Air France and Lufthansa are retiring their Airbus A380s. Singapore Airlines is re-evaluating its fleet. Emirates is de-commissioning the first A380s it received 12 years ago.
The A380 was on the way out before the pandemic. Emirates had soured on a plan to buy more, and the plane’s manufacturer decided to end production. The first A380 delivered, to Singapore Airlines on October 15, 2007, has been sent to the scrapyard rather than finding new life.
By Kentaro Iemoto from Tokyo, Japan, CC BY-SA 2.0 via Wikimedia Commons
Now that we’re in the midst of a global pandemic, with demand for air travel down markedly and expecting a future that has less passengers for several years, the value of a used A380 may be literally zero.
Because of its size and fuel burn it’s expensive to operate unless it’s full, and full all the time. The A380 was envisioned as a plane that collects passengers at one congested hub and carries them to another. Slot controlled airports like London Heathrow and Tokyo Narita were where the plane was supposed to thrive. Emirates operated about half the planes ever delivered, flying people through its mega-hub at Dubai. However technological advances drove down cost of moving people non-stop and bypassing the hubs.
- According to The Economist, the oldest planes, now 12-13 years old, are normally expected to have depreciated 50% and so.
- The a list price of $445 million, and airlines usually paying about half of list you’d expect a new plane to price around $222.5 million, and to depreciate to $111.25 million after twelve years.
- Prior to Covid-19 A380s were being appraised “between $75m and $100m.”
- Not only aren’t there passengers and buyers now, and less of a purpose for the plane than when initially conceived, but there really aren’t congested airports to solve for either.
- One consultant pegs the value as being half what it was six months ago. That matches what one fund owning planes leased to Emirates has written the planes down to.
- However the market price for A380-owning funds imply “the residual values of the planes once the leases expire are between $10m and $15m”
- And since each of the plane’s four engines might worth $6 million in good repair, and that the landing gear probably has value, an A380 airframe must be worth $0 – indeed the airframe itself may have negative value on a standalone basis.
Air France never had a large enough fleet of A380s to achieve decent economics with the plane, even if they had the demand to fill it. It makes sense to retire the fleet, since they weren’t going to grow it. The lack of a secondary market, though, would seemingly help to ensure that Emirates continues to fly it.