before starting to exhibit an appreciable decline beginning in 2008. Even if Boeing is successful in offering a tanker for the USAF based on the B777-200ER, there is unlikely to be any benefit for commercial values.
Print This Page
Email This Page
Archives
Copyright Permissions
