Jetrader - November/December 2010 - 19

appraisal

Airbus A380
Tom Burke mba | morten beyer & agnew

Background
The A380 entered service in October 2007 with delivery of production line number three aircraft to Singapore Airlines. That aircraft now has more than 11,000 hours and more than 1,400 flight cycles. Airbus has delivered 12 aircraft in 2008, 10 in 2009, and 13 so far in 2010, bringing the total number of A380s in operation to 36 as of the end of September. There are currently five operators: two in Europe (Air France and Lufthansa), one in the Middle East (Emirates), and two in the Pacific Rim (Singapore and QANTAS). Of the 36 aircraft delivered, 21 are equipped with the Rolls-Royce Trent 970-84 engine and 15 are equipped with the Engine Alliance GP7270E engine. In our appraisals and valuations, there is no difference in value between the engines. This could change in time as one engine or the other becomes a decided favorite or if one of them should develop operating problems. Thus far, there have been no significant

problems and the order book is relatively even. Of the current operators, Air France and Emirates are ordering the GP7270E while the others are ordering the Trent 972-84. Airbus has secured 234 orders thus far, leaving a backlog of 198, which at current production rates would keep the production line open until the end of 2011. The aircraft thus far has proven to meet all expectations of the operators and shows all signs of being a market force for years to come. Our value determinations take into account many factors such as: recent transactions, of which there have been only new sales for the A380; longterm growth of airline traffic, which will continue at 5 percent per year and

increase the need for larger aircraft such as the A380; and the unique competitive position of the A380. This aircraft appears to offer the appropriate proportional size differential necessary for passenger operators to make the leap from a twin-engine aircraft to a four-engine aircraft. The list price of the A380, according to the Airbus website is $346 million. All indications are that currently jet transport aircraft are selling at about a 35 percent discount. We also believe there were significant discounts made available in the early years to get the program started. Given this plus historic evidence that new aircraft cannot be remarketed at original sales prices gives us the current and future values in the table below.

Constant 2010 US millions of dollars.
Year Value 2010 2009 2008 2007 2010 Market 196.29 175.35 154.60 137.74 2010 Base 205.00 182.65 162.74 145.00 197.88 175.89 156.34 138.96 190.55 168.97 149.83 132.86 175.43 154.82 136.63 120.58 159.98 140.51 123.41 108.39 144.50 126.31 110.41 96.51 129.27 112.46 97.83 85.11 2011 2012 2014 2016 2018 2020

The aircraft values stated herein are the product and property of independent third-party sources, and ISTAT neither approves nor endorses the information contained herein or the use thereof for any purpose whatsoever. Information current as of September 2010.

Basic operating speciﬁcations of the A380
Maximum Take-off Weight baseline-t(lb) Maximum Take-off Weight options t(lb) Maximum Seating Capacity Typical High Comfort Seating-3 class Maximum Range km(nm) 560t (1,234,576 lb) 573t (1,263,236 lb) 853 525 15,400 km (8300 nm) Jetrader 19

Jetrader - November/December 2010

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