MAS to get rid of its A380s

Airbus Group Chief Financial Officer Harald Wilhelm says he “cannot see” the alleged decision by Malaysia Airlines (MAS) to sell or lease out its entire Airbus A380 fleet “impacting our campaigns” for more orders.

MAS is understood to have decided to phase out its six Airbus A380s over time in an effort to reduce its long-haul capacity and to focus on a more regional network, a significant part of its restructuring. According to one senior airline source, MAS and Turkish Airlines have been talking about a lease deal for two Malaysia aircraft as Turkish expands its long-haul capacity. MAS said on Friday that it is "still working to finalize the business plan" and that "exploring fleet options to enhance viability of long-haul sectors is one area being looked into."

Ex-Aer Lingus CEO Christoph Mueller took over as MAS’s new Managing Director and CEO on April 30, replacing Ahmad Jauhari Yahya.

Wilhelm said on Thursday that the move was “a fleet-planning decision by a customer.” Airbus separately said that the aircraft “has enjoyed great success with MAS and is extremely popular with the airline’s customers.” IAG CEO Willie Walsh separately said on the same day that in principle he would be open to considering second-hand A380s, but that decision is still a few years out, in his opinion.

But contrary to Wilhelm’s remarks, the availability of six very young second-hand A380s on the market must be highly unwelcome news for Airbus as it struggles to find new customers for the aircraft. Airbus is already dealing with remarketing six A380s coming from the canceled Skymark order, some of which have already been built.

It is also facing the very real prospect that Turkish Airlines may opt to at least partly go for used aircraft, rather than the fleet of all-new A380s it has also been considering. Pricing power, too, will be affected, in campaigns in which the MAS aircraft arise as an option.

According to Wilhelm, A380 production of 30 aircraft is sold out in 2015-16, but there are open slots in 2017. “We still have time to add to [the order book],” he said.

Airbus plans to break even in terms of production costs for the first time in 2015, but for that target to be met, the manufacturer cannot reduce the annual rate too-far below 30 units.

Once confirmed, MAS will be the first airline to decide to retire an operational A380 fleet. In addition to Skymark, other orders have been canceled, including those by Hong Kong Airlines and Kingfisher. Air France and Lufthansa have reduced the number of units they will take. On the other hand, Emirates continues to expand its A380 fleet and now has a total of 140 aircraft on firm order.

AirNation Net

Photo:Glenn Palmer