Parts sell-off weighed for old Air­bus A380s

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - RICHARD WEISS

Sev­eral of Air­bus’ A380 su­per­jumbo jets face the ig­nominy of be­ing bro­ken up for spare parts if sec­ond-hand op­er­a­tors for the old­est planes can’t be found in the com­ing months.

The dou­ble-deck­ers could be “parted out” to re­cover en­gines and other spare parts worth at least $100 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 af­ter the ex­pi­ra­tion 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, said Anselm Gehling, chief ex­ec­u­tive of­fi­cer of Dr. Pe­ters. Prospec­tive users also in­clude car­ri­ers in the U.S., which has so far es­chewed the model, and Europe, where Bri­tish Air­ways owner In­ter­na­tional Air­lines Group is con­tin­u­ing to eval­u­ate de­ploy­ing used A380s at air­lines within the group, he said.

“Our main goal is to find new lessees,” Gehling said. “Still, there are hardly any spare parts around when it comes to en­gines for A380s, so it may make sense to do a part-out for the first one or two air­craft re­turn­ing.”

Air­bus strug­gled to sell new A380s last year and has of­fered to re­vamp the model with fu­el­sav­ing winglets and 80 ex­tra seats, on top of the stan­dard 550, to im­prove its ap­peal. 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.

An Air­bus spokesman said that the Toulouse, France­based man­u­fac­turer re­mains con­fi­dent in the mar­ket for sec­ond-hand A380s.

While the re­mar­ket­ing of the A380s due off lease is be­ing done in con­junc­tion with Air­bus and Doric, which owns an­other Sin­ga­pore Air­lines plane, Dr. Pe­ters has also en­gaged Spar­fell & Part­ners to seek po­ten­tial VIP cus­tomers for its four air­craft, with the Swiss re-seller ad­ver­tis­ing them on its web­site as Air Force Onestyle “head of state” trans­ports.

For in­vestors, part­ing out A380s — which had an orig­i­nal list price of about $250 mil­lion when they were bought, be­fore dis­counts — should of­fer a de­cent re­turn, Gehling said. Af­ter 10 years, the planes typ­i­cally would have earned back 65 per­cent to 70 per­cent of their out­lay and would need $55 mil­lion to $60 mil­lion more now to break even. An A380 could yield up to $120 mil­lion in com­po­nents.

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