Jetrader - Spring 2016 - 53

Lindsey Webster, Manager - Valuations
ISTAT Certified Appraiser
Morten Beyer & Agnew
Tel: +1 703-956-0224
lwebster@mba.aero

BY BRIYYZ/CC-BY-SA-3.0

appraisal

777-200ERF

Overview
Launched in 2005 with an order from Air
France, the 777-200ERF entered service in
February 2009. Specifically designed as a
freighter, the 777F is considered to be a
replacement for older Boeing cargo aircraft,
offering significantly lower fuel burn than
the MD-11F and lower operating costs than
the 747-200F. As the 777F is based on the
777-200LR passenger aircraft, it contains
many of the same technologies and features, including the airframe and engines.
With a maximum takeoff weight of
766,000 pounds, the 777F has a revenue
payload capability of more than 226,000
pounds (102.8 metric tons) and room for
27 standard pallets, making it second to
only the 747 freighter family in terms of
main deck pallet space.

Market Outlook
The unstable air cargo market has
shown recent signs of bottoming with
FTK decline leveling out in the last few

months of 2015; however, load factors
remain low. World trade is still volatile,
and the freighter market remains delicate, despite the low fuel prices providing
cheaper operating costs.
Compared to other large cargo aircraft,
the 777F has not been hit as hard by the
decline in air freight demand. Although
the 777F has seen some operators switch
to the smaller 767-300F, there continues to
be low availability and the type seems to be
suffering less from cancellations in relation
to the 747-8 freighter.
As of December 2015, Boeing had
delivered 118 777F aircraft, with 42 aircraft on backlog. Despite a lack of firm
orders since July last year, the backlog
is relatively healthy for a freighter and
currently averages about 1.5 deliveries
per month. However, in January 2016,
Boeing announced a production rate cut
to the 777 line from 8.3 to 7 aircraft per
month starting in 2017 in an attempt to
extend the backlog. While a step in the

right direction, a year and a half production gap remains before the first 777X is
delivered, making it likely due for another
production rate cut if not enough orders
are secured.
In the long term, other than the stability of the freighter market, another
factor that could potentially impact
future values is the somewhat inevitable
777-300ER freighter conversion program.
The 777-300ER program is maturing and
will see significant numbers of aircraft
come off lease in the next few years. As
the average age of the fleet rises and
availability increases, a BCF option would
make sense for the -300ER but could have
a negative effect on 777F values.
mba believes values for the 777F have
returned to pre-recession levels, despite
the slow recovery of the global air freight
market. The 777F is a capable aircraft,
popular for those requiring large loads of
long distances, with a cheaper economic
cost than four engine aircraft.

777-200ERF Values as of January 2016, (US$ Million)
Future Base Value (at 2.0% inflation)

Year of
Build

Current
Market Value

Current Base
Value

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2009

117.62

120.02

115.34

110.48

105.48

100.39

95.24

90.06

84.88

79.75

74.69

69.72

2010

123.95

126.11

121.58

116.83

111.91

106.85

101.69

96.47

91.22

85.98

80.78

75.65

2011

130.61

132.50

128.15

123.55

118.72

113.72

108.58

103.34

98.03

92.70

87.38

82.09

2012

137.11

138.69

134.57

130.16

125.48

120.58

115.50

110.28

104.95

99.57

94.15

88.74

2013

143.93

145.18

141.32

137.12

132.62

127.85

122.86

117.69

112.37

106.94

101.45

95.93

2014

151.09

151.96

148.40

144.46

140.17

135.57

130.69

125.59

120.30

114.86

109.32

103.70

2015

158.61

159.06

155.84

152.19

148.14

143.74

139.02

134.03

128.80

123.37

117.79

112.11

2016

166.50

166.50

163.65

160.33

156.57

152.41

147.89

143.03

137.89

132.51

126.93

121.19

Source: redbook - Jet Transport Plus, January 2016
Values Assume GE90-110 engines, MTOW 750,000 lbs.
Except for Aircraft less than 2 years old, values reflect Half-Time.
Jetrader * Spring 2016 53
Jetrader - Spring 2016

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