Singapore Airlines will not renew lease on its oldest A-380

Singapore Airlines said it would not be renewing its lease on its oldest A-380 aircraft when it expires in October 2017.
Singapore Airlines said it would not be renewing its lease on its oldest A-380 aircraft when it expires in October 2017. PHOTO: AIRBUS

SINGAPORE (AFP) - European plane maker Airbus on Wednesday (Sept 14) suffered a fresh blow to its A-380 superjumbo programme after Singapore Airlines (SIA) said it would not renew the lease on its oldest A-380.

SIA, whose aircraft choices are closely watched by the global aviation industry, became the launch customer of the A-380 in 2007 and now has 19 of the world's largest commercial aircraft in its fleet, with five more awaiting delivery.

"Our first five A-380s are on 10-year leases, with options to extend. The first expires in October 2017, and we have decided not to extend it," SIA said in a statement.

"This decision was the result of a regular review of our fleet requirements, and decisions will be made on the four others later."

But it added that "we have five more (A-380s) on firm order with Airbus, deliveries of which will start in the second half of 2017."

Shukor Yusof, an analyst with Malaysia-based aviation consultancy Endau Analytics, said he was not surprised by the announcement as there had been indications from SIA that they would not renew the leases.

"This is understandable given that while the A-380 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," he told AFP.

"I suspect that the other four leases will also not be renewed or extended for the same reason." He said that a plane with four engines like the double-decker A-380 cost more to maintain compared with twin-engine aircraft "so it doesn't really make much sense to operate these gigantic tools", he added.

Asked if it was a setback for the A-380, Shukor said: "I don't think it's a positive sign for the A-380 given that SIA was the launch customer for this aircraft."

He said demand for the A-380 worldwide has struggled recently "not because it's not a good aircraft but because Airbus has produced another aircraft - the A-350 - which has far better economy and residual value than the A-380".

Airbus in July announced it was slashing output of the A-380 to one a month from 2018 because of weak demand, but expressed hope that the cutbacks would last for just a year or two.

The A-380 is the world's largest civilian airplane, carrying up to 544 passengers in a four-class configuration or 853 in just a single class.

The jet - which has four engines - has a list price of US$432.6 million (S$590.8 million).

SIA's A-380s are configured for 379 to 471 seats, the carrier's website says.

SIA became the first airline in the world to fly the A-380 commercially in October 2007.

Shukor said the decision not to renew the lease was in line with SIA's policy of wanting to run mostly newer aircraft.

The airline's fleet of 103 aircraft is among the youngest in the industry with an average age of seven years and seven months, the firm's website said.