SIA not re­new­ing lease on A380

The Myanmar Times - - International Business -

EURO­PEAN plane­maker Air­bus suf­fered a fresh blow to its A380 su­per­jumbo pro­gram af­ter Sin­ga­pore Air­lines (SIA) said it would not re­new the lease on its old­est A380.

SIA, whose air­craft choices are closely watched by the global avi­a­tion in­dus­try, be­came the launch cus­tomer of the A380 in 2007 and now has 19 of the world’s largest com­mer­cial air­craft in its fleet, with five more await­ing de­liv­ery.

“Our first five A380s are on 10year 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 [A380s] 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 as there had been in­di­ca­tions from SIA that they would not re­new the leases.

“This is un­der­stand­able given that 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,” 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 A380 cost more to main­tain com­pared with twin-en­gine air­craft “so it doesn’t re­ally make much sense to op­er­ate these gi­gan­tic tools”, Mr Shukor added.

Asked if it was a set­back for the A380, Mr Shukor said, “I don’t think it’s a pos­i­tive sign for the A380 given that SIA was the launch cus­tomer for this air­craft.”

He said de­mand for the A380 world­wide has strug­gled re­cently “not be­cause it’s not a good air­craft but be­cause Air­bus has pro­duced an­other air­craft – the A350 – which has far bet­ter econ­omy and resid­ual value than the A380”.

Air­bus in July an­nounced it was slash­ing out­put of the A380 to one a month from 2018 be­cause of weak de­mand, but ex­pressed hope that the cut­backs would last for just a year or two.

In France, Air­bus down­played the SIA an­nounce­ment, point­ing to the five more A380s still on or­der and say­ing the one be­ing re­turned would find a home else­where.

“It’s an op­por­tu­nity for an­other com­pany to op­er­ate an A380 at cheaper cost,” a spokesper­son told AFP.

The A380 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 has a list price US$432.6 mil­lion. – of

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