A380-800 Value Implications

With the announcement of the Airbus A380-800 production shutdown in 2021, here are some thoughts on the aircraft from a value perspective.

The shutdown announcement is largely based on the weaknesses of the A380 that have been apparent for several years:

• High transition cost between operators
• Limited in-service fleet after ten years of production
• Small operator base with close to 40% concentration at one airline
• Too large for most airlines and existing airport infrastructure
• Unable to compete with the new widebody twinjets on trip costs
• Limited number of routes that can support the size and economics of the aircraft
• Single model aircraft, no family
• Two engine option bifurcates a limited market

Now, add out of production status which will have negative value implications.

From a replacement and competitive standpoint and although the A380 was the largest aircraft sold, the A350 family and the 777 family will accommodate demand in the long-range and large aircraft sector.  With a limited number of aircraft in service, the A380 took on niche type status which has damaged aircraft value performance; consequently, the market wasn’t good before the announcement.  While it is difficult to predict the long-run impact on values, the curtailment of the program will lead to more uncertainty.  This new status will likely put downward pressure on aircraft and engine values until actual secondary transactions set the mark.

AVITAS is holding to current value opinions for now until we have more market feedback to support a change.