Jetrader -May/June 2013 - 27

appraisal

Boeing 737-800
Steve Rehrmann ATP/FE,
ISTAT Certiﬁed Appraiser
CK Aviation Services
Tel: +1-571-249-8800
steve@ckas.aero

Background
The 737-800 is the most popular aircraft in the “Next Generation”
family of 737 twin-jet aircraft and is considered by many in the
industry to be the gold standard of single-aisle aircraft in terms
of both residual values and lease rates due to its higher seat
count and lower maintenance costs.
First offered in 1994 with initial delivery in 1998, the 737-800
has garnered 4,275 orders with 2,809 deliveries (as of February). This
represents 46 percent of the 9,262 total 737 orders since February
1965. The -800 aircraft was ordered by 69 operators and 19 leasing
companies. Figures do not include MAX, BBJ or military aircraft.
On 18 March, Boeing delivered the ﬁrst 737 at the new monthly
production rate of 38 aircraft per month. This is up from 35
per month achieved on 15 January 2012. Boeing forecasts an
increase to 42 per month in H1 2014 in order to keep up with
demand. A third production line, scheduled to open in 2015,
will produce the ﬁrst four MAX ﬂight test aircraft and support
overall production if/when rates increase.

Outlook
Current market conditions for narrowbody aircraft are very
strong with increased passenger demand being supported by the
United States economic recovery, emerging market demand, stable
oil and low interest rates.
Moving forward to the entry into service date of the MAX,
market experience shows that any aircraft that is soon to be
replaced will experience some degree of pressure on values in
the used market. As long as the current market environment
remains in the recovery mode, demand in the narrowbody sector
will continue to be strong.

The current backlog for the -800 is a respectable 1,466 units
or 36 months of production at the 38 and 42 per month rates
(assumes a 15-month ramp-step between rate changes based on
the 35-to-38 unit timeline) and coincides nicely with anticipated
entry into service of the MAX. Current availability of the 737-800
has been very low with less than 10 aircraft for sale or lease over
the previous three months.

737-7/-8/-9 MAX
The 737 MAX is Boeing’s response to the A320neo and is
an intermediate-step aircraft before a new small aircraft (NSA),
expected by the industry to be launched by both major original
equipment manufacturers around the 2030 timeframe.
The MAX is to be powered by a CFM-56 LEAP-1B engine. According
to www.snecma.com, all three versions (-1A, -1B and -1C) of the Leading
Edge Aviation Propulsion engine (LEAP) will improve fuel efﬁciency
by 15 percent, reduce nitrogen oxide emissions by 50 percent and
noise by 15 effective perceived noise decibels (the Chapter 5 standard) compared to current CFM56 Tech Insertion engines. Maintenance
costs are projected to be comparable to today’s CFM56 engines with
99.98 percent advertised dispatch reliability. Engine thrust should be
announced before the engine design freeze projected to be April.
Aircraft ﬁrm conﬁguration is then expected by Q3 2013.
According to Boeing’s website, as of 25 March, 14 operators,
three leasing companies and two unidentiﬁed customers account
for current orders of 1,185 aircraft (model distinctions are not
made). The three leasing companies, so far, account for 150 (12.6
percent) aircraft. Entry into service date is estimated for the
second half of 2017, although there has been mention of pulling
it forward into 2016.

Value Opinions for Boeing 737-800, typical conﬁguration, with winglets
Year of
Build

Current
Market
Value

Current
Base Value

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2013

46.5

44.0

40.4

37.0

33.6

30.9

28.4

26.1

24.0

22.1

20.2

2011

38.9

39.9

37.3

34.1

31.2

28.7

26.4

24.2

22.3

20.4

18.7

17.2

2009

32.5

34.2

31.5

29.0

26.6

24.5

22.5

20.6

18.9

17.3

15.8

14.5

2007

27.4

28.8

26.5

24.3

22.3

20.5

18.8

17.2

15.8

14.4

13.1

12.0

2005

23.8

24.9

22.9

21.0

19.2

17.6

16.1

14.7

13.4

12.2

11.1

10.1

2003

19.4

20.4

18.7

17.1

15.7

14.3

13.1

11.9

10.8

9.8

8.9

8.1

2001

16.9

17.7

16.2

14.8

13.5

12.3

11.2

10.2

9.2

8.3

7.5

6.7

1999

14.8

15.5

14.1

12.9

11.7

10.6

9.6

8.7

7.9

7.1

6.3

5.7

Future Base Values including 2.0% annual inﬂation

Value opinions are in millions of US dollars, determined according to ISTAT value deﬁnitions, assuming aircraft in average condition for the
type and age.
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.

Jetrader 27

http://www.snecma.com http://www.ISTAT.org

Jetrader -May/June 2013

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