ILFC mulls over fate of its A380 order

Washington DC
Source:
This story is sourced from Flight International
Subscribe today »

ILFC chief Steven Udvar-Hazy - once a strong proponent of the Airbus A380 - is now casting doubts on its sales prospects and hints that it could be the first customer to cancel the passenger version.

The lessor was among the launch customers for the ultra-large airliner, with an order for 10 aircraft, but Udvar-Hazy says the company is "asking ourselves if we are really going to take delivery".

Speaking to German business weekly Wirtschaftswoche at the International Air Transport Association general meeting in Kuala Lumpur earlier this month, Udvar-Hazy cited changing market dynamics and waning interest in the European super-jumbo as the factors driving the lessor's decision-making.

ILFC is the only lessor with A380s on order, and Udvar-Hazy views the estimated $25 million cost of converting the double-decker from one airline's specification to another as prohibitive for leasing companies.

airbus 
 © Airbus

He is also concerned about the 525-seater's ability to serve as many markets as previously expected, adding that "interest is weaker than expected, in particular among the Chinese".

ILFC's A380s are not due for delivery until the 2013-15 period. It says it can cancel its order without penalty before the end of June, with the option of deferring deliveries or conversion to another type also being considered.

Airbus, which has delivered 15 of the 200 A380 orders it holds from 16 customers, recently decided to slow production due to customer delivery deferrals an financing issues.

Udvar-Hazy sees this move as a threat to Airbus, saying: "If I were Airbus I would be very worried. At current production rhythms, it will be very hard to make money with this plane."

Airbus cut 2009 deliveries from 18 to 14 A380s while next year's plan calls for "more than 20", but it warns that output will be "dependent on airline demand and availability of customer financing".

Virgin Atlantic boss Sir Richard Branson - who has six A380s on order - believes the current slump could have an impact on customer thinking: "In this recession, operating economics are critical. A380 operators will be questioning if they've got the right aircraft at the right time and whether they can make it a profitable aircraft type over the next two years," he adds.