The 737-800 remains the best performing aircraft in the narrowbody aircraft market. Its diversified operator base (more than 135 operators around the world), current fleet in operation (approximately 2,750 units), hefty backlog (about 1,380 aircraft), and ease of marketability should ensure that this narrowbody remains desirable in the marketplace for many years to come.
The launch of the 737-800 in 1995 signalled the start of the replacement of the 737 Classic family with Next Generation (NG) aircraft in the 110-seat to 210-seat market.
The 737-800 replaces the 737-400 model, which was developed as a 150-seat replacement for the popular 727 trijet. It is 9ft. 9in. (3.02m) longer than the 737-400 and seats between 146 and 162 passengers on typical two class configuration. A single-class configuration can seat up to 189 passengers.
Like the other members of the NG family, the 737-800 model features improvements including more efficient CFM International CFM56-7B turbofans, the new wing with greater chord, span and wing area, larger tail surfaces and the 777 style EFIS flightdeck with six flat panel liquid crystal displays.
Germany's Hapag-Lloyd placed the first order for the 737-800 and received its first delivery in April 1998.
CFM International offers three engines on the aircraft - all were certified in December 1996.
The lower-rated version, the CFM56-7B/24, has 24,200 lb of thrust, and represents approximately 29% of the 737-800 fleet.
The CFM56-7B/26 version, with 26,300 lb of thrust, is the most popular engine with a 58% market share.
The highest- thrust CFM56-7B/27 at 27,300 lb equips 13% of the total 737-800 fleet.
The -24 engine accounts for 284 aircraft orders that have yet to be delivered, the -26 engine for another 936, while the -27 engine equips another 117 units on order.
The 737-800 programme has 2,729 aircraft in service with another 19 in storage, according to Flightglobal's Ascend Online database. There are 202 737-800s along with 2,527 -800s equipped with winglets in operation.
The stored fleet consists of seven 737 -800s and 12 737-800s with winglets. Current backlog is estimated at 11 737-800s and 1,368 units equipped with winglets.
Ryanair is the largest 737-800 operator with 305 aircraft in service. American Airlines operates 197 units, Delta Air Lines has 132 aircraft, while Continental Airlines has a 130-aircraft fleet.
Top 10 737-800 operators include Hainan Airlines (94 aircraft), Air China (88 aircraft), GOL Linhas Aereas (82 aircraft), Delta Air Lines (73 aircraft), Xiamen Airlines (64 aircraft), Alaska Airlines (61 aircraft) and Norwegian (59 aircraft).
Boeing has begun assembly of the first 737 NG family to be built at the rate of 38 aircraft per month. The first 737 NG built at the new rate is scheduled to be delivered in the second quarter of this year.
Over the past two years, production of the 737 has risen more than 20% to 38 aircraft from 31.5 aircraft a month. Rates will increase again to 42 a month in the first half of next year and by then, 737 NG family production rates will match those of the Airbus A320 family.
Boeing delivered 351 737-800s last year. In 2012, Europe represented 24% of the total deliveries, followed by North America with a 19% market share. However Asia-Pacific received the most units with 151 737-800s, or 43% of the total deliveries.
Latin America and Caribbean accounted for 8% while Africa represented the remaining 6%.
Last year Southwest Airlines received 34 new 737-800s, followed by American Airlines (28) and Ryanair (27). The three customers accounted for 25% of the total deliveries.
Based on commercial figures, Ascend expects the US manufacturer to hand over 386 aircraft in 2013.
Half of this year's new deliveries will be for Asian carriers. Indonesia will receive 27 aircraft while Australia, India and Malaysia will take about 15 aircraft each.
However, China is where the bulk of the deliveries will go. Chinese carriers will take 101 737 -800s this year, or 26% of this year's planned deliveries. Both China Eastern Airlines and China Southern Airlines will take two aircraft a month, on average, this year while Air China is scheduled to receive 17 new aircraft. Shandong Airlines and Shenzhen Airlines plan to add 10 737 -800s to their fleet this year.
The US will receive 66 aircraft while European carriers will take 68 aircraft in 2013.
During the third quarter of 2012, of a total of 24 new orders were recorded by Ascend and 12 were placed by operating lessors.
Trading activity during that quarter included 19 sale and leasebacks on delivery involving AerCap, AWAS, CDB Leasing, GECAS, ILFC, MC Aviation Partners and Pembroke Group. Another three aircraft were second-hand sales and leasebacks while five aircraft were purchases with leases attached. One 737-800 with winglets was purchased by Hebei Airlines from Xiamen Airlines.
The operating lessors will take a total of 82 deliveries in 2013. SMBC Aviation Capital is planned to receive 16 new aircraft this year, while Air Lease and GECAS are expected to take 13 aircraft each.
According to Ascend, ILFC will take delivery of eight aircraft, AWAS will add seven units and CIT Aerospace will take another six aircraft. Aviation Capital Group and Avolon Aerospace have five deliveries scheduled, while BBAM and BOC Aviation have four aircraft each. One delivery is due to Aviakapital-Servis for Aeroflot Russian Airlines operation.
Ascend says the 737-800 has a major presence with scheduled, charter and low cost carriers, which allow the aircraft to be placed quickly once it becomes available.
"The 737-800 is the most liquid narrowbody in the market and remains the operating lessor's favourite aircraft," says Ascend.
Collateral Verifications' vice president Commercial Aviation Services Gueric Dechavanne says although 2013 will continue to be viewed as a challenging year for most aircraft, the long-term viability of the 737-800 remains very good. "The diversified operator base, current order backlog, and ease of marketability should ensure that this aircraft remain desirable in the marketplace for many years to come."
IBA Group's senior analyst Alice Gondry says while its competitor, the Airbus A320, is feeling the pressure, the 737-800 is performing better. "Storage and availability are very low for an aircraft with such a large fleet. Values and lease rates are holding up."
She expects production to be close to 60 aircraft per month by the time the 737 Max enters service. "Production at this rate could have a significant impact on values of older airframes, as newer more efficient aircraft flood the market. In terms of the impact that the entry into service of the Max will have on the current generation aircraft, IBA expects that a significant number of the new models must be in service to witness a pronounced negative value effect. However, it is clear to see that at the high rates of production being considered, this 'critical mass' would not take long to reach."
Dechavanne says that the 737-800 has been able to retain its value better than that of the competing A320. "With the 737 Max beginning to be shaped for definitively in terms of design and production it is likely that the decrease in value for the type will continue."
Ascend does not anticipate 737-800 values to be seriously impacted by the introduction of the Max, as the latter will not start to replace it until well into the 2020s.
However, it sees the 737-800 model as a good cargo replacement for the 737-300 and 737-400 freighter units.
Lease rates and Values
The 737-800 model has maintained a reasonable level in lease rates and values due to its low availability. There are 19 737-800s currently in storage, all manufactured between 1998 and 2007.
The high-end of the lease market is still above $350,000 a month, according to various leasing sources. "We have not seen the full drop off that we saw on the Airbus A320 model," says one lessor.
"There are opportunities at more than $370,000 a month," he says, but acknowledges that some Asian carriers are putting pressure on the market with demand "at less than $350,000 a month".
Another lessor agrees. "Last year, new 737-800 were trading in the $380,000 to $400,000 monthly rate. Now, a 2014 delivery is more in the $370,000 to $380,000 range. However some carriers are trying to lower the bar with offerings at $330,000 to $340,000 range."
"On the one hand, lessors and banks continue to build market share, but on the other hand Asian carriers ask for pretty tough pricing," he says.
According to him, lease rates could go up again. "If Boeing wraps up the last 200 slot positions, lease rates could tighten up again," he says.
Five-year old aircraft are offered in the high $200,000 a month range and can be placed at $275,000 a month and above, according to a leasing source.
The oldest aircraft are offered in the low $200,000 a month range, but demand is lower, according to the lessor.
Appraisers were asked to provide an opinion on a CFM56-7B26 powered aircraft with a 174,200lb maximum take-off weight.
For a 1998-vintage, monthly lease rates are around $220,000 for SH&E and $210,000 for IBA Group. MBA provides a $190,000 to $215,000 range, while Ascend and Collateral Verifications are the lowest appraisers with $190,000. About two years ago, lease rates ranged from $210,000 to $250,000 a month for the same vintage.
A 2002-vintage aircraft has a monthly lease rates of $210,000 for Ascend, $230,000 for Collateral Verifications, $240,000 for IBA Group, $260,000 for SH&E while MBA provides a $220,000 to $240,000 range for the type.
SH&E is the highest appraiser on a 2006-vintage aircraft with $300,000 a month while Ascend is the lowest with $245,000. MBA provides a $255,000 to $270,000 range for the type. Collateral Verifications says lease rates are $270,000 a month while IBA sees rates at $280,000 a month.
A three-year-old aircraft has a $290,000 lease rate for Ascend while MBA opines lease rates are between $295,000 and $305,000 a month. Collateral Verifications says lease rates are $315,000 and IBA says $320,000 per month. SH&E sees rates at $340,000 a month.
A 2012 delivery will attract $325,000 a month according to Ascend, while IBA Group says $340,000 a month. Collateral Verifications says $345,000, while SH&E sees rates at $367,500 a month. MBA says $330,000 to $345,000 for the type.
Ascend believes 737-800 market values remained stable during the second half of 2012. The appraiser puts a new delivery at $360,000 a month.
Dechavanne says the aircraft has shown continued stability in its market value and lease rates, especially for new aircraft. He sees rates around $360,000 per month for new aircraft.
"The older aircraft have not fared as well as new aircraft, but demand still remains good at the right price. Values of older aircraft have dropped by about 15% in the last six to nine months. These trends, not dissimilar to the last downturn, are expected to continue throughout 2013 with the potential for some improvement thereafter. The increase in the production rate of this aircraft by Boeing is a bit of a concern as it does provide more availability to the market and has started to soften the values and lease rates of some of the older aircraft."
According to MBA, a 1998-vintage aircraft has a current market value of $17.9 million. This compares with $17.1 million for IBA Group and $19.5 million for Ascend. SH&E believes the current market value is $17.7 million while Collateral Verifications says $15.7 million.
Four appraisers are within $1 million range on a 2002-vintage aircraft. Current market value is $22.3 million for IBA Group, $23.1 million for Ascend, $23 million for SH&E, $23.2 million for MBA while Collateral Verifications is the lowest at $18.4 million.
A 2006-vintage aircraft has a current market value of $28.5 million for IBA Group, $29.6 million for SH&E, $29.9 million for MBA. Ascend and Collateral Verifications are the lowest with $27.7 million and $27.3 million, respectively.
MBA is the highest appraiser on a 2010-vintage aircraft at $39.4 million. IBA Group and Ascend value the aircraft at $35.9 million and $35 million, respectively. Collateral Verifications has the lowest appraisal at $33.7 million. SH&E says the aircraft is worth $37.6 million.
A one-year old delivery is valued at $41.5 million for IBA Group and $42.3 million for SH&E and Ascend. MBA is the highest with $45 million while Collateral Verifications is the lowest with $36.7 million.