Monthly Special Aircraft Report - Boeing 737 Max 8 August 2017
737 Max 8
Sep 19, 2017
The current market demand for the Boeing 737 MAX has continued to remain strong since the launch of the aircraft in 2011. This demand has kept values and lease rates steady in the last 12 months with normal increases year over year due to pricing escalation. Today, CV knows of no aircraft listed as available for sale and/or lease. Out of 17 aircraft delivered, none are currently in storage, which is expected for such a young aircraft type. It is CV’s opinion that these percentages are considered average for the fourth generation of a single-aisle aircraft type that has been in production for over 50 years.
As mentioned above, current values in today’s market have remained stable and even increased slightly due to normal pricing escalation and the strong demand for the type. The potential increase in the production rate, in 2019, by Boeing may have a negative impact on values and lease rates over the long term but the short-term results will be unaffected due to the continued demand for the aircraft. This trend, which continues to show signs of stability due to the improving state of the industry in certain regions, is expected to continue over the next 12 months. Although some indications that the global economy may be slowing in certain countries, we do not see the much potential for values and lease rates of this aircraft to for the foreseeable future.
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In looking at the leasing market, this aircraft is now leasing for around $370,000 per month for new aircraft on average which is around a $30,000 premium over the Boeing 737-800. With the planned increases in production from Boeing and low fuel prices making used aircraft very attractive, it has created quite a bit of competition for the lessors to place new aircraft which has put pressure on lease rates. As fuel prices rise and airlines shift their focus to new generation aircraft, such as the Boeing 737 MAX or A320NEO, we expect lease rates to strengthen and increase over time.
CV believes that the Boeing 737 MAX 8 will become the next most popular single-aisle aircraft with operators and financial institutions alike. Not unlike its older sibling, the 737G, demand for this aircraft will remain strong well through the next decade.
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