· The aircraft was acquired by the previous federal administration to replace the President Juárez Boeing 757-200, with 28 years of service.
· The new aircraft will operate with greater security, functionality and efficiency.
It was announced that the José María Morelos y Pavon Boeing 787-8 purchased by the federal administration will be delivered to the Presidential General Staff in the next few weeks.
The date will depend on the completion of the final tests and on the certification of the interior equipment by the Federal Aviation Administration of the United States (FAA).
The aircraft will operate two weeks after its arrival in Mexico, during which time the training of the crews and ground staff will be completed.
BACKGROUND TO THE PURCHASE
On November 11, 2011, then Interior MInister Francisco Blake Mora, died in a tragic event aboard a Presidential General Staff helicopter that crashed in Chalco, State of Mexico, which also killed those accompanying Minister Blake and the crew members.
In the wake of that regrettable incident, in the review of the Expenditure Budget for the Federation for the 2012 fiscal year, passed on December 15, 2011, representatives urged the Federal Government “To make the appropriate budgetary adjustments to renew the aircraft, and the rest of the aircraft assigned to the president, in order to ensure the safety of the president and his Cabinet ministers.
In response to this request; and on the basis of the technical and operational evaluation by the MInister of National Defense (SEDENA), as well as the economic conditions analyzed by the Secretariat of Finance and Public Credit (SHCP), in November 2012, the National Bank of Works and Services (Banobras) completed the purchase of a Boeing 787-8 aircraft.
The total cost of the aircraft, including engineering, systems installation, structural adaptations, certifications and a package of spare parts, was $218.7 million USD, paid at 13.5 pesos per dollar, since exchange rate coverage was also acquired. This means that the actual cost, paid in pesos for the entire aircraft with its equipment, was $2.95 billion pesos.
At the same time as the purchase of the aircraft, Banobras signed a 15-year lease with the federal government, at the end of which the equipment will become part of the Ministry of National Defense’s assets.
Financial leasing is the instrument commonly used for the purchase of these assets, allowing payment to be deferred over time and thereby reduce the budgetary impact at a given time, in order not to affect other areas of spending.
PRESIDENT ORDERS STUDY
In a context of budget adjustment, last September President Enrique Peña Nieto ordered the Finance Ministry to conduct a study that would provide the necessary elements to determine, based on technical, financial and national security factors, whether to sell or keep the B787 -8 for use by the Mexican State.
In compliance with the presidential instruction, Banobras hired Ascend Flightglobal Consultancy, an international company specializing in valuation and advice on buying and selling aircraft.
The company, based in London, has evaluated over 67,000 aircraft worldwide for airlines, corporate aviation, air leasing companies and financial institutions. It has been certified by ISTAT (International Society of Transport Aircraft Trading), an organization that sets standards and promotes the sale or purchase of aircraft worldwide.
The scope of the study included the identification of the potential market for the eventual sale of the aircraft; an assessment of market conditions and trends; the expected time to make the sale; the likely price at which the aircraft could be sold and the conditions for its sale.
The main results of the study are given below:
(i) If the aircraft were sold to a commercial airlines, it would experience very significant loss in relation to its purchase price. This is due to the cost and time of internal reconversion, as well as the loss of existing equipment. The consultant estimates that, if sold to a commercial airline, its sale could represent a loss of more than 58% of its cost (128.2 million dollars). In view of the above, the consultant considers that the aircraft should maintain its current function, rather than being converted into ocommercial equipment.
(ii) If sold with its current configuration on the private aircraft market, the sale could be completed within 12 to 24 months, given the characteristics of this market and the complexity of the current economic context. If sold within 24 months, the loss could amount to 30% of its value ($65.9 million USD) and in 36 months to about 35% ($76.2 million USD).
(Iii) The equipment was acquired at an attractive price, since it was one of the first B 787-8 planes to be manufactured and purchased at a fleet price. The aircraft (without equipment) had a cost of $114.6 million USD when its marke price-at the time of purchase- was approximately $200 million USD. In other words, it was purchased at a discount of 42.7%.
(Iv) The cost of adjustments, including engineering, installation of systems, structural adaptations, cabin equipment and certificates, was $81 million USD and it is in the low range of the standard equipment for private aircraft of this size, which oscillates between $75 and $125 million USD:
(v) The aircraft purchased is one of the best alternatives in terms of efficiency in available costs on the market.
(Vi) Given the need to replace the current equipment-which is 28 years old-there are very few chances of finding an alternative aircraft with better market conditions. The list price of an unequipped B787-8, one of the smallest, most economical widebodyaircraft on the market, is $218.4 million USD, in other words, 90.6% higher than the original cost.
Due to the loss its sale would cause the public purse and the need to renew the presidential plane at a time when the exchange rate is higher, it was decided to retain ownership of that aircraft.
SAFETY AND FUNCTIONALITY CONSIDERATIONS
Presidents require safe, reliable and efficient aircraft for the performance of their functions, their teams and the media representatives covering their activities. On average, 60% of the passengers on each flight of the presidential plane are journalists.
Due to this national security consideration, the aircraft requirements were determined by the Ministry of National Defense.
Although the “Presidente Juárez” Boeing 757-225 operates with high safety standards, it has flown for more than 28 years and shows inevitable signs of aging and obsolescence. For example, it is forbidden to land in various cities around the world because of the noise pollution it emits, which reduces the efficiency of the development of the presidential agenda.
Between 1987 and 2015, 2,662 flights were made on 953 domestic and 323 international tours; together with 4,668 landings and 154 stops on international tours. In 2015, it carried 5,151 passengers.
Due to the fact that the B757-225 model was discontinued in 2005, the supply of parts and supplies is increasingly scarce, increasing their cost and maintenance time. Precisely because there are no spare parts for the fuel tanks with which it was originally configured, these had to be replaced by others of a smaller capacity which reduces its flight range, requiring a greater number of stopovers on transoceanic routes.
The Boeing 787-8 and 767-300 models were considered as options for the new aircraft for the presidential fleet, as well as the Airbus A330-300.
The Department of Defense (SEDENA) considered that the B787-8 offers better performance conditions, including the following:
· Increased flight range, both in takeoffs from Mexico City and at sea level;
· It has a range of 13,900 kilometers, allowing it to fly nonstop to any destination in the northwest of the American, European and African continents, as well as certain destinations in the eastern and western part of Asia and the east of Oceania;
· It consumes up to 20% less fuel than other aircraft in its class;
· It produces 60% less pollution than similar aircraft;
· It has navigation, approach and landing systems using land, satellite and independent media, enabling routes to be followed more accurately and in all weather conditions, thereby increasing safety and operational reliability;
· Its fuselage consists mainly of compound materials (carbon fiber), offering lower weight and greater resistance to wear and corrosion;
· Its aerodynamic design reduces the effect of flight turbulence;
· It is equipped with latest generation General Electric engines designed to fly 20.000 hours or 16 years before its first major revision;
· It can operate at 92% of the domestic airports where the “President Juárez” has been used.
WORK SPACE
The “Jose Maria Morelos y Pavon” aircraft can carry up to 80 passengers, 20 more than the capacity of the "President Juárez" currently operating.
It has satellite telecommunication and Internet equipment, which will allow the president to permanently receive and transmit information from anywhere in the world, facilitating the completion of his working agenda even on long-haul flights.
It has an estimated service life of 25 year, meaning that it will be in service until 2040. In other words, it will be available to at least five presidents of the country, their teams and the media assigned to covering the president’s activities.
FUTURE USE OF THE “PRESIDENT JUAREZ”
The “Presidente Juárez” Boeing 757 will remain as part of the president’s air fleet. It will serve as a backup aircraft when the “Jose Maria Morelos y Pavon" aircraft is under maintenance.
Download the complete study on the aircraft here: "http://www.gob.mx/cms/uploads/attachment/file/47851/Ascend_Reporte_P_blico_Espa_ol_vf.pdf" \\ t "_blank" aircraft.