Purchasing older 747s is “a pretty smart move on the part of Boeing,” says aviation consultant Michel Merluzeau. The latest 747s, which retail for about $350 million each, have drawn only five orders this year. But there were also five cancellations, according to Boeing’s website. “I think it’s one year at a time for that program,” Merluzeau says.
Boeing’s buybacks help 747-8 customers avoid recording losses on older planes they would otherwise struggle to sell amid a global glut of used jumbos, Avitas’s Kelly says. With demand weak for air freighters, conversions of passenger 747s to carry cargo have dried up, he says, curtailing one of the usual options for airlines to extract value from aging aircraft. About 75 747-400s are parked in deserts around the world, according to Ascend, and valuations have tumbled. A 1992-vintage 747-400 that was appraised at $41.6 million in January 2008 is valued at $16.7 million now, Kelly says.
Korean Air, which has sold six 747-400s to Boeing since 2010, agreed in June to buy five 747-8s as part of a planned $3.6 billion aircraft purchase. The carrier is the second-largest global operator of the 747-400 and one of the biggest buyers of the latest version of the 747-8, according to Ascend.
Cathay Pacific, which has ordered 13 of the new 747s outfitted to carry only freight, sold one 747-400 to Boeing this year, as did Air China Cargo, which is 49 percent-owned by Cathay. Dragon-air sold Boeing three of the jets.
Lately, planemakers are particularly eager to deal on four-engine models. Last year, Boeing even bought five of its rival Airbus’s A340s—a four-engine widebody no longer in production—from China Eastern Airlines (CEA), which was taking 20 of Boeing’s 777s in a $6 billion deal based on full list prices (which are often discounted for early or multiple purchases).