SIA won't extend lease on A380 jet

The Singapore Airlines A380 jet. SIA said it will not extend the lease on its first Airbus A380 superjumbo jet.
The Singapore Airlines A380 jet. SIA said it will not extend the lease on its first Airbus A380 superjumbo jet. PHOTO: SINGAPORE AIRLINES

Singapore Airlines (SIA) said it will not extend the lease on its first Airbus A380 superjumbo jet - a move set to test second-hand demand for the world's biggest commercial aircraft.

"Our first five A380s are on a 10-year lease, with options to extend. The first will expire in October next year, and we have decided not to extend it," an SIA spokesman said. "For the other four, decisions will be made later."

SIA, which at present has 19 A380s in its fleet, said the decision not to extend the lease was the result of a regular review of its fleet requirements. "We have five other A380s on firm order with Airbus and deliveries will start in the second half of 2017," the spokesman said.

Mr Shukor Yusof, an analyst with Malaysia-based aviation consultancy Endau Analytics, said: "While the A380 has been a very popular aircraft with passengers, my feeling is that it hasn't quite provided the economy and the profits that the airline had been expecting. I suspect that the other four leases will also not be renewed or extended for the same reason."

Airbus has said that the demand for A380s has fallen far short of its original projections, forcing the company to drastically cut output earlier this year.

While Emirates has ordered more than 140 of the planes and has about 80 in service, only two other operators - SIA and Australia's Qantas Airways - have bought 20 aircraft or more.

The aircraft faced a further setback when Qantas said last month that it is deferring deliveries of eight A380s it has on order.

Malaysia Airlines said last week that it is in talks with a number of countries about offloading its six A380s because the giant double-deckers are no longer needed in the fleet.

Airbus has said it sees a second-hand market for the plane as the major carriers, including Emirates, come to the end of their initial lease terms, potentially offering low-cost Asian airlines an option of flying more people on six- to eight-hour routes.

In May, aircraft-leasing firm Doric said the company and fellow owner, Dr Peters Fund of Germany, are preparing for a possible return and needed refurbishment of the five A380s from SIA, starting next year.

REUTERS, AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 15, 2016, with the headline 'SIA won't extend lease on A380 jet'. Print Edition | Subscribe