Boeingluvr
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How Much Do The Planes Cost?

Mon Oct 15, 2007 7:25 am

Now we've all gone to Airbus or Boeing websites and looked at the cost of aircraft ( if we didn't already know). I was debating with someone else in the industry as I am and we were discussing the cost of aircraft over a mortgaged period? How longs are these periods? 10 years, 15 years, 20 years?? I worked out an approx figure on a 737 costing 65 million dollars, and came up with an extremly rough estimate of about 317000 dollars per month over a 15 year period. Is this anywhere close to right?

Also what about other cost incurred such as insurance on aircraft? What does it cost to insure say a 737?? Just something I hadn't thought too much about previously. Are leases better for airlines as they incur lower cost per month??

Any details.... I'm looking for educated facts if possible!

Thanks.
 
EIDAA
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RE: How Much Do The Planes Cost?

Mon Oct 15, 2007 7:39 am

A rough rule of thumb for for lease rental is in the region of 1% of the value of the aircraft per month. Obviously when the market is weak, you will not get that, but when the market is strong, you will often see rentals in excess of 1%.

Another factor would be the credit you are leasing to and also the term.

Also, $65m is quite high - an average cost these days would probably be about 70% of that.

For a new 737-800, let's say for arguments sake with a purchase price of $45m, in todays market you will probably see some rentals in the low 400s per month. Pretty good when you assume an economic life of 20-25 years for the asset.

I can't give you any input on insurance unfortunately.
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Boeingluvr
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RE: How Much Do The Planes Cost?

Mon Oct 15, 2007 8:27 am

Umm according to Boeing... your prices are a bit off. You can't tell me that the discounts for even a large order are 30 million a plane.

http://boeing.com/commercial/prices/index.html

There's your reference. Can you be more specific... Like you're talkin four hundred thousands per month?
 
EIDAA
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RE: How Much Do The Planes Cost?

Mon Oct 15, 2007 2:19 pm

Quoting Boeingluvr (Reply 2):
Umm according to Boeing... your prices are a bit off. You can't tell me that the discounts for even a large order are 30 million a plane.

The number of $45m is quite accurate. My 70% of list price figure above was quite high actually. I know of customers getting discounts in the region of 40%, so I should have said purchase prices of 60% of list price.

Quoting Boeingluvr (Reply 2):
Can you be more specific... Like you're talkin four hundred thousands per month?

I'm afraid I can't get into specifics for obvious reasons, but again, the 1% figure is a good rule of thumb. It is not usually achievable on brand new aircraft, but lease rentals on these will typically be anywhere from 0.8 to 1% of purchase price. This would relate to $350-400k per month on an A320 or an -800.
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CXfirst
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RE: How Much Do The Planes Cost?

Mon Oct 15, 2007 2:27 pm

Quoting EIDAA (Reply 3):
My 70% of list price figure above was quite high actually. I know of customers getting discounts in the region of 40%, so I should have said purchase prices of 60% of list price.

But, a private person would not get such a discount, only airlines that buy multiple aircraft and are likely candidates to buy more planes from the producer later get good discounts.

-CXfirst
 
Boeingluvr
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RE: How Much Do The Planes Cost?

Mon Oct 15, 2007 8:38 pm

Which brings me back to my origional statement questions? HOW MUCH???
 
Rbgso
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RE: How Much Do The Planes Cost?

Mon Oct 15, 2007 8:55 pm

I don't think there is an easy answer to this. I'm sure the prices paid are all over the map. A large carrier that has ordered hundreds of frames in the past and is a loyal A or B customer will get substantial (30-40%) discounts. A launch customer gets a great deal. Air Scrotum who buys 2 frames may pay close to list. A private buyer or BBJ customer may in fact pay list plus.

Then comes delivery dates. If the customer can be flexible, I'm sure they get a better deal. If they need the maker to squeeze them in, well that will raise the price. And we haven't even covered trade-ins, if applicable.
 
tdscanuck
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 1:32 am

Quoting Boeingluvr (Reply 5):
Which brings me back to my origional statement questions? HOW MUCH???

It's not that simple. Beyond just the purchase price discount, which can vary all over the map as previously discussed, an airplane isn't something you just purchase and are done with. You've got support, maintenance, ground support, training, spares, financing, etc. Any one of these are potential items for negotiation during a sale. As a result, it's entirely possible to have two airlines pay the same purchase price for their aircraft, but one to spend 10-20% less money than the other at the end of the day.

Tom.
 
checkraiser
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 2:37 am

Quoting Rbgso (Reply 6):
Air Scrotum

You have a route map for these guys?  biggrin 
N1120A is a camel-fucking terrorist.
 
AirframeAS
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 2:59 am

Quoting Rbgso (Reply 6):
I don't think there is an easy answer to this.



Quoting Tdscanuck (Reply 7):
It's not that simple.

That sums it up the best. Each air carrier gets a different price tag for different types of aircraft. It (the prices) changes all the time. There is no straight-away answer.
A Safe Flight Begins With Quality Maintenance On The Ground.
 
EDICHC
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 3:02 am

Quoting Checkraiser (Reply 8):
Quoting Rbgso (Reply 6):
Air Scrotum

You have a route map for these guys?

I can only assume they are not part of SRB's Virgin empire!  Silly
A300/319/320/346 ATR72 B722/732/3/4/5/6/8/742/4/752/762/3/772/3 BAC111 BAe146 C172 DHC1/6/8 HS121 MD80 PA28
 
pnwtraveler
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 3:30 am

Yes AC has gotten into the business of leasing these days. They are subleasing both some owned and some leased aircraft at a much better rate than they anticipated. They have leased 319s to Mexicana and others and are leasing out the A340's. So AC got such a good rate that they can now lease them out at a nice profit.
 
Boeingluvr
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 5:59 am

Anyone have examples from certain airlines or experience? If you seem to know a lot about how the prices vary, you must have examples to give from experience or airlines. I'm not looking for exact numbers. But someone must have an approximate figure or example from previous experience.
 
EIDAA
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 9:31 am

Quoting Boeingluvr (Reply 12):
Anyone have examples from certain airlines or experience? If you seem to know a lot about how the prices vary, you must have examples to give from experience or airlines. I'm not looking for exact numbers. But someone must have an approximate figure or example from previous experience.

Well I work with one of the larger leasing companies and the guide numbers above are based on my experience with several Sale & Leaseback transactions and current market lease rentals. Due to confidentiality with the airlines, manufacturers and internally, I cannot give specifics.

Also, as some of the others have rightly pointed out above, the initial up-front cost is not the only cost an airline has to worry about. Even the up-front cost is not a lump some but rather consists of PDPs which result in a portion of the purchase price being paid over a defined term prior to the delivery date, on which the balance is paid. I can't give any input on the costs Tdscanuck listed, so perhaps others can help you out there.

Just coming back to list/purchase prices, CXfirst and Rbgso are correct in that the discounts will vary depending on the customer, size of order, aircraft type, delivery schedule, etc etc. Most of the deals I have seen have involved either start-up airlines (10-20) or larger airlines putting in orders for 30-40 aircraft. I have not dealt personally with BBJs or "ones and twosies".

Finally, it is also worth considering that the choice of suppliers for BFE/SFBFE can change your up-front cost. Customers need to negotiate individually with the suppliers... Honeywell, Rockwell Collins, Thales, Driessen, Webber, B/E Aerospace, Recaro.... and so on.

It is a very complicated process, but hopefully this thread can shed some light on it and give you some of the answers you need.
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scouseflyer
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RE: How Much Do The Planes Cost?

Tue Oct 16, 2007 10:06 am

Quoting EDICHC (Reply 10):

I can only assume they are not part of SRB's Virgin empire!

Virgin Scrotum - that sounds quite, quite wrong!