A glimpse at the pricing of new jets

Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

Hey, I’m interested in the oddest things. Saw an article saying Boeing completed a deal for 80 aircraft at a list price approaching $17 billion.

I wondered, just what is the sticker price for a brand new jet?

If you are also curious, follow along with me as I take a quick look at the details.

12/12 – Wall Street Journal – Boeing Seals Nearly $17 Billion Iran Deal – The deal could get sidetracked by a change in administration, but they have a deal, subject to approval of a wide range of federal agencies.

The deal with Iran includes:

  • 15 – 777-300ER wide bodies
  • 15 – 777X, wide bodies, under development
  • 50 – 737 Max, single aisle obviously
  • 80 – total deal

For context, Iran Air has been under sanctions for decades. Their fleet is quite old. The domestic travel in the country could lead to 400 new planes to update their fleet.

Deal is cited at $16.6B, without expected discounts. I wondered about the list prices. Did a quick internet search and found some cool data at Statista.com: Average prices for Boeing aircraft in 2015, by type (in million U.S. dollars). I’ll list a few of the data points:

  •   90.2 – 737 Max 7
  • 110.0 – 737 Max 8
  • 116.6 – 737 Max 9
  • 387.5 – 747-8
  • 197.1 – 767-300ER
  • 277.3 – 777-200ER
  • 339.6 – 777-300ER
  • 371.0 – 777-8X
  • 264.6 – 787-9
  • 306.1 – 787-10

I’m assuming that doesn’t include spare maintenance parts or spare engines.

Since I’m an accountant, you know I just had to do the math. Here’s my calculation after making a few assumptions on the specific models:

 777-300ER           15         197         2,955
 777-8X           15         371         5,565
 737 Max 9           50         117        5,850
 total           80       14,370
 average         180


At an extended list price of $14.4B, the announced price of $16.6B would include a lot of spare parts. Given the statistically measurable risk of another embargo, I would guess Iran Air wants lots and lots and lots and lots of spares.

At my guess of an average list price of $180M for the planes and an average list price in the deal of $207M, I’ll make a wild guess that is around $27M of spare parts per plane. I am clueless on the prices of spare parts, but can guess that is a lot of parts.

I’ll boil that long list of list prices down to a simple list of rounded numbers:

  • 110M – 737
  • 390M – 747
  • 200M – 767
  • 340M – 777
  • 300M – 787

For a bit of contrast, the article says Airbus signed a deal with Iran Air back in January for 118 airplanes at list price of $25B. That is an average of $212M each.

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