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Joined: Tue May 18, 1999 3:49 am

744 V A346/B773 Lease Tradeoffs

Sat Jun 24, 2006 11:59 am

With the ageing 747-400 fleet and the relatively new (and highly capable) A340-600 and 777-300ER aircraft, what (if any) variation are airlines beginning to see with the leasing rates for the 744 versus the newer-designed aircraft?

Is the tradeoff between the operating effeciencies of the newer craft enough to warrant the (presumed) higher costs to lease the aircraft?

F L Y 7 7 7 U A L
Posts: 64
Joined: Mon Jun 19, 2006 7:15 pm

RE: 744 V A346/B773 Lease Tradeoffs

Sat Jun 24, 2006 1:08 pm

For the short term, demand for the B747-400 is as strong as ever, and lease rates as a result are going up. More older B744's are being retired from passenger service for freighter conversion, and replacement aircraft are currently hard to come by until the A380 enters service later this year. The recent delays by Airbus do nothing but strengthen B744 lease rates for another few years.

Currently, lease rates for a B744 range from approx. $450k-$900k per month depending on age of the aircraft. The A340-600 in comparison is about $750k-$1 Mio again depending on the age. Lease rates of the -300ER are slightly higher than the A340-600.

As far as the tradeoff between operating efficiency and potentially higher lease rates, there are several things an airline might take into consideration determing the cost-benefit analysis. Factors such as:
-Simple lease rate comparison
-Maintenance costs (new aircraft will have less initial MX costs, but will also require acquiring a spares inventory, training maintenance staff for a new aircraft type, etc)
-Costs to train flight/cabin crew for a new aircraft type
-Revenue comparison

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