HOTR: Second hand 787-8 market to be tested

By the Leeham News Staff

July 10, 2020, (c) 2020, Leeham News: A few months ago, Qantas announced that it intended to sell three Jetstar-operated Boeing 787-8s that would become surplus once the airline received its first A321-LRs. In the aftermath of the COVID-19 outbreak, Avianca rejected one 787-8 lease and Royal Air Maroc intends to sell four of them.

Four 787-8 operators (Aeromexico, Avianca, Latam Airlines, and Thai Airways) with a total of 38 aircraft in service filed for Chapter 11 or are in administration. This represents around 11% of the 374 787-8s delivered so far.

After years of high 787-8 production rates, Boeing is reluctant to sell the type. It has less production commonality than the 787-9 and 787-10 have between them and sales margins are lower. As a result, airlines do not place many new orders for the variant because they think other aircraft are more attractive investments.

Small orders

The 787-8 isn’t the only aircraft with small orderbooks.

As a few 787-8s will hit the market, some Dreamliner operators might be interested in purchasing or leasing them at lower rates once long-haul traffic recovers. Replacing aging 767s or A330s could be the main goal.

A380 accounting charges

Qantas will record in its 2020 annual earnings a 1.25 to 1.4bn Australian dollar ($860m to $970m) fleet impairment charge, mostly tied to the Airbus A380. Since Qantas owns and operates 12 of the type, it amounts to between $70m and $80 per aircraft.

Qantas took the accounting charge as a result of the decision to put the aircraft into long-term storage for several years. As a result, the airline won’t be able to utilize its economic value as envisioned. Air France took a $500m charge in the second quarter of 2020 to prematurely retire the five A380s it owns.

As passenger demand will likely stay subdued on long-haul markets for years, other A380 operators will likely have to take material accounting charges. Excluding Emirates, only nine A380s are on operating leases. Therefore, most A380 operators will likely face significant accounting charges on their Superjumbo fleets.

43 Comments on “HOTR: Second hand 787-8 market to be tested

  1. The 787-10 and A350-1000 will get a boost when re-engined. The A319 and 737-7 might have a future as Biz jets

    • The RR Spec 787-10 got re-engined already (Trent TEN). Very little improvement for all the hoopla and brought all the 1000 issues with it.

      • @TW: Trent 10 is not really a “new” engine. It’s an upgraded Trent.

        A re-engine is like the LEAP on the A320 and 737, the GTF on the A320 and EJet. A 787 or A350 re-engine means a new engine like this.

        • Scott:

          In mechanical terms, you replace 75% of the engine, its a new engine.

          RR can say what it wants, its a new engine.

          They chose to keep the worst 25% obviously.

          • In my world, its like saying a Ford 302 is the same engine as a 351 Windsor with miner changes.

            Its not. Cranks is close to the same, but the throw is different as are the con rod journals , you can’t switch between the two engines.

            Its a different block (taller) the connecting rods are different and cannot be used in the other engine nor are the valves the same. .

            Same family small block yes, derived from the 302 just as the TEN is derived from the 1000, but a different engine plane (pun intended) and simple.

          • What does Ford engine blocks have to do with. Some jet engines can major changes including the core than similarly named ‘family engines’, the Leap A and B are a case in point, massively different outside the front fan diameter. GE had to engineer in a very different engine to make its numbers from the smaller fan size ( one of those was to make the core itself smaller).
            The other family with a ‘black sheep’ was the CF34 with the much higher thrust -10 version really being from the CFM56 family.
            I have already shown that RR Trent 1000 TEN is not a black sheep but an improvement ‘package’ on the earlier family versions.
            The history for that is after the T1000 was developed for the 787 the later A350 became a sole source from Rolls ( maybe even exclusive) and required all new Trent 3 shaft engine it was the XWB.
            A comparable situation might be the GE90 which needed a new engine for its exclusive on the later B777-300ER family , yet it remains the same family name but with better numbers all around.

            When RR calls a T1000 with an improvement package a TEN , you claim its a new engine ( because ,something about Ford).
            Yet when GE-90 did have a major development /new engine the -110 version – all its numbers are better than the older GE90s ( but its much heavier as well, often the real indicator of a substantially different engine) its bypassed. As an aside, the older GE90s had their fair share of problems when in service. However the new 777s were substantially heavier MTOW and required more thrust and better economy, they succeeded admirably.

            Ive looked through the RR 1000 ( inc 7000) EASA certification sheets, covering all versions, and it confirms the essential parameters are much the same. ( except weight of 7000 versions are region of 400kg more) , even the marketing name of Package TEN isnt mentioned.
            Same stages, same dimensions, same BPR, same Fan size etc

          • When you replace 75% of your parts you have a new engine.

            Dimensions are meaningless , it what you have done inside.

            You match all those dimensions so you don’t have to change the nacelle.

            And 400 kg is not miner, its major. Clearly they stuffed a lot more into the package.

          • Thats part numbers… using your analogy with car parts , having the most common fastners with a different part number doesnt a new car make.

            But taking a more specific plane example mentioned here. The 787-8 and 787-9 originally only had 20% ‘commonality’
            Yet everyone knows they practically the same plane. Your reasoning would mean that they are ‘completely different planes’
            Perhaps you should stick to automotive and prime mover world.

          • I have no problem with 787-8 being considered a complete different airplane.

            The 75% figure is parts, ergo, its not the same.

            Machinery is machinery, does not matter what causes it to spin.

            Scott is a consultant so I can understand him being ignorant of the intricacies of engines (see note) you should know better. You do, you just don’t admit it.

            note: At one time Scott contended that the 737-900/9 was competitor to the A321. I had to point out it was the closest Boeing had, but it was not a competitor. Like my 4 seat Passat was a competitor for an 7 seat Flex.

            Again consultant tend to glaze over this sort of thing, but its a bedrock of comparisons. A Ford 460 Natural Gas Generator is not the same as a Cummins 5.9 Diesel Generator.

            The 460 NG 75KW can work as a standby , no one runs it as prime power.

  2. I wonder if these are an opportunity for Delta. It’s clear a NMA won’t be launched for some time and those 767s aren’t getting any younger. A T1000 example could be similar enough to their a339s to be tempting. Didn’t Boeing agree to go back and improve commonality after American ordered their last tranche of 40-50? Could present an opportunity to replace those 767s there and at United where both would solve the middle of market with 788 and a321XLR

    • @Zoom: For years, the production commonality of the 788 vis-a-vis 789/10 was about 20% (or so it was said). A few years ago, Boeing changed the aft end on the -8 to match the 9/10. It is said the production commonality now is about 40%. Boeing never confirmed these figures, however, so I can’t vouch for them. But the point is made.

      From the airline perspective, training and most parts are “common.” It’s went you get into the guts the issue arose.


      • That clarifies, I thought it went FROM 40% to something slightly below the -9/-10 levels. What’s your take on customers that were waiting for NMA now that it’s delayed indefinitely. It seems there’s no appetite for an a338, will they be forced into 787s? A339 resurgence? I’d imagine some capacity cut routes will get an a321 but that still leaves a few hundred at airlines without a real replacement plan and planes that will age out before another frame comes along.

        • @ zoom
          Efficency is king today, as is not having overcapacity.
          That’s why the -8 looses out against the -9, it’s a more efficent plane as it’s a stretch and it doesn’t have any downsides. (note: the 10 i don’t include, it has severe range and payload restrictions due to engine and wing)
          Same is true for the A338 and A339 – the smaller one is a pretty niche airplane, as it is for the B777x.
          Only the A350 is the widebody violating that rule, where the -900 clearly outsells the -1000.
          But that might be as the market is still happy with plenty of B77W in that size.

          The A321 with its LR and XLR will be a pretty decent replacement for less demand routes flown with B767 and B757 these days.

          • The 787-10 lower range isnt a ‘severe’ issue. Its more aligned to a typical medium range for widebodies and allows US transcon and US Europe flights
            The max takeoff weight is the same as its 787-9 brother, which can look after the much longer range flights across the pacific and elsewhere. Remember, non stop from California to Australian cities not so long ago required a 747-400

      • Scott, can you confirm 95% communality between B787-9 and 10?
        If it’s still that low with the 8, what actually did happen?
        Did Boeing really develop two dreamliners? The failure -8 and the winner -9 and -10?

        How can 60% be different?

    • “”I wonder if these are an opportunity for Delta””

      Wikipedia says that Delta still has 27 A321-200 on order. Makes me wonder why they would want these kind of old planes.

      During these hard times there should be other cheap models available too, models Delta is already using. They never used 787 before.

      • The attractive thing about the 787 is it is a current gen jet, and has been built in high numbers unlike the A350 and especially the A330neo. That means that in this post covid world there will likely be far more 787s on the used market than A350s and the A330neo.

        An airline could potentially build a decent size fleet of 787s (again a current gen jet) at the fraction of the price of new build 787/A330/A350s. I’m not saying Delta will do something like this, but it is no doubt something they would consider in one of many postCovid plans discussed in Atlanta (Delta loves exploring all options).

        • That would be a “in-character” play for Delta. A bit what they did with the MD-80/90 at the time.

          • If the 787-8 were cheap, but the May 18 Ishka numbers for 5 years old with $85m and $0.575m seem not so interesting at the moment.

            Interesting for Delta could be 15 years old 767-300ER for $14.5m or 15 years old A330-200 for $0.17m per month. The 767 is even cheaper than the A321-200.
            Why not expand the 767 fleet if Delta were really interested to buy something. Prices might drop even more, should be patient.

          • But why would anyone buy planes right now, when predictions are it need 5 years to recover?

            If any airline has trouble, than due to it has to many planes and personel.
            Simply, all airlines these days shrink fleets, they don’t need new planes. They have enough old ones.

        • I imagine tui would be interested if the prices came down a little, they already run a fleet of 788s and im sure customer confidence would be higher on those than the raft of 737max’s they have on order.
          Also maybe an openning for mr o’leary to venture into trans atlantic ops with the 788.

    • “those [Delta] 767s aren’t getting any younger.”
      A lot of them are ‘parked’ and next stop will be desert graveyard and arent coming back.
      The 787-8 full range ( for full passengers and their baggage only) was 7850nm
      However the range at Max weight is around 5500nm
      The max weight from a structural basis is around 228 tonnes , while the climb limit weight ( to cruise level ?) is lower 195 tonnes.
      Im not sure Ive used these numbers correctly but with high temperatures and altitude factors you dont really want a lower max weight 2 class 787-8 thats useful over a wide range of routes.

      • “”A lot of them are ‘parked’ and next stop will be desert graveyard and arent coming back””

        The 767 are parked because Delta has better planes. But if fuel prices stay low and there is demand for more flights. Delta could replace older 767 with newer 767.

        Delta’s A321-200 have 191 seats, their 767-300ER have 208-226 seats. Its just a numbers game. 15 year old A321-200 are $15m, 767-300ER $14.5m with much better range.

        Delta’s 777-200 have 288 seats, but if there are not enough pax they earn more with 767.

    • Delta is using the 777 with 9-abreast, United with 10-abreast.
      United is using the 787 with 9-abreast, Delta would use the 787 with 8-abreast and then it makes less sense.
      Delta keeps a minimum comfort and won’t go below it.

      • For what’s it worth from what I’ve read, Delta will no longer use their two types of 777s after 2020.

        • I read that too, replaced with 350-900 which is wide enough for 9-abreast.

  3. Qantas operated only 10 A380s not 12, so that will change the writeoff per plane. From Airfleets, they say 2 are ‘active’ and 8 are parked for medium term storage.
    With the RR Trent 1000 series engines they came in various thrusts and various upgrades for existing and new models of 787 were described as ‘packages’.
    For the 787-8 essentially they were Package A and B. For the 787-9 the variant became package C. Further changes became Package C1 for instance.
    Once the RR Trent XWB new engine was certified, further development of the C1 package was given the marketing name ‘TEN’ which stood for Thrust Efficency and New Technology. The differences from the C1 base engine are small in the big scheme of things’
    ” Differences from Package C1 include increased take-off thrust rating; increased HP rotor TO redline speed;
    reduced TET limit;
    modified IP and HP compressor aerofoils;
    modified HPT front cover plate system;
    fully modulated HP3 air system with vortex amplifiers;
    new EEC hardware and modified FOGV aerofoils.” ( fan outlet guide vane)
    Further nomenclature changes of packages were introduced for various reasons and thrust ratings can have their own letter designation.
    A few months back when the CF-34 engines as used in regional jets were discussed the CF34-10 model for the E-190 series had far bigger changes from the earlier CF34 series than the Trent Package ‘TEN’ change. There was a bigger fan, changed stages etc. The sum of those changes made it a mini CFM56-7 as used on the 737NG.
    The time period between the initial engines and the virtual doubling of thrust mean its not unusual for an jet engine to have the same model name but not much in common in with much earlier models.

  4. Must be hard to sell a 787-8.
    Those used 787-8 should be very cheap and could be interesting to replace 777, just to get smaller.
    Were there airlines who changed to the 787 instead of the MAX before covid? They could take these cheap used 787-8 instead.

    • If the quoted market prices for a 5yo 788 at $85M are correct, I don’t think that’s a huge bargain. But if the prices are right — or they drop some more yet — I’m sure we will see some takers.

      But it’s a BIG drop in capacity to go from a 773 to a 788, maybe 40% fewer seats?

      • LNA reported the market prices.

        United is using the 787-8 in 4-class with 243 seats.
        United is using the 777-200ER in 4-class with 276 seats.
        United is using the 777-200ER in 3-class with 362 seats.
        United is using the 777-300ER in 4-class with 350 seats.

        • UA, AA and AF are the outliers in using a lot of 772s; most other airlines use the 773 (and 787s) instead. But, yes, it’s true that for the 772 operators the gap is not so big. Whether the improved efficiency is worth $85M is something that needs more calculation and more data.

          From a 773, though, the drop is 30%+, depending on the configuration (two-class will show a much bigger difference than the UA four-class configuration).

          • the 772s are 20 yrs or more, while 787s are under 10 years old.
            The US airlines have plenty of the early models as that version was designed for their use ( before EFTOPS even allowed twins on the direct transatlantic routes).

  5. I wonder if there is a lower MTO Weight certification available for the 787-8. Say one that gives it a 5000nm range. Doing that would reduce landing fees when operated as a NMM. Doing it by deactivating some fuel tanks may even save on some maintenance.

    • You can do anything you want in that regard. Airbus did it with the so called A330 Regional.

      China took some, no one else did. Long term the high speed rail replaces a lot of that.

      I don’t know landing fees are the savings, just the aircraft cost.

      Japan has local market 787s they fly, dense load). But that is a one off markets that the 787-3 was not worth building for.

      They did it with 747 and maybe 777 as well.

      • “China took some, no one else did. Long term the high speed rail replaces a lot of that.”
        You havent checked have you. Shenzhen to Beijing by HSR ( 2400km) takes about 9 -10 1/2 hrs Most people will take the train for intermediate stops.

        A lot of the high traffic regional routes in East Asia are international between big hubs like Tokyo, Osaka, Seoul, Beijing Shanghai ( plus numerous inland Chinese cities), Taipei , Hong Kong, Bangkok, Kuala Lumpur, Singapore, Jakata

    • Not really. France and US are the worlds leading experts in this area. They also did the ones from the Etheopian crash.

    • Not strange when there are tensions between Iran and US.
      I’m happy Ethiopia sent the boxes to France.
      If USA want to act as a safety expert they should start with their own mess.
      The Boxes should never enter USA, might be too dangerous, same as EASA pilots were not allowed to enter.

      • You guys did not follow this did you? The rest is meaningless has two aspects.
        1. The boxes are going to tell you nothing the world does not know.
        2. They have their nexuses lined up

        Iran insisted it would download the boxes themselves.

        Then no one was going to get them.

        France getting them always was logical, though no relevance. Meaningless in it tells us NADA we don’t know.

        Iran does not want anything solved, they want to hang a few people and then get on with the Theocracy.

  6. I’m surprised to see that no one discussed about the major blocking point:
    The cabin replacement !

    It will be the biggest challenge to meet the next operator needs it term of cabin replacement as nobody is allowed to do it except… Boeing (Airbus has introduced the same rules from A380 program).

    • If airlines signed that.
      I guess a cabin refresh might not be cheap but I can understand Airbus asks for it. Airbus is a brand which offers comfort. Then United is using A320-200 with 17 inch wide seats in economy and economy plus classes damaging the Airbus brand.
      This might not be the real reason but for me as a passenger I want to have good seats and I’m happy Airbus takes control of it.

      Also most seat configurations need to be certified and match the Exit configuration. Some airlines might have cheated with the Exits in the past.
      If Airbus does it from the start it might be even cheaper because certification is included.

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