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souptaco
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A380 Value / State of the market

Fri Nov 19, 2021 1:02 pm

Hey All,

I've been doing some reading on the A380 history and am pretty surprised at the overall outcome. It seems that the plane is completely worthless for most operators, with even Ethiad probably on the way out.

It got me wondering - what would one of these be worth today? We have already seen a good amount of scraps, so that value has likely fallen. I'm wondering - what is the floor price for one of these? Is there a price at which Ethiad or a similar operator might have to say yes? Is this just 500 tons of aluminum at this point?

Thanks!
 
Jet-lagged
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Re: A380 Value / State of the market

Sat Nov 20, 2021 3:42 am

The engines and landing gear must be worth something. I really don't know, but would throw out a wild guess of at least $20M for engines and landing gear less than 10 years old, average cycles.
 
jetwet1
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Re: A380 Value / State of the market

Sat Nov 20, 2021 6:02 am

This thread : viewtopic.php?f=3&t=1460947&p=22794653&hilit=Valuation#p22794653

Has the values, bottom price listed is $18.6m
 
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Wingtips56
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Re: A380 Value / State of the market

Sat Nov 20, 2021 7:29 am

I'm wondering if the OP is thinking there might be a chance that an operator could scoop a few up for very cheap; cheap enough to actually make a go at flying them. Haj? Luxury executive uses? All premium? Or are they likely too expensive to operate even if for the price of scrap or ceremonial £1?
 
Noshow
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Re: A380 Value / State of the market

Sat Nov 20, 2021 7:31 am

HiFly did that but returned their aircraft already. If they can't make it work it must be tricky.
 
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aemoreira1981
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Re: A380 Value / State of the market

Sat Nov 20, 2021 7:52 am

Noshow wrote:
HiFly did that but returned their aircraft already. If they can't make it work it must be tricky.


Post-pandemic, energy efficiency matters. That is why they see new A339s as better than used A388s.
 
32andBelow
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Re: A380 Value / State of the market

Sat Nov 20, 2021 7:52 am

Jet-lagged wrote:
The engines and landing gear must be worth something. I really don't know, but would throw out a wild guess of at least $20M for engines and landing gear less than 10 years old, average cycles.

Why the landing gear? It would only be valuable to other a380 operators
 
Noshow
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Re: A380 Value / State of the market

Sat Nov 20, 2021 8:01 am

It's a custom made titanium part that can't be obtained elsewhere anymore. You need a working landing gear if you want to operate the aircraft. Even with a limited fleet operating.
 
smartplane
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Re: A380 Value / State of the market

Sat Nov 20, 2021 9:38 am

Jet-lagged wrote:
The engines and landing gear must be worth something. I really don't know, but would throw out a wild guess of at least $20M for engines and landing gear less than 10 years old, average cycles.

Engines may represent a significant liability if on PBTH (or a fixed price maintenance contract), rather than an asset. The new owner scrapping, will need to buy out any fixed term commitments. Most likely, engines will be retained by the current operator, who will make the monthly payments, using in their existing fleet. These agreements can be assigned, but the original customer effectively acts as guarantor for the new, so best to retain and use until expiry.
 
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Mortyman
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Re: A380 Value / State of the market

Sat Nov 20, 2021 12:27 pm

souptaco wrote:
Hey All,

I've been doing some reading on the A380 history and am pretty surprised at the overall outcome. It seems that the plane is completely worthless for most operators, with even Ethiad probably on the way out.

It got me wondering - what would one of these be worth today? We have already seen a good amount of scraps, so that value has likely fallen. I'm wondering - what is the floor price for one of these? Is there a price at which Ethiad or a similar operator might have to say yes? Is this just 500 tons of aluminum at this point?

Thanks!



Well, British airways, Qatar, and Qantas is bringing them back. Emirates, Korean, ANA and China Southern still use them.
 
frmrCapCadet
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Re: A380 Value / State of the market

Sat Nov 20, 2021 3:48 pm

I'm still hoping that some tour company buys a few, and flies them around the world, always eastward and with the jet stream. Different flights go variously north and south of the equator, stopping at this city, or that tourist attraction, sometimes adventurous stop. You get off for various days in each stop (either for tours or go it alone advantures), and catch a subsequent flight onwards. All seats economy plus (a few 1st class, and basic economy to squeeze more people in if needed on a particular flight). Minimum fare likely $10-15K. I'd sign up in a flash! The company might need a few smaller planes as 'pinch hitters', alternately trade seats with main liners to balance passenger loads. Anyway my fantasy.
 
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JannEejit
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Re: A380 Value / State of the market

Sat Nov 20, 2021 7:00 pm

Noshow wrote:
HiFly did that but returned their aircraft already. If they can't make it work it must be tricky.


To be fair they also had the worst global aviation recession in history to contend with too. I'd be interested to see how the A380 fares on the 2nd hand specialist market once things are up and running again personally. I'd also be interested to see if currently growing pressure in ecological terms on air travel, will force a lower frequency/larger aircraft scenario ? Therefore fuelling demand for VLA types again ?
 
MIflyer12
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Re: A380 Value / State of the market

Sat Nov 20, 2021 7:37 pm

JannEejit wrote:
Therefore fuelling demand for VLA types again ?


The problem isn't properly generalized as VLA types. Plenty of early 77Ws are still flying. It's the economics of A380s -- and A340-600s.
 
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JannEejit
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Re: A380 Value / State of the market

Sat Nov 20, 2021 8:29 pm

MIflyer12 wrote:
JannEejit wrote:
Therefore fuelling demand for VLA types again ?


The problem isn't properly generalized as VLA types. Plenty of early 77Ws are still flying. It's the economics of A380s -- and A340-600s.


Yes but any future demand for VLA type aircraft based on aforementioned frequency reductions would surely be of evolved state or more likely brand new concepts ? In the meantime we have what we have.
 
TUGMASTER
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Re: A380 Value / State of the market

Sat Nov 20, 2021 9:03 pm

The 380 only works well when it’s full, otherwise just about every other ship out there has better economics.
 
FLYBY72
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Re: A380 Value / State of the market

Sat Nov 20, 2021 9:18 pm

There is no secondary market because of the airport Infrastructure it requires. You can’t just buy one and fly it out of secondary airports. Can’t covert it to a freighter. Can use it at existing large airports because those gates are already being used by the current operators.

When these planes come up in heavy checks they are going to the scrap yard.
 
frmrCapCadet
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Re: A380 Value / State of the market

Sat Nov 20, 2021 10:37 pm

I have heard that the 380 can operate out of any number of airports which are not fully equipped for it. It stops or limits other air operations landing, taking off, or taxiing. For occasional operations that would not be a problem.
 
TUGMASTER
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Re: A380 Value / State of the market

Sun Nov 21, 2021 6:42 am

frmrCapCadet wrote:
I have heard that the 380 can operate out of any number of airports which are not fully equipped for it. It stops or limits other air operations landing, taking off, or taxiing. For occasional operations that would not be a problem.



It’s a problem.
It’s a code “F” aircraft…
All the rigmarole the surrounds that, needs to be in place. Strengthened and widen taxiways are just the start.
As someone once said up thread , HiFly tried to make a go of it , in what we’re alleged to believe were very good rates,( Airbus supported or not)and they still couldn’t find a market for it.Their 380 did very little Flying over the course of their operation.
 
JayinKitsap
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Re: A380 Value / State of the market

Sun Nov 21, 2021 8:47 am

jetwet1 wrote:
This thread : viewtopic.php?f=3&t=1460947&p=22794653&hilit=Valuation#p22794653

Has the values, bottom price listed is $18.6m


Here are some snippets from that thread
A350-900 - $77.0 - 149.0M, $450-1,030,000
A380 - $18.6 - 94.0M, $170-730,000
B777-300ER – $26.8 – 132.5M, $240-1,020,000
B787-8 - $47.8 - 100.5M, $290-650,000
B787-9 - $72.5 - 140.0M, $410-940,000

The 77W price and lease rates across the band are higher than the A380. The 787's are even above the A380.
The A359 price and lease rates across the bank are higher than the A380.

Back when the first Dr Peters frames went to the desert I recall the estimated parts value then was $45M and they were unable over a good period of time to get any taken up on lease or sale. HiFly stepped in to lease 'by the hour' one craft, meaning it only paid when it was in service, HiFly decided to not continue this. I recall this is the only lease activity in the secondary market.

It appears that the $18.6M is around the worth as parts, as the 26.8M with the 77W. This is in a market where there are few buyers in the wide body segment at this time, once a market returns the rates should recover, but faster for those models that have a high % flying vs storage. Planes in storage don't need parts.

A side current in the A380 market are the planes with EA engines vs RR engines. EA stopped producing engines many years before RR so part availability, they had EK's initial orders and about 2/3 of the total orders but they switched to RR for over 50 of the later deliveries, RR picked up most of the later orders. So the older frames most likely to be retired first are mainly the GP7200's, adversely affecting engine part availability with the corollary where part costs are rising due to scarcity.

EA has around 130 x 4 = 520 + spares, RR a bit less. Not big quantities of either and these engines are not on any other plane.
 
Noshow
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Re: A380 Value / State of the market

Sun Nov 21, 2021 8:57 am

The two engine families, one almost abandoned already, certainly don't help the A380's future.
 
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eurotrader85
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Re: A380 Value / State of the market

Sun Nov 21, 2021 10:31 am

The A380 is only going to be bought by those who can make it work, and they are the airlines with the ambition for max pax through their hub like EK, have mass pax at peak niche times (SQ at SIN), or those for whom it was ultimately designed for, expanding pax out of restricted infrastructure capacity, like BA at LHR. Those that fit this have made it work very well, those that didn't, and made it almost a vanity purchase, have not made it work.

The current state of the WB aviation market is awful full stop at the moment. So for sure valuations in a second hand A380 are going to be scrap prices. When MH recently had their tender for their birds it was inevitable what the outcome would be. They would probably have been wiser to hold on and wait for a stronger market, or frankly have cut a workable deal with BA in the past when they were looking to offload them back then in a good market. OK, hindsight is a beautiful thing. But the question now is not what the market is now, it's where will it be?

Of course, guessing when the aviation market will be back to 2019 levels is anyone's guess, but let's say 2024 for argument's sake. By this date have the issues that the A380 addressed have been resolved or will the fundamentals of long-haul traffic have changed? I.e. will there be a 3rd runway at LHR at this point? No. Will EK still have the same business model that has served them well? Probably. So those who made it work will still have reason to buy it.

There are no more A380s going to be built, so those that make the big bird work (BA, EK, SQ, QF etc), will only have the secondary market to purchase them. At this time airlines whom it doesn't work as well, or at least say it doesn't (LH, QR, KE, OZ) have all said around this date is when they look to exit them out of their fleets. I'm not saying it will be a 'seller's market', but if the market conditions fit and we are all back in the air again, there will be deals to be done, certainly above current scrappage prices as dare say it, there will a slither of physical demand, especially given the understandable current lack of investment in the VLA sector of the commercial aviation and the fact that the 35K and 779 are simply not big enough for these players.
 
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Polot
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Re: A380 Value / State of the market

Sun Nov 21, 2021 12:20 pm

JannEejit wrote:
Noshow wrote:
HiFly did that but returned their aircraft already. If they can't make it work it must be tricky.


To be fair they also had the worst global aviation recession in history to contend with too. I'd be interested to see how the A380 fares on the 2nd hand specialist market once things are up and running again personally. I'd also be interested to see if currently growing pressure in ecological terms on air travel, will force a lower frequency/larger aircraft scenario ? Therefore fuelling demand for VLA types again ?

Covid was just a convenient excuse, HiFly was never going to renew the lease. It was severely underutilized prior to covid, in fact it probably got just as much work chartered last year when HiFly was using it purely for cargo than years prior.

HiFly CEO did learn that making hints about acquiring another A380 and so on in press was a great way to get free publicity for his airline though.

Jet-lagged wrote:
The engines and landing gear must be worth something. I really don't know, but would throw out a wild guess of at least $20M for engines and landing gear less than 10 years old, average cycles.

Something is only has worth if someone actually wants it. A380 landing gear and engines are really only useful for other A380s. With most of the fleet parked/retired their value has dropped dramatically.
 
edealinfo
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Re: A380 Value / State of the market

Sun Nov 21, 2021 5:24 pm

TUGMASTER wrote:
The 380 only works well when it’s full, otherwise just about every other ship out there has better economics.


This makes no sense. Any aircraft can be made full "at the right price". The question is yield per seat not filling the aircraft per se.
 
OMAAbound
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Re: A380 Value / State of the market

Sun Nov 21, 2021 5:25 pm

I would also say that the engines wont be as easy as that to get rid of as people think. Only the inboard engines have the hydraulic system for reverse thrust, so anyone that needed a new motor, would effectively have to buy them in pairs or full sets.

OMAA
 
Jet-lagged
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Re: A380 Value / State of the market

Sun Nov 21, 2021 5:36 pm

Polot wrote:
JannEejit wrote:
Noshow wrote:
HiFly did that but returned their aircraft already. If they can't make it work it must be tricky.


To be fair they also had the worst global aviation recession in history to contend with too. I'd be interested to see how the A380 fares on the 2nd hand specialist market once things are up and running again personally. I'd also be interested to see if currently growing pressure in ecological terms on air travel, will force a lower frequency/larger aircraft scenario ? Therefore fuelling demand for VLA types again ?

Covid was just a convenient excuse, HiFly was never going to renew the lease. It was severely underutilized prior to covid, in fact it probably got just as much work chartered last year when HiFly was using it purely for cargo than years prior.

HiFly CEO did learn that making hints about acquiring another A380 and so on in press was a great way to get free publicity for his airline though.

Jet-lagged wrote:
The engines and landing gear must be worth something. I really don't know, but would throw out a wild guess of at least $20M for engines and landing gear less than 10 years old, average cycles.

Something is only has worth if someone actually wants it. A380 landing gear and engines are really only useful for other A380s. With most of the fleet parked/retired their value has dropped dramatically.


That a good point; now matter how much it costs to produce something if nobody wants to buy it then the market value is zero.

Somebody speculated upthread that when these get to D checks they will be retired. Perhaps the A380 story will reach its last chapter in about five years, save for a what-the-characters-did-afterwards epilogue.
 
TUGMASTER
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Re: A380 Value / State of the market

Sun Nov 21, 2021 8:21 pm

edealinfo wrote:
TUGMASTER wrote:
The 380 only works well when it’s full, otherwise just about every other ship out there has better economics.


This makes no sense. Any aircraft can be made full "at the right price". The question is yield per seat not filling the aircraft per se.


Stop splitting hairs, you know exactly what I mean.
 
Noshow
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Re: A380 Value / State of the market

Sun Nov 21, 2021 8:35 pm

He might have a point, especially concerning the A380. Load factors didn't look that bad when it was flying in full force. But the speed airlines retired it seems to indicate they had to sell seats cheap to fill it somehow for some time? Many airlines retired their entire A380 fleets without much hesitation.
(I personally very much enjoy flying onboard as a passenger and would even go the extra mile to fly A380 instead of something else)
 
tvh
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Re: A380 Value / State of the market

Mon Nov 22, 2021 1:49 pm

BA should buy second-hand. They were intrested before corona and they have retired all there 747's. To get back to old capacity they need large aicraft.
 
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DL_Mech
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Re: A380 Value / State of the market

Tue Nov 23, 2021 3:49 am

OMAAbound wrote:
I would also say that the engines wont be as easy as that to get rid of as people think. Only the inboard engines have the hydraulic system for reverse thrust, so anyone that needed a new motor, would effectively have to buy them in pairs or full sets.


The thrust reverser assembly stays with the airframe during an engine change. The RB-211 engines attached to TriStars and 747s had T/R assemblies that stayed with the engine.

http://www.youtube.com/watch?v=lU4mXljJRC8

Image

From: https://i.redd.it/hljy8rwwxrh31.jpg

Image

From: https://hars.org.au/wp-content/uploads/ ... engine.jpg
 
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SEPilot
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Re: A380 Value / State of the market

Tue Nov 23, 2021 12:58 pm

OMAAbound wrote:
I would also say that the engines wont be as easy as that to get rid of as people think. Only the inboard engines have the hydraulic system for reverse thrust, so anyone that needed a new motor, would effectively have to buy them in pairs or full sets.

OMAA

I am sure that the hydraulics and reverses are bolt on parts. They do not affect the basic engine.
 
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SEPilot
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Re: A380 Value / State of the market

Tue Nov 23, 2021 1:17 pm

tvh wrote:
BA should buy second-hand. They were intrested before corona and they have retired all there 747's. To get back to old capacity they need large aicraft.

Why? Too little capacity allows you to raise prices. Too much forces you to lower them. The right capacity gives you maximum yield. But it is far better to have too little than too much, because too much really hurts in a downturn (which ALWAYS comes). And with the 779 soon to be available with far better economics and at least 2/3 the capacity (more than that compared to actual A380s as used) the case for picking up used A380s when the only source for parts is other scrapped frames is dubious indeed. What happens when the last of a critical part gets used? They did not build thousands of them, only 249, if I remember correctly.

Case in point. I ran the local airport for two years. I was asked to repair a single engined plane that had had a bad landing at a nearby airport and damaged one landing gear strur and other minor damage. Had it been a Piper or other in production aircraft it would have been an easy repair. But my mechanic didn’t want to touch it because that particular aircraft had been out of production for 15 or 20 years and many parts were unavailable for it. Apparently that included right landing gear struts because the plane ended up being scrapped. The plane in flying condition would have been worth at least $50,000, and had the parts been available the repair should have been no more than $10,000.
 
moa999
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Re: A380 Value / State of the market

Tue Nov 23, 2021 1:22 pm

Even the parts probably aren't worth much now for those airlines/lessors that aren't going to keep a fleet.

Both EK and now QF (with 2 retirements) are going to have their own spares.
 
tvh
Posts: 284
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Re: A380 Value / State of the market

Tue Nov 23, 2021 1:52 pm

Too little capacity creates also an opportunity for your competition.
 
souptaco
Topic Author
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Re: A380 Value / State of the market

Tue Nov 23, 2021 2:51 pm

moa999 wrote:
Even the parts probably aren't worth much now for those airlines/lessors that aren't going to keep a fleet.

Both EK and now QF (with 2 retirements) are going to have their own spares.



Yes that's why I think this is pretty interesting to see develop. Does the 18.6m quoted 6 months ago represent a floor? Or, since there are still under 10 of these scrapped so far, is the value only going to drop more as more are retired. Is there a price where one of the remaining operators simply has to pick it up? If not, what is the absolute lowest this could go for?
 
smartplane
Posts: 1926
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Re: A380 Value / State of the market

Tue Nov 23, 2021 6:10 pm

OMAAbound wrote:
I would also say that the engines wont be as easy as that to get rid of as people think. Only the inboard engines have the hydraulic system for reverse thrust, so anyone that needed a new motor, would effectively have to buy them in pairs or full sets.

Higher monthly maintenance / rental charge usually apply on inboard engines. Some operators pay the same rate on all 4, and undertake to rotate / equalise over contracted life.

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