Used A380 Superjumbos Threaten Airbus’s Drive for Sales

Airbus Group SE is set to face a fresh challenge in reviving sales of its flagship A380 superjumbo as used aircraft hit the market.

Malaysia Airlines Bhd. said June 2 it would like to dispose of two of its six A380s, deliveries of which began three years ago, while two built for failed carrier Skymark Airlines Inc. are seeking new owners. Thai Airways International PCL could also attempt to sell some of its six planes, all of them less than three years old, people familiar with the situation said.

Airbus hasn’t won a new airline customer for the world’s biggest commercial jet in almost three years and needs to sell close to 30 a year just to break even. In addition to aircraft deemed excess to requirements, some of the oldest A380s are poised come off lease, with five flown by Singapore Airlines Ltd., the model’s first operator, being offered to other carriers by asset-management firms.

The A380, marketed as seating about 540 people in three classes, is generally too large for all but the densest routes, or ones where carriers pack passengers onto fewer flights or must do so because of a lack of airport slots.

Airbus Chief Operating Officer John Leahy said second-hand A380s will be attractive to customers who would otherwise opt for a smaller and cheaper plane like the Boeing Co. 777 because they’ll be available at similar rates.

Different Competitors

“Used A380s do not compete with new A380s,” Leahy said in an interview.

Only Emirates, which has ordered 140 superjumbos to feed inter-continental traffic through its hub in Dubai, has made the world’s largest commercial airliner a central part of its fleet, rather than a minor element used to serve high-profile destinations.

Used A380s are likely to be available at a fraction of the plane’s $428 million list price, yet without a spate of new sales Airbus will face empty production slots from 2018.

Malaysia Air is looking to shrink its fleet after Chief Executive Officer Christoph Mueller said June 1 the carrier is “technically bankrupt.” Skymark’s planes, which had been due for delivery last year, need a new operator after the Japanese discount operator filed for bankruptcy in January.

Thai is studying the role of the A380 in its fleet, according to two people, who asked not to be identified because nothing has been made public. Executives couldn’t be reached for comment.

Returning Planes

The Singapore aircraft are being marketed by Doric and German asset manager Dr. Peters Group, which oversee the planes for investors that acquired them from the carrier in sale-leaseback deals. Doric CEO Bernd Reber said there are “several candidates for the aircraft,” attracted both by competitive rates and shorter lease terms on offer.

Singapore Air, which took the world’s first A380 in 2007, has its early superjumbos on 10-year leases.

Four, due to be returned between October 2017 and June 2018, are managed by Dr. Peters, where CEO Anselm Gehling said the company has begun to “brainstorm” future applications for them, including a role with Asian low-cost carriers. The sole jet provided by Doric can be sent back from March 2018, Reber said. Singapore Air has an option to extend the leases to 12 years and said it hasn’t yet decided how long to keep the jets.

Operators of second-hand A380s will benefit from the fact that airlines such as Singapore have generally used them on long routes, accruing a relatively low number of flight cycles, said Robert Mann, president of RW Mann & Co. in Port Washington, New York, an ex-American Airlines fleet director.

Still, the relatively high level of customization that A380s typically undergo — as befits their status as airline flagships — may make placing used aircraft more complicated.

In addition to older planes, 20 new A380s ordered by Amedeo in February, 2014, are still without an end user.

Amedeo could also be in the market for off-lease A380s, founder Mark Lapidus said in an e-mailed response to questions. Dr. Peters’s Gehling said his company is working with both Amedeo and Doric to combine their mutual expertise with the model and potentially “bundle” their re-marketing efforts. Airbus has also created a team to assist with that, he said.

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Photo:Duncan Stewart - LAX