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kitplane01
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Data: scrap value of an A380

Tue Oct 16, 2018 2:07 am

The very first A380 to be scrapped has an estimated airframe value of $45 million, and the power plants should be worth another $24 million.

The owner of this 11 year old plane expect to see a small but positive return on investment when all is said and done.

Having a positive return after scrapping 11-year-old airplane seems crazy to me!

Source:Aviation International October 18 page 68
 
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lightsaber
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 2:27 am

$6 million per engine is well pedigreed engines and nacelles! Not for power by the hour.

Interior refurbished is costly:. $40 million per this link:
https://www.businessinsider.com/airbus- ... ory-2018-6

The issue for the A380 is that it will be easy to swamp the used part market with such a small in service fleet.

Lightsaber
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 2:35 am

kitplane01 wrote:
The very first A380 to be scrapped has an estimated airframe value of $45 million, and the power plants should be worth another $24 million.

The owner of this 11 year old plane expect to see a small but positive return on investment when all is said and done.

Having a positive return after scrapping 11-year-old airplane seems crazy to me!

Source:Aviation International October 18 page 68


I can see the $24 Million for the engines and nacelles. I don't see $45 Million for other parts and scrap metal. Perhaps $45 million total - at least for the 1st A380 for initial inventory of spare parts.

Future values will likely be less as the used part inventory will quickly fill up to adequate levels for most parts after a few A380.

Have a great day,
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 2:37 am

That's a lot of beer cans and kegs.
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 2:44 am

Did/will Airbus ever make money off the A380?
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2175301
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 3:25 am

TWA772LR wrote:
Did/will Airbus ever make money off the A380?


No: Airbus has never said... (and an advantage of not using program accounting is they never have to say). But, a number of respected analysts have estimated Airbus losses at at least $25 Billion for the A380 (high end estimates are $30 Billion loss), not counting the continuing "acceptable" production losses of the last few years due to slow production in the overbuild facilities (they built facilities initially capable of something like 42 A380 per year; up front; which tells you how successful they thought it would actually be).

Have a great day,
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 4:20 am

I assume (given the reported age) this is MSN 3, 9V-SKA?

If so scrapping was the only realistic option. An interior refit of this bird, with its essentially custom wiring, would be a nightmare. This is a likely outcome for any of the first 25 frames that cannot find a new operator (like HiFly) willing to live with the old cabin. Production standard wiring was phased in with MSN 26.
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 4:43 am

2175301 wrote:
I don't see $45 Million for other parts and scrap metal.


It’s not 45 million for scrap metal.

All the rotable parts like avionics, flight controls, spoilers, flaps, winglets, fairings, landing gear, doors, galleys, toilets and their associated systems where possible will be removed and returned to service, either directly or after overhaul.

Some of the avionics I wouldn’t be surprised will be remanufacturered (components changed and new serial number) by the original supplier and installed as a new part on a new aircraft.
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 5:14 am

lightsaber wrote:
$6 million per engine is well pedigreed engines and nacelles! Not for power by the hour.

Interior refurbished is costly:. $40 million per this link:
https://www.businessinsider.com/airbus- ... ory-2018-6

The issue for the A380 is that it will be easy to swamp the used part market with such a small in service fleet.

Lightsaber


I can see value in EK scrapping some of their earlier build A380's to support the rest of the fleet. Problem is they operate half of the A380's in service. As such, for other operators the value for scraping will quickly deminush with each airframe parted out.
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 5:43 am

2175301 wrote:
TWA772LR wrote:
Did/will Airbus ever make money off the A380?


But, a number of respected analysts have estimated Airbus losses at at least $25 Billion for the A380 (high end estimates are $30 Billion loss)


Do you have a link to one of these respected analysts?
:smile:
 
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kitplane01
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 6:05 am

2175301 wrote:
kitplane01 wrote:
The very first A380 to be scrapped has an estimated airframe value of $45 million, and the power plants should be worth another $24 million.

The owner of this 11 year old plane expect to see a small but positive return on investment when all is said and done.

Having a positive return after scrapping 11-year-old airplane seems crazy to me!

Source:Aviation International October 18 page 68


I can see the $24 Million for the engines and nacelles. I don't see $45 Million for other parts and scrap metal. Perhaps $45 million total - at least for the 1st A380 for initial inventory of spare parts.

Future values will likely be less as the used part inventory will quickly fill up to adequate levels for most parts after a few A380.

Have a great day,


I'm not arguing, but the article clearly said air frame = 40-50, powerplants another 24.
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 7:35 am

2175301 wrote:
I don't see $45 Million for other parts and scrap metal. Perhaps $45 million total - at least for the 1st A380 for initial inventory of spare parts.


Gee what a surprise. Who should we believe? Investment specialists or bulletin board warriors with an agenda? :crazy:
 
2175301
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 9:30 am

chiad wrote:
2175301 wrote:
TWA772LR wrote:
Did/will Airbus ever make money off the A380?


But, a number of respected analysts have estimated Airbus losses at at least $25 Billion for the A380 (high end estimates are $30 Billion loss)


Do you have a link to one of these respected analysts?
:smile:


Wiki is not always the best source: But in this case it provides most of the ones I remember being discussed a few years ago (and Airbus has never challenged these estimates that I am aware of).

https://en.wikipedia.org/wiki/Airbus_A380

Total development cost

In 2000, the originally projected development cost was €9.5 billion.[33] In 2004 Airbus estimated 1.5 billion euros ($2 billion) would be added for a €10.3 Bn ($12.7 Bn) total.[34] In 2006 at €10.2 Billion, Airbus stopped publishing its reported cost and then provisioned €4.9 Bn after the difficulties in electric cabling and two years delay for an estimated total of €18 Bn.[33]

In 2014, the aircraft was estimated to have cost $25bn (£16bn – €18.9bn) to develop.[35] In 2015, Airbus said development costs were €15bn (£11.4bn – $16.95 Bn), though analysts believe the figure is likely to be at least €5bn ($5.65 Bn) more for a €20 Bn ($22.6 Bn) total.[3] In 2016, The A380 development costs were estimated at $25 billion for 15 years,[36] $25–30 billion,[37] or 25 billion euros ($28 billion).[4]

To start the program in 2000, Germany, France and the U.K. loaned Airbus 3.5 billion euros and refundable advances reached 5.9 billion euros ($7.3 billion). In February 2018, after an Emirates order secured production of the unprofitable program for ten years, Airbus revised its deal with these countries to save $1.4 billion (17%): restructured terms allow to lower the production rate from eight in 2019 to six per year.[38]

The links do not directly copy (you can go to Wiki yourself and link directly: But the list of them are (so you can search separately as you wish):

33) Yann Philippin (7 May 2012). "Airbus encaisse les coûts de l'A380". Libération (in French).
34) Bloomberg (13 December 2004). "Airbus Says Its A380 Jet Is Over Budget". The New York Times.
35) Karl West (28 December 2014). "Airbus's Flagship Plane May Be Too Big To Be Profitable". The Guardian. Business Insider.
36) Andrew Stevens and Jethro Mullen (17 February 2016). "Airbus CEO upbeat on future of A380 after new orders". CNNMoney.
37) Richard Aboulafia (6 June 2016). "Airbus A380: The Death Watch Begin". Forbes.
38) Benjamin D Katz (23 Feb 2018). "Airbus Super-Jumbo Sheds Financial Weight in New State Aid Deal". Bloomberg

Have a great day,
 
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zeke
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 10:20 am

Airbus Boeing BBD EMB etc all do not pay 100% of the development costs, in the case of the A380, Airbus paid around 40% of the total, the rest you need to look at the risk sharing partners.
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 12:10 pm

One example is useful but not very statistically robust in setting a market value. Prospective lessors won't ignore this, though, nor will prospective purchasers, particularly those who don't routinely keep aircraft to end-of-life.

Any 77W resale values of the same vintage?
 
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 3:40 pm

zeke wrote:
Airbus Boeing BBD EMB etc all do not pay 100% of the development costs, in the case of the A380, Airbus paid around 40% of the total, the rest you need to look at the risk sharing partners.

To add to that: for each A380 delivered Airbus pays off some of the program debt and RLI. So while it may be true that production and delivery is not making Airbus any money, each A380 delivery makes the financial hole a little less deep (which is probably not much at 6 frames per year though . . . . )
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Re: Data: scrap value of an A380

Tue Oct 16, 2018 4:30 pm

kitplane01 wrote:
The very first A380 to be scrapped has an estimated airframe value of $45 million, and the power plants should be worth another $24 million.

The owner of this 11 year old plane expect to see a small but positive return on investment when all is said and done.

Having a positive return after scrapping 11-year-old airplane seems crazy to me!

Source:Aviation International October 18 page 68

lightsaber wrote:
$6 million per engine is well pedigreed engines and nacelles! Not for power by the hour.

Interior refurbished is costly:. $40 million per this link:
https://www.businessinsider.com/airbus- ... ory-2018-6

The issue for the A380 is that it will be easy to swamp the used part market with such a small in service fleet.

Lightsaber

We probably should have an "A380 Retirement and Scrapping Thread" akin to 777 one ( viewtopic.php?f=3&t=1381177 ) so we can discuss the A380's "afterlife" without having to rehash all the old stuff.
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 5:41 am

Does anyone know what the largest or most expensive part one might harvest from a scrapped A380? Would they remove the vertical tail, the elevators, even a wing? Landing gear??

My experience is with Pipers, where wing swap is reasonable. Is it even possible on an A380?
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 6:57 am

kitplane01 wrote:
Does anyone know what the largest or most expensive part one might harvest from a scrapped A380? Would they remove the vertical tail, the elevators, even a wing? Landing gear??

My experience is with Pipers, where wing swap is reasonable. Is it even possible on an A380?

Generally its engines first and landing gear second as far as costs.

Then you get into the LRUs, flight controls etc. etc.
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 6:58 am

Probably not a wing, but control surfaces, horizontal and vertical stabilizers, doors, windows, antennas, landing gear black boxes, LRU's and other parts to numerous to list would be very salvageable and reusable. Remember that aircraft are nothing more than a bunch of parts flying in formation and if a part can be removed somewhat easily it has the potential of being a spare part. I would imagine the estimates cited are very believable.

Most expensive single part I would imagine would be the engines.
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 1:49 pm

Even things like pilots seats cost a bundle, also add toilets, stairs, coffee makers, other galley parts. bins, list could be in thousands.
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 1:56 pm

seabosdca wrote:
I assume (given the reported age) this is MSN 3, 9V-SKA?

If so scrapping was the only realistic option. An interior refit of this bird, with its essentially custom wiring, would be a nightmare. This is a likely outcome for any of the first 25 frames that cannot find a new operator (like HiFly) willing to live with the old cabin. Production standard wiring was phased in with MSN 26.


Almost certainly. Standard wiring started with MSN 6...which is in the Hi Fly Malta fleet.
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 2:22 pm

Is GLARE recyclable?
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 4:40 pm

If we're talking 9V-SKA here, it was a leased aircraft, from delivery. Let's say the aircraft was purchased for $150 million. Even though the list price was closer to double, this price is probably still an upper end estimate given general discounts, launch customer, and probably further price cuts for wiring issues. Given a 20 year depreciation schedule, the balance sheet value of the aircraft is about $50 million. So $50 to $70 million from scrapping isn't a terrible return.
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 5:03 pm

aemoreira1981 wrote:
Almost certainly. Standard wiring started with MSN 6...which is in the Hi Fly Malta fleet.


My understanding is that MSN 6+ had more, but not all, components standardized, and that the first frame with full production wiring was MSN 26. It may well be, though, that an interior refit for 6 and up would be substantially easier than one for MSN 3 or 5, which I believe are the two ex-SQ birds that Dr. Peters will scrap.
 
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Re: Data: scrap value of an A380

Wed Oct 17, 2018 7:02 pm

evanb wrote:
If we're talking 9V-SKA here, it was a leased aircraft, from delivery. Let's say the aircraft was purchased for $150 million. Even though the list price was closer to double, this price is probably still an upper end estimate given general discounts, launch customer, and probably further price cuts for wiring issues. Given a 20 year depreciation schedule, the balance sheet value of the aircraft is about $50 million. So $50 to $70 million from scrapping isn't a terrible return.

It was an SQ order, sold and leased back before delivery.

The first SQ tranche had Airbus underwritten buyback on the air frame, and in turn, Airbus probably had a buyback from RR on the engines.

Also need to deduct End of Lease payments from the residual.

Most lease agreements give the leasee first right of refusal on engines and air frame parts, including a value formula.
 
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Re: Data: scrap value of an A380

Thu Oct 18, 2018 12:45 pm

Nomadd wrote:
Is GLARE recyclable?


Not as-is... the aluminium and glass-fibre would need to be separated, then the aluminium could be recycled. I think they were looking at what to do to give the glass-fibres some kind of second life in plastic mouldings for garden furniture etc. There was a project looking at all that.
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Re: Data: scrap value of an A380

Thu Oct 18, 2018 1:43 pm

atimp wrote:
That's a lot of beer cans and kegs.


You can never have enough of those!

Fun fact, recycled aluminum takes 95% less energy to make than virgin Aluminum.

https://www.thoughtco.com/the-benefits- ... ng-1204138
 
LewisNEO
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Re: Data: scrap value of an A380

Thu Jan 03, 2019 10:22 pm

https://www.luchtvaartnieuws.nl/nieuws/ ... s-begonnen

In Dutch: today the scrapping fo two ex SIAs A380s started. The lease company Dr. Peters expects to sell its parts for 45 million. Selling used A380s to Iranair and British Airways didn't work out.

Pity to see those two beautiful birds to be scrapped after just over 10 years. But these first ones had also loads of reworks at the time as I remember it.
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Ruscoe
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Re: Data: scrap value of an A380

Thu Jan 03, 2019 11:02 pm

It's unclear to me if the $45 million is for each aircraft, or for both together.
Can anyone clarify for me?
Thanks
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 2:35 am

kitplane01 wrote:
The very first A380 to be scrapped has an estimated airframe value of $45 million, and the power plants should be worth another $24 million.

The owner of this 11 year old plane expect to see a small but positive return on investment when all is said and done.

Having a positive return after scrapping 11-year-old airplane seems crazy to me!


Return on investment is a fishy thing. The operator has been earning positive cash flow from this aircraft or else they would have stopped and repurposed the airplane a long time ago.

In terms of the sale, keep in mind that most countries have tax law that provides for accelerated depreciation. This means that an owner gets to write-down the asset accounting value faster than its economic value is “wearing out.” As a consequence, when the owner sells the asset and the economic value exceeds the accounting value, they must take a capital gain.
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 3:19 am

kitplane01 wrote:
Having a positive return after scrapping 11-year-old airplane seems crazy to me!

A 'positive return' doesn't have to be positive. It could very well be that the investors would have made more money putting their money on a savings account and that the value of their money is less taking into account inflation (~22% in the US over these 11 years).
 
mffoda
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 3:22 am

If the engines/APU are PBH? Then this $45 Million dollar figure is wishful thinking...

Once you get past the engines, landing gear, apu and avionics, the meat of the aircraft is gone.

Others have mentioned upgrading rotable's (avionics and such) to current/desired part numbers, but doing so is very expensive and may or may not be worth it.

As far is the striped down hull is concerned, it will have a value of thousands of dollars, not hundreds of thousands..

It will be interesting to see what they are reporting a year after they tear down this aircraft...
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Yeastbeast
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 3:30 am

atimp wrote:
That's a lot of beer cans and kegs.

Fun fact, kegs are Stainless Steel. I sometimes wonder though, how many of the cans the brewery I work at used to be Boeings, which were made an hour away?
Brewers make the wort, the yeast makes the beer.
 
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 4:26 am

mffoda wrote:
If the engines/APU are PBH? Then this $45 Million dollar figure is wishful thinking...


Dr Peters Group have leased the engines to RR, they are still generating income for the fund.

45 million is just the airframe which would be on the conservative side of what the serviceable spares would attract. They could value add to this by having various components overhauled and ready fir an AOG requirement.
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smartplane
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 4:36 am

zeke wrote:
mffoda wrote:
If the engines/APU are PBH? Then this $45 Million dollar figure is wishful thinking...


Dr Peters Group have leased the engines to RR, they are still generating income for the fund.

That would be extremely unusual.

Engine lease will be valued, with a payment to the fund, so participants can be paid out. Ditto for parting the air frame. Participants and financiers don't want to hang around and see what parts sell, and for how much. Value, pay, exit (probably into a new lease).
 
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 4:58 am

Yeastbeast wrote:
atimp wrote:
That's a lot of beer cans and kegs.

Fun fact, kegs are Stainless Steel. I sometimes wonder though, how many of the cans the brewery I work at used to be Boeings, which were made an hour away?


I seem to recall the answer being none, because in fact the aluminum in airplanes is different from that found in beverage cans.
I was raised by a cup of coffee.
 
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zeke
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 5:29 am

smartplane wrote:
That would be extremely unusual.

Engine lease will be valued, with a payment to the fund, so participants can be paid out. Ditto for parting the air frame. Participants and financiers don't want to hang around and see what parts sell, and for how much. Value, pay, exit (probably into a new lease).


“In addition, the strategy is to continue the existing engine leasing agreement with Rolls Royce, or with an airline, beyond March 2019. Due to the increasing number of A380s operated by Rolls Royce, which in turn will require maintenance in the coming years, Dr. Peters Group expects to generate at least the current monthly income of 480,000 USD for each investment company. It is anticipated that the engines will be sold by the end of 2020.”

From https://www.dr-peters.de/en/service-wor ... 380-funds/
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Yeastbeast
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 5:40 am

hOMSaR wrote:
Yeastbeast wrote:
atimp wrote:
That's a lot of beer cans and kegs.

Fun fact, kegs are Stainless Steel. I sometimes wonder though, how many of the cans the brewery I work at used to be Boeings, which were made an hour away?


I seem to recall the answer being none, because in fact the aluminum in airplanes is different from that found in beverage cans.

LOL. I do believe you are correct. Different alloys and such.

My mind does wander at work tho..... :D
Brewers make the wort, the yeast makes the beer.
 
81819
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 5:48 am

I think its fair to say that the value in these two aircraft is in their ability to service the remaining fleet of A380's as they come up to their twelve year engine and air frame checks.

I'd suggest just having two sets of landing gear to cycle through the 85 aircraft that will reach twelve years of age over the next five years is going to be enough to ensure these items alone will be very liquid in an open spares market environment.

My very rough back of envelope numbers are as follows:

Engines x 8 @ $4,000,000 = $32,000,000
APU x 2 @ $450,000 = $900,000
Engine nachelles x 8 @ $150,000 = $1,200,000
Landing Gear x 2 @ $1,500,000 = $3,000,000
Avionics x 2 @ $3,200,000 = $6,400,000
Control Surfaces x 2 @ $1,600,000 = $3,200,000
Interiors x 2 @ $800,000 = $1,600,000
HVAC Systems x 2 @ $500,000 = $1,000,000
Actuators x 2 @ $600,000 = $1,200,000
Pumps/ motors x 2 @ $300,000 = $600,000
Sundry Mechanical Hardware x 2 @ $350,000 = $700,000
Airframe Doors / Hardware x 2 @ $100,000 = $200,000
Windows / Windscreens x 2 @ $1,500,000 = $3,000,000
Fairings / Bodywork x 2 @ $190,000 = $380,000
Galleys / Flight services x 2 @ $100,000 = $200,000
Scrap Metals x 2 @ $800,000 = $1,600,000
Dismantling / Scrapping costs x 2 @ $(3,000,000) = $(6,000,000)

TOTAL $51,180,000

These are very rough best guess numbers, so please don't get too upset if they are not to your liking!

https://www.ainonline.com/aviation-news ... ount-aging
 
Ruscoe
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 6:31 am

Thanks,
So the 45 million (51) is for the two frames, not per frame.
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Re: Data: scrap value of an A380

Fri Jan 04, 2019 11:12 am

zeke wrote:
2175301 wrote:
I don't see $45 Million for other parts and scrap metal.


It’s not 45 million for scrap metal.

All the rotable parts like avionics, flight controls, spoilers, flaps, winglets, fairings, landing gear, doors, galleys, toilets and their associated systems where possible will be removed and returned to service, either directly or after overhaul.

Some of the avionics I wouldn’t be surprised will be remanufacturered (components changed and new serial number) by the original supplier and installed as a new part on a new aircraft.


Yes and no.

Yes about many rotable parts making up a pretty nice pool of spare parts with a nice value.

No about suppliers remanufacturing parts to sell as new to install on new aircraft. The aircraft and parts are in production, so it makes way more sense to produce batches of new ones than to buy single used parts and repackage them to sell them as new.
Used parts are cheaper than new ones to an airline, but to the manufacturer it will most probably be cheaper to make a new one than to buy a used one. The final cost of a new part is much more than the production cost, there are depreciations on R&D and intellectual property, overhead costs (the bosse's Tesla), earnings to shareholders, etc...
Suppliers do overhaul their parts and participate in the used market, but they often do it to keep spare parts pools tight and keep prices high.
Airlines and the OEM can bypass suppliers and use used parts, but that's another story.

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