First two retired A380 superjumbos to be broken up for parts

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 5 years ago

First two retired A380 superjumbos to be broken up for parts

Updated
Loading

Two of Airbus's flagship A380 superjumbos are headed for the scrap heap after a search for new operators failed to secure firm bids.

Negotiations with British Airways, Iran Air and Hi Fly, a Portuguese charter specialist, ended without any deals, German investment fund Dr. Peters, which manages the planes, said in a statement to shareholders. The aircraft are already parked in the foothills of the French Pyrenees, where they will be filleted over the next two years by a specialist company and sold in parts.

It's an inglorious end to the pair of double-deckers just a decade after they entered service, a fraction of the time commercial aircraft typically ply the globe. There's no established second-hand market for the A380, making a sale to a new owner harder.

Two former Singapore Airlines A380s will be broken up for parts.

Two former Singapore Airlines A380s will be broken up for parts. Credit: Bloomberg

Further complicating any transaction was the perceived lack of commitment from Airbus to the aircraft in recent years, said Anselm Gehling, chief executive officer of Dr. Peters.

"Given the size of the investment, some airlines weren't sure about the future plans for the aircraft," Gehling said in an interview. "That's a factor that has complicated negotiations."

Failed talks

The first retired Singapore Airlines Airbus A380 superjumbo arrives at Tarmac Aerosave near Toulouse, France.

The first retired Singapore Airlines Airbus A380 superjumbo arrives at Tarmac Aerosave near Toulouse, France.Credit: Tarmac Aerosave

In the case of British Airways, the airline only wanted to take the used A380s by 2021 because that's when some of its older Boeing 747 are leaving the fleet. That was too far out for Dr. Peters to facilitate a deal, Gehling said.

Advertisement

Talks with Iran Air ended because of political uncertainties, while Hi Fly ultimately failed to produce a convincing business case for the deal structure they had envisioned, he said.

The double-decker jets had an original list price of about $US250 million ($A326 million) at the time of the purchase a decade ago, and the list price today is in excess of $US445 million, making it by far Airbus's most expensive model. The components could generate $US80 million per aircraft in revenue. Fund holders will be asked to approve the move at a meeting on June 28.

Parts shortage

The bulk of proceeds from the break-up will come from aircraft parts and the engines. There's generally a scarcity of second-hand components for the A380, making pieces like landing gear, flaps and engines more valuable, Gehling said.

Some airlines have already inquired about components, and the company tasked with breaking up the aircraft will sell the pieces through its global network of spare parts, the CEO said.

Singapore Airlines returned the A380s after their 10-year leases expired and Dr. Peters has been seeking new operators since mid-2017. Superjumbo sales have weakened as carriers opt for twin-engine wide-bodies that burn less fuel. Were they resold to another operator, the planes might be expected to fly for at least another decade.

See also: Airline review: Singapore Airlines' new A380 business class

Dr. Peters said in November that it would store A380s at Tarbes in the Pyrenees as it sought new operators. A further two aircraft are due to return from Singapore Air in coming weeks. The firm is in negotiations with an existing A380 flag carrier in Asia for the aircraft, Gehling said, declining to identify the party.

The fifth plane coming back from the Asian carrier, owned by leasing firm Doric, may still go to Hi Fly.

Airbus declined to comment on the recommendation from Dr. Peters that the first two jets be scrapped, reiterating that it remains "confident in the secondary market for the A380 and the potential to extend the operator base."

Emirates order

The manufacturer won a lifeline for the superjumbo with a January order for 20 new planes from Emirates, the only airline to have made the model a central plank of its fleet. The deal will extend production through 2029 should the Dubai airline also take up options for 16 more aircraft, by which time Airbus is betting that overcrowded airports might spur a sales revival.

See also: Emirates to add new class to Airbus A380s

It was reported last week that British Airways parent IAG had suspended negotiations to buy a batch of new A380s, an order that would have given the program an additional shot in the arm.

The A380 has won a total of 331 orders, with 226 planes delivered as of April 30, according to the Airbus website. While that suggests a backlog of 105 aircraft, some of those commitments date from many years ago and may never be delivered.

"When the A380 launched a decade ago there was a real hype surrounding the aircraft, and to this day I have yet to meet a passenger who would say it's a bad aircraft," Gehling said. "Maybe things will turn around for the second-hand market in a few years."

Bloomberg

See also: The A350-900ULR: Why Airbus will only build seven of the world's longest-range airliner

See also: Not dead yet: The Boeing 747 will survive, but not as you know it

Sign up for the Traveller newsletter

The latest travel news, tips and inspiration delivered to your inbox. Sign up now.

Most viewed on Traveller

Loading