Dis­man­tling plan for air­craft

Sunday Tribune - - VENTURE -

A DECADE AF­TER DE­BUT, FIRST A380 JUM­BOS TO BE BRO­KEN UP. SIN­GA­PORE AIR­LINE OPTS NOT TO EX­TEND LEASE, BUT EMI­RATES KEEPS FAITH

AGERMAN in­vest­ment com­pany said it would strip two un­wanted Air­bus A380 su­per­jumbo pas­sen­ger jets for parts af­ter fail­ing to find an air­line will­ing to keep them fly­ing fol­low­ing a de­ci­sion by Sin­ga­pore Air­lines not to keep them in ser­vice.

The de­ci­sion by Dort­mund-based Dr Peters Group deals a fresh blow to the plane maker’s ef­forts to main­tain mar­ket in­ter­est in the dou­ble-decker, barely 10 years af­ter it went into ser­vice hailed by heads of state as a sym­bol of Euro­pean am­bi­tion.

“Psy­cho­log­i­cally, it is not good for Air­bus, but this is a very large air­craft with a very small sec­ond-hand mar­ket,” said Uk-based aero­space an­a­lyst Howard Wheel­don.

De­spite strong re­views for its quiet and spa­cious cabin, de­mand for the 544-seater has fallen as many air­lines drop the in­dus­try’s largest four-en­gined air­craft in favour of smaller twin-en­gined ones that are more ef­fi­cient, and eas­ier to fill.

“It’s too big. There was a bat­tle for air­line fash­ions and it lost out,” Wheel­don said.

Air­bus says the iconic jet will even­tu­ally prove it­self as travel de­mand sat­u­rates air­port ca­pac­ity at ma­jor cities.

“We can’t com­ment on the de­ci­sion by Dr Peters, which is the owner of the air­craft,” an Air­bus spokesman said.

“We re­main con­fi­dent in the sec­ondary mar­ket for the A380 and the po­ten­tial to ex­tend the op­er­a­tor base.”

Sin­ga­pore Air­lines launched A380 ser­vices amid fan­fare in De­cem­ber 2007, but re­turned the first two air­craft to their Ger­man fi­nanciers when leases ex­pired about 10 years later.

The two dis­carded air­craft were re­painted and flown to Tarbes in the French Pyre­nees, to be stored. Since then their fate has been un­cer­tain as their owner looked for other tak­ers.

“Af­ter ex­ten­sive as well as in­ten­sive ne­go­ti­a­tions with var­i­ous air­lines such as Bri­tish Air­ways, Hi­fly and Iranair, Dr Peters Group has de­cided to sell the air­craft com­po­nents and will rec­om­mend this ap­proach to its in­vestors,” the com­pany said.

Air­bus has been work­ing for months to try to stim­u­late a sec­ond-hand mar­ket for the A380 to en­cour­age new air­lines to take the risk of in­vest­ing in the plane, know­ing the as­set would be worth the right amount when they de­cide to sell it.

When it was launched, the A380 boasted highly cus­tomised in­te­ri­ors to help air­lines pro­mote a luxury feel, but the cost of re­plac­ing such be­spoke fit­tings is now seen as a hand­i­cap.

“The prob­lem is the cost of re­con­fig­u­ra­tion. It is $40 mil­lion (R507m) or more per plane,” a se­nior in­dus­try source said.

The planes would not be scrapped en­tirely, but their huge frames would be combed for valu­able com­po­nents such as land­ing gears and elec­tron­ics, a Dr Peters of­fi­cial said.

Their en­gines have al­ready been re­moved and leased back to man­u­fac­turer Rolls-royce for use as spares. Us-based VAS Aero Ser­vices will be re­spon­si­ble for ex­tract­ing and sell­ing parts.

Dr Peters said the deal would yield a pos­i­tive re­turn for in­vestors in funds used to fi­nance the jets. It op­er­ates a num­ber of bou­tique funds tar­geted at wealthy in­di­vid­u­als and has two more A380s in Sin­ga­pore that could face the same fate.

While dis­man­tling the first two pas­sen­ger-car­ry­ing A380s will em­bar­rass Air­bus and dis­may the plane’s 3 800 work­ers, later ex­am­ples of the flag­ship jet may not be as vul­ner­a­ble.

Early copies of a new plane tend to be less ef­fi­cient and Sin­ga­pore Air­lines re­cently or­dered some new A380s. How­ever, over­all de­mand is thin­ner than Air­bus ex­pected, forc­ing it to slow pro­duc­tion to a trickle while look­ing for more busi­ness.

Still, Emi­rates, the largest A380 cus­tomer, is keep­ing faith with the jet which brings mil­lions of pas­sen­gers a year through its Dubai hub and is as­so­ci­ated with the air­line’s global brand.

Throw­ing the loss-mak­ing pro­gramme a life­line for a decade, Emi­rates re­cently or­dered up to 36 more A380s and set out plans on Tues­day to in­stall 56 pre­mium econ­omy seats. – Reuters/african News Agency (ANA)

FILE PIC­TURE: SIBU­SISO NDLOVU

Bri­tish Air­ways’ largest and most mod­ern air­craft, the Air­bus A380, lands at King Shaka In­ter­na­tional Air­port in 2014.

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