A380 suffers new blow, future remains bleak

Young airplanes

The five A380s that will be returned are young—2010-2014 builds. It was surprising that leases expire as early as next year. Usually, wide-body airplanes are on 12 year leases, or 10 at the shortest.

Singapore Airlines’ A380s were 10-12 years old when the carrier began returning aircraft off lease. These were the earliest models and among the first A380s delivered.

Only two of the first four aircraft to be returned found a new home, with wet lease operator HiFly. Two others are being parted out.

The young Air France airplanes will certainly have a problem finding a new home, especially given the old, inferior interiors. Reconfiguring an A380 is easily a $30m project. (HiFly stuck with the Singapore interiors, avoiding this cost.)

Created in a different era

The underlying issue is that the A380 was created in a different era.

It was conceived in the late 1990s. The program was launched in 2000. During this period, there was no Boeing 777-300ER (entry into service in 2004) or Boeing 787 (program launch December 2003). The Airbus A330-200/300 were still medium range airplanes, not the long-haulers they are today. The A350 wasn’t even a gleam in Airbus’ eye.

Nor were the Airbus A321neo/LR/XLR and Boeing 737-8. While hardly in the same class as the A380, these longer-range, single-aisle airplanes, combined with the long-range twin-aisle aircraft, accelerated the market fragmentation that underpinned Boeing’s product strategy begun by the 777-200ER, which in turn built upon the 767-200ER/300ER fragmentation.

Airbus’s rationale for the A380 was that airport congestion would inevitably demand an airplane of this size. It’s stubbornly stuck to this reasoning despite the proliferation of trans-ocean-capable twin- and single-aisle aircraft that make secondary market service viable.

Aging aircraft

Another problem for the A380: its technology is getting old.

The A380 Plus winglet and minor aerodynamic enhancements revealed at the Farnborough Air Show two years ago landed with a thud.

The engines are 1990s design, eclipsed by the technology in the Rolls-Royce Trent 1000 and GE Aviation GEnx for the 787.

There have been some minor engine PIPs (performance improvement packages) for the A380, but nothing of fuel-sipping consequence.

The A380 needs new engines. But the lack of a market demand means the engine makers, RR and Engine Alliance, have no interest in providing them.

And the market is uninterested unless there are new engines.

In reality, there is really no market interest in the A380 in any form. The day of the Very Large Airplane appears to be over. Even the Boeing 777-9, 777-8 and Airbus A350-1000 aren’t selling.

Dropping the A380

So why doesn’t Airbus recognize reality and drop the airplane?

The corporate pride would take a huge hit, but this really shouldn’t matter.

The overhead of all the facilities dedicated to the A380 would have to be repurposed. Until Airbus launches a new airplane program, this is problematic.

A key reason seems to be the launch aid associated with the program. LNC is told that if Airbus drops the program, the governments are on the hook for the debt. (This was one of the issues at the heart of the Boeing-US trade complaint with the World Trade Organization.)

So Airbus committed to Emirates Airlines, which ordered half the A380s sold, to keep the program alive for 10 years in exchange for an order a year ago. Production limps along at 6/yr. Airbus is working to break even at this rate.

 

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