Fate of the A380??

[Tonitan]

Just had a lively speculative conversation with some tech crew and a lessor executive over coffee today. Although the A380 routes are loss making for SQ,the market uncertainity and negative interest in the secondary market might throw the ball back into SQ's court and work to it's advantage.

Lessors are anxious that due to limited interest in these birds,the only viable option is to entice the present operator to extend their lease. Given the huge investment outlay to retrofit these birds and the limited routes suitable for them has largely depressed their values further to new users.The leasing industry is all abuzz with speculation that Dr Gruppe that holds the title to the initial birds might surprise all with an irresistable offer to SQ to keep these birds in the fleet.

An offer that more than compensates for the lack of efficency and overweigh in these birds, an irresistable rate that requires a much lower breakeven load. There is some small talk that the A350 orders are reduced not only for the ULR but also for 'unforseen' lifespan extension for some birds. Remember SQ has not made any statement regarding their decision on these birds but merely commented that they might be returned to their lessors as they are not viable to operate. Good move by SQ and let the show begin!

[leops1984]

I would be very surprised if the A350 orders are reduced in favor of keeping some A380s, especially the ULR. They have very different missions, and by all accounts the ULR is VERY important to SQ. (I could see some conversions from the -900 to the -1000, though...)

There's one more factor that works in SQ's favor regarding A380 leases. There are another 20 A380s on order by the lessor that don't have any takers. They were supposed to be delivered by 2016, but Amedeo had enough trouble getting lessors interested that they swapped some delivery slots with EK. Delivery for those birds are now scheduled in 2017. I could see SQ taking some of those aircraft as well if the rates are right... and the lessor is certainly motivated!

Longer term it depends if there's an A380neo, which is a different kettle of fish altogether...

[Jumbojet Lover]

...Although the A380 routes are loss making for SQ...

Are they, really? All of them or just some?

[SQ228]

The A380 is shaping up to be judged by history as a good idea at the time that fell flat very quickly. They are just too big to have the flexibility to match demand. If the same number of people wanted to fly at the same time of the day to the same destination 365 days of the year they would be perfect, but that's not a real scenario.

All the predictions were that the number of flights to destinations would be reduced and smaller planes replaced by the A380. At one point MEL ended up with 2 daily A380 and one 777. Present situation? Either 4 daily 777s or 3 daily 777s and an A330. To provide further capacity they add another A330 at peak times. Likewise SYD- heavily constrained by congestion and curfews would be the perfect destination. Reality- a fifth daily flight with only one A380 in use, occasionally two. HKG- 7 daily flights with a wide assortment of craft, some flights leaving within an hour of each other- only one out of seven is an A380.

These planes are too expensive to buy and then sit them on the ground waiting for peak seasons to arrive, but equally too expensive to fly half empty in the low seasons. With their new A350 strategy, SQ will be able to selectively add or reduce flights as needed with smaller, more efficient planes and EK will end up with a massive fleet of behemoths that can't adapt to change. At least when their value falls away the gulf states have plenty of desert to park them on.

[SQ228]

And with the announcements posted in another thread...http://www.sqtalk.com/forum/showpost.php?p=198229&postcount=2... it's all about the A350 for SQ right now. SQ's A350 order is comparable to EK's A380 order, so I guess that says something about the future each airline is choosing.