Emirates sees strong supply of A380 financing

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Emirates faces no issues financing its Airbus A380 fleet, despite continuing questions about the residual value of the aircraft.

“It’s one where we continue to see strong demand for lending to Emirates and lending for the A380,” says Nigel Hopkins, executive vice-president of group services at the Dubai-based carrier, at an A380 investor event in New York on 12 June.

Financing for Emirates' fleet of 48 A380s is split 35% from export credit backed loans and bonds, 22% from operating leases, 20% from secured enhanced equipment trust certificates (EETCs), 14% from commercial loans and 9% from Islamic financing in the form of Sukuk programmes, he says.

Questions remain about long-term demand for the aircraft and their residual value risk.

Mark Lapidus, chief executive of A380 lessor Amedeo, is unconcerned with the risks. They can reconfigure most aircraft that they have on lease into a two-class configuration for “less than $5 million” – or roughly the cost of reconfiguring an Airbus A330 – he says at the event.

In high-density configurations with upwards of 700 seats, the A380 will have the unit costs of one Boeing 777X but the capacity of two of the aircraft in 2025, he adds. Global population growth during the intervening decade will only increase the attractiveness of these characteristics.

Asked why no new airline has ordered the aircraft during the past two years if its economics are so attractive, Lapidus says simply: “It takes a little bit of time.”

Amedeo is on track to begin placing the 20 A380s it has on order by the end of 2014, he says.