Major Industry Events A380 Production & 737 MAX
A couple of major industry events are getting a lot of attention. In February, Airbus announced the end of A380 production after the remaining orders are delivered over the next two years. This announcement follows the cancellation of orders by the largest operator, Emirates. Recently, Lufthansa reported that they are going to trade 6 of their 14 A380s back to Airbus in 2022 and 2023 and utilize smaller widebodies instead. Lufthansa placed an order for an additional 20 A350-900s at the same time. Other airlines are likely to follow Lufthansa’s lead and request A380 trade-ins as well.
This does not mean the end of the program though. Airbus is committed to supporting A380 customers and aircraft in operation. Emirates has stated publicly that the A380 will remain the pillar of their fleet well into the 2030s. Even so, values will likely be tested soon as lease expirations continue. As we all know, the secondary market is extremely limited for this aircraft. Future editions of the BlueBook will likely reflect lower values as these transactions become known.
The other major industry news is the grounding of the 737 MAX fleet following a second fatal crash in five months. Our heartfelt sympathies are with the families of the passengers and crew lost on the flights of Lion Air and Ethiopian Airlines. Boeing has backed the decision to ground the airplane out of “an abundance of caution” and “is doing everything to ensure this does not happen again.” The full investigation and implementation of the fix will likely take months. We are holding off on any changes to value opinions, if any, of the 737 MAX family until we have a complete understanding of the results of the investigation and reaction from operators and owners. No doubt there will be increased short-term demand for other narrowbodies such as the 737NG and A320 to help fill the capacity gap of the grounded MAX fleet.