All around the world we are seeing airlines suspend flights and ground their fleets. Some of the first aircraft to be grounded were Airbus A380s. This was the case for airlines like Lufthansa, Korean Air, and most recently, Air France. With other airlines, we’ve seen announcements of early retirements for their older aircraft. This includes KLM’s 747 fleet and Singapore Airlines’ 777-200s. Some airlines had plans to retire the A380 in the next few years. So the big question for the A380s is if it will return to the skies when this is all over…
No demand for flights, no need for the A380
German flag carrier Lufthansa made the first move earlier this month. In fact, it decided to ground its entire fleet of 14 A380s until at least the end of May. This was due to a drop in passenger traffic and travel demand.
However, as the coronavirus outbreak officially became a pandemic, we saw countries all around the world impose travel bans and restrictions on travelers wishing to enter their borders. This, combined with the important message of social distancing and self-isolation, has effectively shut down the majority of operations for airlines around the world.
While some airlines are still operating long-haul routes (Qatar and Emirates come to mind), others have completely stopped – or have scaled down to mostly operating repatriation flights. Even Qatar and Emirates are having to deal with lower demand and ground parts of their fleet. Emirates, in particular, is grounding over 20 of their A380s.
Retirements already near
Air France is a prime example of an airline that may be expediting the retirement of its A380s. According to CNN Travel, in 2018, the French carrier was one of the first airlines to announce plans to cut its A380 fleet. In fact, just a few months ago we saw the airline retire the first of its superjumbos.
For Air France, the combination of a number of factors could spell an early end to the A380s. Firstly, there is little to no demand for the high-capacity jets. Combine this with their higher maintenance costs, and the fact that it is taking a large number of Airbus A350s over the next five years, and we’re not sure if the A380 will fly again for the airline.
A different story for Emirates
With Emirates operating the largest fleet of A380s in the world, it’s unlikely that the coronavirus will kill the A380s that fly in and out of Dubai International Airport. Emirates’ fleet of 115 is supposed to be still growing, with eight of the aircraft still on order.
Even though reports suggest that the airline is delaying the delivery of these additional eight, this crisis won’t last forever. Emirates will, eventually, be able to return to doing what it does best: connecting passengers from all corners of the world through its Dubai hub.
Via CNN Travel, Valerie Bershova, valuations analyst at Ascend by Cirium, estimates that the market value of an A380 now ranges between US$77 million for a 2005-build “half-life” aircraft and US$276 million for a new 2019-build “full-life” condition aircraft. Bershova also predicts that in 10 years, spare parts value of an A380 could be as little as US$35 million.
Could the plummeting value and expedited retirement of the A380 equate to a buying-opportunity for Emirates? Having more in its fleet, primarily to be used as spare parts, could possibly extend the service life of the aircraft type.
Ultimately, whether or not the coronavirus kills the A380 will depend on the airline and, more importantly, how long this pandemic will have a stranglehold on the global economy and our daily lives. Certainly, as we are on the edge of a global recession, it is more likely that the A380 will be a casualty in some parts of the world.
Do you agree with this analysis? Why or why not? Let us know in the comments!