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Value Trend for New B777-200ERs Reflected End of Life Deterioration

January 20, 2020

The value of a new B777-200ER experienced fluctuation before declining in the last years of production, a trend that has already been repeated for the -300ER and A380 and which awaits the fate of other types currently in production.

The value a new B777-200ER in 1996 – designated the “B” version or IGW (Increased Gross Weight) – was originally just in excess of $110 million. As the 1990s progress the value increased not least because manufacturers were only just beginning to employ lean manufacturing which produced economies of scale benefits. The value of a new B777-200ER was also able to increase because of the demand for more efficient long haul aircraft. Airbus had pursued the less than popular four engines for long haul which meant that the A330-300 was still restricted to medium haul services. The larger B777-200ER was also seen as a replacement for the trijets – the Tristar and the DC10-30 – as well as for the B707s and DC8s that were still in service albeit in dwindling numbers. With the takeover of McDonnell Douglas, Boeing was able consolidate the position of the B777-200ER still further by ceasing production of the competing MD11. The demand from operators and the absence of competition saw an increase in the value of a new B777-200ERs through the 1990s. However, the events of 2001 inevitably impacted demand and values suffered a significant fall although relatively recent service entry shielded the type from more severe declines. With the return of international travel and the further liberalization of long haul routes, the demand for the -200ER returned and values of new examples increasing once more such that they reached their peak in 2007. By 2007 both Airbus and Boeing were struggling to meet the surge in demand for international travel but even then the need for larger equipment saw orders being placed for the larger -300ER at the expense of the -200ER. With delivery rates falling and fresh orders non-existent, then the values of new -200ERs suffered. The predicament of the -200ER was further affected by the Great Recession. Having been in service for over a decade and with production easing in the face of new offerings, the values of new -200ER’s experienced a far more significant fall. Between 2008 and 2013 – the final year of production – a total of only 17 -200ERs were delivered. As of 2013 the value of a new -200ER had fallen to less than $100 million representing a 25 percent fall in six years compared to the twenty percent rise between 2001 and 2007. The consequence of a fall in the value of new -200ERs was also to see values of used examples fall by a significant rate. Deterioration

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