Airbus' A380s could be broken up for parts

PARIS • Airbus' A380 superjumbo faces the ignominy of being broken up for spare parts if second-hand operators for the oldest jets cannot be found in coming months.

The double-decker jets could be "parted out" to recover engines and other spares worth at least US$100 million (S$138 million) per plane, according to German fund manager Dr Peters, which owns four A380s due to be returned between October and June by Singapore Airlines following the expiry of 10-year lease deals.

At the same time, talks are continuing with six potential operators of the jets, including an Asian low-cost airline that would fly them in a 700-seat single-class layout, Dr Peters' chief executive officer Anselm Gehling said in an interview.

Prospective users also include carriers in the US, which has so far eschewed the model, and Europe, where British Airways owner IAG is continuing to evaluate deploying used A380s at airlines within the group, he said.

"Our main goal is to find new lessees," Mr Gehling said. "We're also willing to sell the aircraft as some airlines told us they'd prefer that."

Airbus struck an order blank on selling new A380s last year and has offered to revamp the model with fuel-saving winglets and 80 extra seats on top of the standard 550 to improve its appeal. Rival Boeing last month dropped the very large aircraft category from its 20-year forecast, saying it sees no long-term future for either the Airbus plane or its own 747.

LEASE OR SELL

Our main goal is to find new lessees. We're also willing to sell the aircraft as some airlines told us they'd prefer that.

MR ANSELM GEHLING, chief executive officer of German fund manager Dr Peters.

"Parting out" can be a lucrative option even for relatively young planes, with components - especially turbine elements - carefully managed in the aftermarket. Original lease terms on the A380s require that they be returned with engines, landing gear and auxiliary power units effectively as new.

A spokesman said Airbus remains confident in the market for second-hand A380s, adding that used planes will present a growth opportunity for new entrants and operators with different business models, as well as for major carriers with the jet already in their fleet, or are considering adding it.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 05, 2017, with the headline 'Airbus' A380s could be broken up for parts'. Print Edition | Subscribe