Airbus Future Headache
 

I don't know if this has already been posted but it's sure interesting reading.


Airbus Future Headache: Emirate's Dumped/Retired A380s Posted on May 6, 2014

StrategicAero Research

Emirates A380 Retirements Will Force Asset Value Plunge

Second Hand A380 Market Non-Existent

Emirates 777X Impact On Gas-Guzzling A380

Continued A380 Wing Angst

For all the gimmickry that Airbus aligns with the A380, the impending countdown to the arrival of the 777X at Emirates delivers some unwelcome news. Putting aside the commercial superiority of the 777X family, the Emirates hold on the A380 order book poses questions as to how the second hand market will cope with near-zero demand for used A380s. Emirates will be handing back two-dozen A380s to Doric/Amedeo as well as expediting the retirement of the overweight and several-times-over-rewired A380s as it inducts more of the type around the time the 777-9X also enters their fleet in 2020. Amedeo’s dubious order for 20 A380s is already in jeopardy because Emirates doesn’t want them and Amedeo has failed to place even a solitary unit elsewhere.
Once these ageing A380s come out of Emirates fleet where will they go? Who will buy them? Will Airbus further underwrite a depreciating asset and thereby kill off interest in new-build A380s ?And then there is the leasing market in general after ILFC ditched the A380 order, except the Amedeo order, no leasing firm has ponied up to this toxic airplane. Let's cut to the chase the possibility of the A380 getting new engines is nil. Such a move would kill any interest in the loss-making jet and would also compound Airbus' financial capability to put a lid on the continued cost escalation to this $27bn-plus disaster. If Airbus does make the stupid move to give the A380 new engines, who exactly will stump up the cost?

Pratt & Whitney has no new large engine to offer. Its GTF engines are proving troublesome, GE will not be partnering with Pratt to provide an updated GP7200 engine and Rolls-Royce has eyes on new engines at the start of the next decade, which by all accounts would be too late for the A380. Emirates savvy in commanding the near 50% of the entire A380 backlog speaks to its desire to access Europe (or threaten to dangle A350 and A380 orders) as well as making the most of its frequency-based model to use Dubai as a global transit nexus that could frankly be served with any large, long haul airplane the A380 has no exclusivity here.

Current A380 operators and customers have found that filling the A380 is not easy and even on the rare flights that they have filled, they are not profitable. Malaysia Airlines, Thai Airways, British Airways, Air France, Qantas,
Lufthansa, Korean Air, Singapore Airlines, China Southern Airlines all have succumbed to John Leahy Kool-Aid that it takes an A380 to compete with an A380 nonsense, only to discover that they have slowed, not sped up A380 deliveries and in the case of Virgin Atlantic, have continually deferred it until they can fathom what to do with an obsolete airplane post-2018.Airbus has spent over $1bn trying to fix the wing cracks already. Emirates is feeling the strain here as the biggest victim to this design flaw that is compounded now by the metal fatigue in the wing spars this will impact operational life, cycles and values. Emirates was shrewd to conduct sale-leaseback deals to cash in on the then high value exclusivity of the A380 back in 2008 because so few examples were in service at that time. Fast forward to today, Airbus is struggling to even give them away because airlines are wising up to the fact that the A380 has old technology engines, it not a money spinner even if you fill it (yield is king, not capacity) and that the limitation of use restricts deployment. While the 777-9X will deliver a mortal wound to the A380, it is actually Airbus' biggest customer (Emirates) that is shaping up to be its biggest nightmare with its biggest flop of an airplane and there is nothing Airbus can do about it. That no one is even discussing this inevitability points to an abject understanding of how fatally flawed the entire A380 program and process was when it was launched back in 2000. Emirates will be dumping A380s as Airbus railroads the program into yet another brick wall.

Ben Rich, M.C.C.
Latitudes Unlimited
International Maritime & Aviation Consulting
Regards,

Is that the same Captain Ben Rich who worked at Emirates?


TP

Yes, that would be the same Capt Rich who was briefly at Emirates on the Boeing,(always trying to swap on to DFW flights). I believe Strategic Aero Research is a personal blog, so just an opinion from this so called "aviation consultant".

He is missing just a few details,not worth paying attention to. And what difference does it make to any pilot at EK? I really don't give a,,,,,,,, about yields , just move the Airplane from A to B. (Our job)

Airbus Future Headache
 

............

Whether ot not the article is biased, there are a few facts here that are worrisome:

- Emirates will start retiring the first A380's in 2020 (TC has repeatedly stated that he doesn't want to lease them longer than 12 years each)
- Amedeo is a company specifically founded for the purpose of leasing A380's to EK
- There is zero second hand market for A380's

There is a good chance that Amedeo will go bankrupt if they can't repurpose EK's leasing returns. And there's good reason for that not happening:

- Every other A380 operator has either delayed or cancelled their A380 orders
- EK is single handedly keeping A380 production alive. Without the latest order of 50 airplanes Airbus would've probably shut production down in a few years

Amedeos bankruptcy would certainly be a problem for EK.

We, the Knoteetingham pilots are all prostituing ourselves to the sandpit for the money. It does not matter if it is Airbus or Boeing that you fly, it is the route structure and the take home pay that really matters.

Who cares about the longterm goal of the companies aircraft orders and what will happen to the old airframes after thier service. If the Middle Eastern clients stop paying then the expat pilots will move to the next town or country and sell themselves there instead.

JS

Jack, you sound like Yoda "It does not matter if it is Airbus or Boeing that you fly"

If Amedeo goes bust, what's the bet EK buys it for a buck and gets free 380s?

Are we assuming that Amedeo goes bust after taking delivery of 20 frames they are unable to place with any customer, presumably parking them in a convenient desert having written the cheque to Airbus? Whilst that assumption is exceedingly preposterous, let's for a moment go with it.

EK could probably pick up such a company for a single buck, provided it then also took ownership of the debt. That's not what I would call 'getting for free', though.

But the basic assumption is still absurd as well as, perhaps, showing why it's frequently a daft idea having pilots running airlines.