Jetrader - Spring 2014 - 35

appraisal

Boeing 757-200
Jonathan McDonald
Senior Analyst
IBA Group, Ltd.
Tel: 44 1372 224488
jonathan.mcdonald@ibagroup.com

Background and Current Market Outlook

LLPs and airframe are well above mid-time, but can also reduce to
$5.75 million if the LLPs are approaching cyclic limits and engine
performance restorations are imminent. IBA's experience is that it
is vital to pro-rate maintenance adjustments, particularly on the
engines and LLPs. Failure to do so will result in overly positive or
negative maintenance adjustments, and ultimately, an unrealistic
appraisal figure. This is especially relevant when one considers
that a Rolls-Royce RB211-535E4 engine heavy shop visit can exceed
$4 million. Extended range twin operations aircraft may attract
a minor value premium, though with the aging fleet, this value
premium is now likely to be less than $1 million for many aircraft.
In summary, the Boeing 757-200s market appears split among
the following:
* One is parting out of older, low gross weight aircraft with a
specification/configuration or maintenance condition that is
simply not conducive to the -P2F process. This is afflicting
some early-build Pratt & Whitney powered Delta aircraft.
* Another is keeping the aircraft with operators with a good few
years of passenger service left in the type. Typically, these aircraft will have had investment in winglets and cabin upgrades.
Icelandair is an example.
* The third route applies to passenger aircraft without winglets,
which will either be remarketed in the future for continued
passenger service or become eventual part-out candidates.
* The fourth decision applies to aircraft confirmed for passenger to freighter conversions. With all these scenarios, a wide
production span and range of specifications, market values
vary considerably.

The Boeing 757-200 entered service with Eastern and British
Airways in early 1983. Earliest aircraft were powered by Rolls-Royce
RB211-535C engines, though the Rolls-Royce RB211-535E4 and
Pratt & Whitney PW2037/2040 series became production-standard
from 1984. Production ended in 2004 after nearly 22 years.
IBA used to perceive the PW2037/PW2040 series powered
Boeing 757-200 aircraft as a minority variant with a concentrated
operator base when compared to the more populous Rolls-Royce
powered model. Consequently, a small negative value adjustment
was made to the Pratt & Whitney powered aircraft as it was feared
the remarketing prospects might be reduced. This all changed
once the passenger to freighter conversion (-P2F) program settled
down. Operators such as FedEx were happy to take both Pratt &
Whitney and Rolls-Royce aircraft, and the argument for appraisal
firms to attribute value premiums for Rolls-Royce powered aircraft
became unjustified.
With an aging profile, higher maintenance costs, fuel prices
and the ability of newer, Airbus A321s and Boeing 737-900ERs to
operate many Boeing 757-200 missions more efficiently, part-outs
of Boeing 757-200s have become fairly commonplace. Around 68
Boeing 757-200s have been retired.
It is important to review the maintenance condition of Boeing
757-200s, particularly engines, as the overhaul/life limited parts
(LLP) cost is expensive. These, and airframe checks, have an
increasing influence on the value of Boeing 757-200 aircraft. For
example, IBA attributes a mid-time market value of $8 million for a
1991 delivery. This value can rise to $10.25 million if the engines,
757-200 Passenger
Fleet Status
Delivered

903

Active

601

Stored

76

Retired

68

Converted

150

Destroyed

8

Source: IBA Jetdata as of
8 Jan. 2014.

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.

Boeing 757-200 Value Matrix
Current
Current
Year of Build Market
Base Value
Value
1983
4.44
5.22
1984
4.79
5.63
1985
5.15
6.06
1986
5.52
6.50
1987
5.93
6.98
1988
6.34
7.46
1989
6.81
8.01
1990
7.24
8.52
1991
7.70
9.06
8.18
9.62
1992
1993
8.72
10.26
1994
9.29
10.93
1995
9.81
11.54
1996
10.35
12.18
1997
10.87
12.79
1998
11.54
13.58
1999
12.35
14.53
2000
12.92
15.20
2001
13.98
16.45
2002
14.93
17.57
2003
16.20
19.06
2004
17.36
20.43

Future Base Values at 2.0% Inflation
2015
4.65
5.04
5.44
5.85
6.31
6.76
7.28
7.77
8.27
8.80
9.39
10.03
10.59
11.19
11.76
12.48
13.37
13.98
15.12
16.15
17.52
18.77

2016
4.10
4.44
4.82
5.21
5.64
6.07
6.55
7.01
7.49
7.98
8.54
9.13
9.67
10.22
10.75
11.42
12.24
12.81
13.86
14.80
16.06
17.21

2017
3.23
3.86
4.19
4.56
4.96
5.37
5.82
6.26
6.71
7.17
7.70
8.25
8.75
9.27
9.77
10.39
11.15
11.68
12.64
13.51
14.67
15.72

2018

2019

2020

2021

2022

2023

2024

2.96
3.58
3.90
4.28
4.66
5.09
5.50
5.93
6.37
6.86
7.38
7.85
8.34
8.81
9.39
10.09
10.58
11.47
12.27
13.33
14.30

2.66
3.26 2.32
3.60 2.93 2.00
3.96 3.25 2.55
4.36 3.62 2.88
4.75 3.99 3.22
5.15 4.37 3.59
5.57 4.76 3.96
6.03 5.20 4.37
6.52 5.66 4.80
6.96 6.08 5.20
7.42 6.52 5.62
7.86 6.93 6.02
8.41 7.44 6.49
9.06 8.05 7.06
9.52 8.48 7.47
10.34 9.24 8.17
11.08 9.92 8.80
12.05 10.81 9.62
12.94 11.63 10.38

2.00
2.14
2.46
2.80
3.15
3.54
3.94
4.33
4.72
5.11
5.56
6.08
6.48
7.12
7.71
8.47
9.17

2.00
2.34
2.70
3.09
3.45
3.83
4.20
4.63
5.12
5.51
6.10
6.65
7.35
8.00

2.23
2.58
2.94
3.30
3.71
4.17
4.54
5.09
5.61
6.25
6.86

Specification: MTOW 250,000lb, RB211-535E4/PW2040, winglets not fitted.
Jetrader * Spring 2014 35
Jetrader - Spring 2014

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