Ascend Flightglobal Consultancy has conducted a valuation study for the government of Mexico, to support the decision made to purchase a new Boeing 787-8 for the nation's president, Enrique Peña Nieto.
President Enrique Peña Nieto ordered the study in order to evaluate the technical, financial and performance elements of the new Boeing and the viability of options for the Mexican state to either retain or resell the aircraft post-delivery. The aircraft, set to be delivered in February 2016 following US Federal Aviation Administration certification, is intended to replace a 757-200 which has been used by the government for 28 years.
Banobras, the state-owned development bank in Mexico, hired Ascend Flightglobal Consultancy to conduct the study based on its international reputation and proven expertise in aircraft appraising, having won the Aviation 100 Aircraft Appraiser of the Year award five times in the last six years.
The scope of the study included an analysis to calculate the attractiveness of reselling the aircraft, configured in a customised "Bizliner" interior, while taking into consideration and evaluating the conditions and trends of both the private/bizliner and commercial passenger airliner markets. The study also took into account the time required to sell the aircraft, the potential value that could be realised from selling, and what would be required for a sale to take place.
Ascend Flightglobal Consultancy presented the main outcomes of the study in a public report. From a 2012 acquisition cost of $218.7 million (including spare parts), Ascend appraises this 787 aircraft value today at $172.7 million. Reselling the aircraft in either its current configuration, or converted back to a commercial passenger airliner, would likely incur both significant costs and a marketing period of as long as 24 months. During this time the aircraft would further depreciate and lose value. Consequently, if the aircraft were resold in the current configuration as a Bizliner, Ascend estimated that it would lose up to 30% of its value within 24 months. Further, if it was converted back to a passenger airliner configuration, the loss was estimated as up to 60%. This loss is compounded by the fact that the aircraft was manufactured early in the 787 programme, and because much of the value today is held within the customised interior.
The study also highlighted that the aircraft was acquired at an advantageous initial purchase price and has subsequently been customised with an interior suited to the Mexican government's mission requirements. Consequently, the sourcing of an alternative aircraft would now be a less attractive proposition, both from a cost and lead-time perspective.
As a result of its findings, Ascend Flightglobal Consultancy recommended accepting final delivery of the 787-8 and retaining it for operation by the Mexican government for the foreseeable future.
Based on this study, the government of Mexico has decided to keep the aircraft as part of its presidential fleet.
"Ascend Flightglobal Consultancy was delighted to be given the opportunity to demonstrate through our analysis that the Mexican government's Boeing 787-8 represents the best-value solution today compared to alternative options that would have involved potential disposal of the aircraft in the secondary market and acquisition of an alternative solution. We trust that the Mexican taxpayers take comfort from our verification of their government's strategy," says Rob Morris, head of consultancy at Ascend.
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Source: FlightGlobal.com
