SIA will not renew lease on first A380

Monday, 19 September 2016 00:01 - - {{hitsCtrl.values.hits}}

AFP: European plane maker Airbus last week 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 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 (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 by the announcement 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”, he added. Asked if it was a setback for the A380, 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 spokesman 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 – which has four engines – has a list price of $ 432.6 million.

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.