Jetrader - Autumn 2016 - 63

appraisal Airbus A380 Anthony Brooks Certified ISTAT Appraiser & Civil Expert Witness Flight Ascend Consultancy Korean Air is one of several Asian carriers that uses the A380 as the backbone of its long-haul fleet. Background There is a total of 193 Airbus A380 aircraft in passenger service, with 13 operators and 126 on order with 12 customers (programme total 319). Two RR-powered aircraft originally due for Skymark, which are currently parked, have now been ordered by Emirates. The in-service fleet consists of 78 RR-powered aircraft and 115 aircraft with Engine Alliance (GE/P&W) powerplants. The on-order fleet includes 20 Engine Alliance-powered aircraft, 76 with RR engines (including 50 for Emirates placed at the beginning of Q2 2015) and 30 with an engine choice yet to be announced. Currently there are 286 A380 aircraft in service/on order with airline operators, including 162 aircraft with three carriers in the Middle East, 80 aircraft with eight carriers in Asia-Pacific and 44 aircraft with four carriers in Europe. The top A380 carriers and operating lessors in terms of aircraft in service and on order include Emirates Airlines (142), Amedeo (30), Singapore Airlines (24), QANTAS (20) and Doric (18). Others include Lufthansa, Air France, BBAM, Novus Aviation and ALM  - Aircraft Leasing & Management. Market Outlook Market values for all vintages last fell by 6 to 9 percent at the start of 2016 in line with annual depreciation. Lease rates also came down by 7-18 percent, with the oldest aircraft experiencing the greatest drop. Airbus announced a production rate cut from 27 aircraft per year to 12 per year from 2018, a figure below the previously declared breakeven rate of 20 per year. This cut was driven by a lack of recent orders and the wish to bridge production until a time when market demand picks up or when an enhanced version of the A380 is developed. The A380 programme had received a boost at the end of Q4 2015 when it secured an order for three aircraft from ANA. This made the Japanese carrier the 14th confirmed airline customer. RR engines were chosen and the aircraft will operate to Hawaii. Iran Air has a letter of intent for 12 aircraft as part of a large Airbus deal announced in January 2016. IAG chief executive Willie Walsh very recently announced interest in acquiring "five or six" second-hand A380s, giving hope for the as-of-yet untested secondary market for the aircraft type. Walsh also stated that British Airways would likely not convert its nine A380 options, saying they are "too expensive." The A380 is a possibility for Iberia. The previous debate about a potential new engine option variant has now cooled as lower oil prices and continued weak demand challenge the business case. Timing for any next generation A380 is now more likely in the mid-2020s. There is backlog uncertainty for over a third of the 126 on order; it is unlikely Virgin Atlantic will ever take delivery of its A380s. Hong Kong Airlines noted in 2012 that it might cancel its 10 A380 orders or swap them for a smaller widebody type to focus Year of Build Current Market Value 2006 $109.70m $110.8m $102.4m $94.5m $87.1m $80.2m $73.8m 2015 $201.20m $200.3m $183.5m $167.9m $153.4m $139.9m $127.5m on short-haul routes; its order is now listed as undisclosed. Qantas deferred eight and Air France is expected to cancel its last two. Following Transaero's cessation of operations, one of its four orders was cancelled in Q4 2015 and the remaining three are now listed under an entity named "Air Accord." Amedeo, rebranded from Doric, set up as an A380 operating lessor and an order for 20 was confirmed in February 2014. However, no lessees have been announced and deliveries have moved further out, with slots taken by others (e.g. Emirates with four in 2016). Given the reducing production rate of 12/year and much of the next five years backlog for Emirates, there is uncertainty about when the Amedeo aircraft may be delivered. Amedeo is targeting large network carriers that do not fly the A380 at present and will feature a simple, higher density cabin configuration (baseline 573 seats) to reduce reconfiguration costs. The main deck will be all-economy seating in 2016 and 2017 while the upper deck will have a three-class layout. They have been openly marketing the aircraft to mainline carriers that either currently or previously operated 747s; however, most have opted for large twins instead. Financing the A380 has not proven difficult despite the high asset cost largely because of the customer base with tier one airlines. However, uncertainty over a secondary market and residual values are now seeing questions as the first five aircraft delivered to Singapore Airlines are returned and re-marketed in 2016 and 2017. Base Values at 2.0 percent annual inflation rate, U.S. Dollars 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 $67.7m $62.1m $56.9m $52.0m $47.5m $116.0m $105.4m $95.7m $86.7m $78.4m Aircraft Specification: Engine Rolls-Royce Trent 970-84, Max Takeoff Weight 1,234,600 lb Jetrader * Autumn 2016 63

Table of Contents for the Digital Edition of Jetrader - Autumn 2016

A Message from the President
Calendar/News
Q&A: Mike Williams, Jetaire Group
Wish Upon a Star
Sunshine, Rain and Mixed Feelings
ISTAT’s 2016 Farnborough Airshow Chalet and Reception Continue to Achieve Record Attendance
Legal Status of Aircraft Engines and Effects on Financing and Leasing Transactions
Survival of the Fittest
Weathering Economic Gusts: Copa Airlines’ Pedro Heilbron Advocates Flexibility and Smart Growth
5 Places to Visit While Attending the ISTAT Latin America Forum
From the ISTAT Photo Archives
From the Jetrader Editorial Archives
Aviation History
Aircraft Appraisals
ISTAT Foundation
Advertiser Index
Advertiser.com
Jetrader - Autumn 2016 - cover1
Jetrader - Autumn 2016 - cover2
Jetrader - Autumn 2016 - 3
Jetrader - Autumn 2016 - 4
Jetrader - Autumn 2016 - 5
Jetrader - Autumn 2016 - 6
Jetrader - Autumn 2016 - A Message from the President
Jetrader - Autumn 2016 - 8
Jetrader - Autumn 2016 - 9
Jetrader - Autumn 2016 - Calendar/News
Jetrader - Autumn 2016 - 11
Jetrader - Autumn 2016 - Q&A: Mike Williams, Jetaire Group
Jetrader - Autumn 2016 - 13
Jetrader - Autumn 2016 - 14
Jetrader - Autumn 2016 - 15
Jetrader - Autumn 2016 - Wish Upon a Star
Jetrader - Autumn 2016 - 17
Jetrader - Autumn 2016 - Sunshine, Rain and Mixed Feelings
Jetrader - Autumn 2016 - 19
Jetrader - Autumn 2016 - 20
Jetrader - Autumn 2016 - 21
Jetrader - Autumn 2016 - 22
Jetrader - Autumn 2016 - 23
Jetrader - Autumn 2016 - ISTAT’s 2016 Farnborough Airshow Chalet and Reception Continue to Achieve Record Attendance
Jetrader - Autumn 2016 - 25
Jetrader - Autumn 2016 - 26
Jetrader - Autumn 2016 - 27
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Jetrader - Autumn 2016 - 30
Jetrader - Autumn 2016 - 31
Jetrader - Autumn 2016 - Legal Status of Aircraft Engines and Effects on Financing and Leasing Transactions
Jetrader - Autumn 2016 - 33
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Jetrader - Autumn 2016 - 37
Jetrader - Autumn 2016 - Survival of the Fittest
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Jetrader - Autumn 2016 - 43
Jetrader - Autumn 2016 - Weathering Economic Gusts: Copa Airlines’ Pedro Heilbron Advocates Flexibility and Smart Growth
Jetrader - Autumn 2016 - 45
Jetrader - Autumn 2016 - 5 Places to Visit While Attending the ISTAT Latin America Forum
Jetrader - Autumn 2016 - 47
Jetrader - Autumn 2016 - 48
Jetrader - Autumn 2016 - 49
Jetrader - Autumn 2016 - From the ISTAT Photo Archives
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Jetrader - Autumn 2016 - 53
Jetrader - Autumn 2016 - From the Jetrader Editorial Archives
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Jetrader - Autumn 2016 - 57
Jetrader - Autumn 2016 - Aviation History
Jetrader - Autumn 2016 - 59
Jetrader - Autumn 2016 - 60
Jetrader - Autumn 2016 - 61
Jetrader - Autumn 2016 - 62
Jetrader - Autumn 2016 - Aircraft Appraisals
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Jetrader - Autumn 2016 - 65
Jetrader - Autumn 2016 - ISTAT Foundation
Jetrader - Autumn 2016 - 67
Jetrader - Autumn 2016 - 68
Jetrader - Autumn 2016 - Advertiser Index
Jetrader - Autumn 2016 - Advertiser.com
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