Airbus’s Longest Aircraft Gets More Seats to Help Rebuild Value

[flee 5]

Airbus SAS plans to lift the seat count on the A340 wide-body jet and cut maintenance costs in an effort to prop up the market value for its longest aircraft, which went out of production two years ago after slack sales.

The plan, which needs approval from regulators, would see the seat count on the twin-aisle airliner go to 475, according to a presentation by Airbus and engine makers in London yesterday to A340 owners. Service costs on the four-engine jet would fall to the equivalent of two powerplants to improve its economics.

Airbus stopped building the plane in November 2011 after customers picked up more fuel-efficient two-engine models such as Boeing Co. (BA)’s 777 and the shorter Airbus A330. Adding more seats would underpin Airbus’s efforts to bolster the A340’s value in the secondary market as operators renew their fleets.

“This will revolutionize A340 economics,” Airbus Chief Operating Officer John Leahy said in a e-mail following the presentation, where engine makers Rolls Royce Holdings Plc and CFM International, a joint venture of General Electric Co. (GE) and Safran SA (SAF), also spoke to a group of about 100 people with an interest in A340 values.

More here: http://www.bloomberg.com/news/2013-12-04/airbus-s-longest-aircraft-gets-more-seats-to-help-rebuild-value.html

[flee 5]

Airbus and Rolls-Royce aim to boost the market appeal of the A340-600 with reconfiguration and support initiatives that address operating costs.

The plan was unveiled in London on 4 December to an audience of over 100 delegates, who included bankers, appraisers, brokers, financiers and lessors.

"The meeting was to demonstrate Airbus, Rolls-Royce and CFM’s joint common commitment to the A340 programme," says Andreas Hermann, vice-president of freighters and A340 asset management at Airbus. "The key message is that it is not only one party, it’s all three parties who are very committed to the A340 programme."

Airbus has delivered a total of 377 A340s, including 246 CFM56-powered A340-200/300s and 131 R-R Trent 500 powered -500/600s. It is currently remarketing 16 A340s, including seven -300s, four -500s and five -600s, says Hermann. "For quite a few of these we have a solution to be announced sometime soon," he adds.

Airbus acknowledges that the A340-600 burns 12% more fuel than the similarly sized Boeing 777-300ER, but it claims the four-engined aircraft can be competitive thanks to its lower ownership costs, which it claims averages $850,000 per month, and by tackling engine maintenance costs. Central to the latter is a pledge by R-R to bring maintenance costs for an A340’s four Trent 500s in line with those of a pair of General Electric GE90-115Bs, which power the 777-300ER.

A presentation given by Airbus at the conference included a slide about engine manufacturer support for the Trent 500 which stated: "Four engines for the price of two (four Trent 500 = two GE90-115)".

In response to cynicism that this pledge is nothing new, Hermann says: “That is where Rolls is very happy that they will be proven, not on their words, but on their actions.”

More: http://www.flightglobal.com/news/articles/airbus-and-rolls-unveil-plan-to-restore-a340-600-appeal-393844/

[Kee Hooi Yen 0]

Are the four A340-500s from SQ ?

[flee 5]

Possibly - they have taken in all five of SQs A345s when they ordered their new A359s.

[Johan Z 0]

Airbus should call it quits with A340. A340 has done wonderful jobs with other airlines. Airbus should concentrate on A350 family now.

[flee 5]

Airbus should call it quits with A340. A340 has done wonderful jobs with other airlines. Airbus should concentrate on A350 family now.

They have - they stopped production in 2011.

 

However, they are continuing to support existing A340 operators and not abandon them. Furthermore, they have also signed some resale value guarantees with customers.

 

What they are trying to do now is to make sure that the cost of maintenance of the A340s are comparable to the twinjets. That is where the engine manufacturers are playing their role as Airbus partners. The A340s are quite efficient - the A340-600 has about 20% better fuel burn than the B747-400 but about 12% worse fuel burn than the B777-300ER.

 

With these measures, Airbus has narrowed that the gap to the B77W (total cost of ownership should now be competitive) and airlines can still operate the planes profitably.

Also, those airlines who have retired the B744 but are not looking to replace them with new build planes can now look at the A346 as a possible replacement.

[Johan Z 0]

They have - they stopped production in 2011.

 

However, they are continuing to support existing A340 operators and not abandon them. Furthermore, they have also signed some resale value guarantees with customers.

 

What they are trying to do now is to make sure that the cost of maintenance of the A340s are comparable to the twinjets. That is where the engine manufacturers are playing their role as Airbus partners. The A340s are quite efficient - the A340-600 has about 20% better fuel burn than the B747-400 but about 12% worse fuel burn than the B777-300ER.

 

With these measures, Airbus has narrowed that the gap to the B77W (total cost of ownership should now be competitive) and airlines can still operate the planes profitably.

Also, those airlines who have retired the B744 but are not looking to replace them with new build planes can now look at the A346 as a possible replacement.

 

The cost of acquiring them will also be cheaper.

[Mulyadir Fitri 0]

If wonder with all the improvements, will it be enough for D7 to make money to Europe?

[flee 5]

Two big issues in Europe - carbon taxes and the ridiculous air passenger duty in UK. These make it very difficult for D7 to compete with the Middle Eastern airlines - these taxes are levied based on total distances travelled. So the taxes from LGW-KUL will be much more than the taxes levied from LHR-DXB/AUH/DOH.

 

Remember, D7 already has high density seating - so the only savings will be in the maintenance costs. These savings may not be sufficient.

Edited December 6, 2013 by flee

[H C Chai 4]

Two big issues in Europe - carbon taxes and the ridiculous air passenger duty in UK. These make it very difficult for D7 to compete with the Middle Eastern airlines - these taxes are levied based on total distances travelled. So the taxes from LGW-KUL will be much more than the taxes levied from LHR-DXB/AUH/DOH.

 

Remember, D7 already has high density seating - so the only savings will be in the maintenance costs. These savings may not be sufficient.

 

Yes I agree that the UK air passenger duty is a PITA... but dont think this is ther reason why D7 is having the disadvantage over the middle eastern carriers. If one is doing London - Dubai - KL with Emirates, the amount of UK APD imposed on the ticket is still the same as the a nonstop London - KL flight. The APD only drops if you break the journey at the transit point for more than 24hrs...

 

Middle eastern airlines are just too big to compete for a relatively small airline like D7. Those big 3 fly to almost every major cities in Europe these days...