What’s a used A380 superjumbo worth? Airbus may find out

Toulouse: For sale: One very, very large used passenger jet. Price negotiable.

Airbus Group SE may find out that price when Singapore Airlines Ltd. decides whether to return the world’s first superjumbo to its owner in 2017 following the expiration of a 10-year lease.

Should the Asian carrier send the plane back to German investor Dr. Peters Gruppe, which holds the title, or negotiate a drastically reduced rate to keep it, the model’s residual value will be established at a lower level than Airbus would wish, said Bertrand Grabowski, head of aviation at DVB Bank in London.

“It’s going to be a test,” Grabowski said Monday at a conference in Prague. “You have a recipe for a correction in terms of lease-pricing for the A380.”

Low-cost role

Airbus, which is struggling to sell new A380s, sees a second-hand market developing as airlines led by Singapore and Dubai-based Emirates, the biggest operator, come to the end of initial lease terms. Planes retired by premium carriers may find a new life plying six- to eight-hour routes for low-cost Asian airlines, Airbus predicts.

“Airbus is very actively involved with investors out there today” on re-marketing of A380 aircraft, said Mark Pearman- Wright, head of corporate and investor marketing at Airbus, in a presentation on Tuesday on widebody aircraft at the conference in Prague. It was sponsored by ISTAT, a aircraft traders’ group. “No doubt Airbus has to support the secondary market.”

The cost of refitting the A380 after a decade in service is also unknown, making it difficult for financiers to judge the value of supporting secondhand transactions, Grabowski said. Singapore Airlines and Emirates generally bought their A380s directly before offloading them to investors via so-called sale- leasebacks, so that the residual value rests with the new owner.

Lease decision

“Our first five A380s are on lease and we have options to extend,” Singapore Air spokesman Nicholas Ionides said on Tuesday in an e-mailed response to questions. “We have yet to make a decision on whether to extend the leases.”

The A380 is also struggling to secure 25 new orders that sales chief John Leahy said at the 2015 Paris Air Show should be announced this year. Failing to deliver those deals could have a detrimental effect on pricing, according to Grabowski, who spoke at the ISTAT Europe aircraft traders conference.

“That would also be a test of where the program is going,” he said.

BI AIRM for commercial aircraft manufacturers’ dashboard BI AIRL EU European airline dashboard BI AIRMG INDD Monthly orders for new aircraft, parked fleet statistics. Bloomberg