The Boeing 787-8 Dreamliner is fast becoming one of the workhorses of the sky. Since first flying passengers in 2011, Boeing has delivered 414 of the planes to 42 customers worldwide. Over one-third of those planes are leased. Leasing has several advantages over buying, not least conserving cash flow.
Leasing versus buying
Exclusive of discounts, the fly away list price of a Boeing 787-8 is US$248.3 million, a significant financial impost for many airlines. In addition to giving an airline some operational flexibility, leases can be easier on the airline’s bottom line. An ongoing monthly payment over a period of time can be far easier to handle than one big lump sum payment.
So how much does it cost to lease a Boeing 787-8? That will depend on several factors. A new Dreamliner will cost more than a second-hand one. The number of flight cycles and flying hours will also impact the cost.
Operators might also pay a premium for a used aircraft from a quality airline with an outstanding maintenance record. Leasing airlines with solid credit records and a proven payment history could expect a discount. The length of the lease will also come into the equation.
Finally, the number of leased planes available will impact the asking price. Classic supply and demand rules dictate less expensive planes in an oversupplied market and more expensive planes in an undersupplied market. Right now, there is a worldwide glut of unwanted planes.
That glut is forcing lease costs down, and that’s a key reason why were are seeing a number of startup airlines this year.
Airlines getting some good leasing deals
Until airlines started sending planes back to lessors en masse over the last 18 months, it typically cost between US$800,000 and $1.05 million per month to lease a 787-8 Dreamliner. But all the stated reasons determined the final price an airline pays for a leased Boeing 787-8.
It’s late 2021 and a pretty unusual flying environment for most airlines. That’s seeing some good-value lease prices for a 787-8 Dreamliner.
American Airlines leases a handful of 787-8 Dreamliners from BOC Aviation. While you can quibble about the quality of their inflight service these days, American Airlines pays its bills, and lessors know it. It’s no surprise that AA gets a decent discount. According to ch-aviation, it is estimated American is paying just $625,000 per month for their four leased BOC Aviation 787-8 Dreamliners.
Qatar Airways has six 787-8s leased from ICBC Financial Leasing. They are A7-BCY, A7-BCZ, A7-BDA, A7-BDB, A7-BDC, and A7-BDD. One of those planes, A7-BCY, is just over six years old, and Qatar is paying an estimated $450,000 per month for it. The other five planes are around five and a half years old, and the airline is paying slightly more – an estimated $475,000 per month for them. Is that $25,000 premium due to the age of the plane? Hard to say, but it is the only discernable difference.
Oversupply is forcing prices down
Addis Ababa-based Ethiopian Airlines has nine leased 787-8 Dreamliners, including three from AerCap. The airline is paying an estimated $450,000 per month for these planes. Like that stray Qatar Airways leased Dreamliner, these planes are aged around six and a half years.
These rates are significantly less than the aforementioned $800,000 to $1.05 million going rate. The quoted examples all involve aircraft a few years old on multi-year leases at established airlines – they’ll get a decent deal regardless of the external environment.
But it is inarguable the oversupply of planes on the market is also driving down leasing costs. That’s good for airlines and bad for lessors. It is a state of affairs that is likely to continue for a few years yet, suggesting the widely circulated going rates for leased planes may need to be revised.