November's aircraft report: The Airbus A340-600

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

The Airbus A340-600 features a 35 ft (11.7 metres) stretch over the -300 model allowing up to 380 passengers in a three class cabin arrangement over 7,500 nautical miles (nm) and 419 passenger in a two-class configuration. Maximum capacity is 440 passengers.

Airbus launched the A340-500/600 series to compete the Boeing 747 models and the 777 series. The most direct Boeing equivalent to the A340-600 is the 777-300ER.

The A340-600 is more than four metres longer than the 747-400 model and 2.3 metres longer than the A380. It provides similar passenger capacity to a 747 but with 25% more cargo volume, and at lower trip and seat costs.

First flight of the A340-600 was made in April 2001. The aircraft received certification by the European Joint Aviation Authorities in May 2002 and entered service with Virgin Atlantic in August 2002.

The A340-600 is powered by four 56,000 lbs thrust Trent 556 engines. IThe two-wheel centreline landing gear of the A340-300 is replaced by a four-wheel undercarriage on the fuselage centre-line to cope with the increased maximum take-off weight (MTOW). Airbus has made provisions for freeing additional upper deck main cabin space by providing optional arrangements for additional facilities such as crew rest areas, galleys, and lavatories upon the "stretched" A340 aircraft's lower deck.

Airbus launched the A340-600HGW (high gross weight) version, with a strengthened structure, increased fuel capacity, more powerful engines and new manufacturing techniques like laser beam welding. The aircraft first flew in November 2005 and was certified in April 2006.

The A340-600HGW is powered by four 56,000 lbs thrust Trent 556A-261 engines. Benefiting from A380 technology, reduced maintenance costs, and the latest development of Rolls-Royce Trent 500 engines, Airbus says the A340-600HGW provides up to 18% higher productivity compared to earlier variants and travels 250 nm further, up to 7,900 nm.

Emirates Airline became the launch customer for the -600HGW when it ordered 18 at the 2003 Paris air show; but postponed their order indefinitely and later cancelled. Qatar Airways, which placed its order at the same air show, took delivery of only four aircraft with the first aircraft in September 2006. Lufthansa, Virgin Atlantic and Etihad Airways also took delivery of the -600HGW variant.

Airbus studied an Enhanced version of the A340-600 five years ago to reassert itself in the long-range widebody battle with Boeing. The dubbed "A340-600E" study incorporated certain improvements from the A350 and a new Trent 1500 engine, developed from the Trent 1000/1700 family. Airbus eventually shelved the study to concentrate on the A350 programme.

Market

Airbus sold a total of 96 A340-600s (including two aircraft for VIP role) and delivered 95 aircraft to customers. One aircraft was damaged beyond repair during ground testing in November 2007. The aircraft was due to be delivered to Etihad Airways.

Last A340-600 deliveries included two aircraft for Iberia in the first half of this year.

A total of 37 aircraft are powered by the Trent 556-61 engine, while the Trent 556A-261 engine powers 58 aircraft.

The A340 was Airbus' original long-range product in the days when it did not believe the market for a twinjet of similar capability would find enough market interest due restrictive regulations on long over-water flying. The subsequent success of the A330 and the 777 gradually changed Airbus' view on this and it has evolved its own big twin into a strong performer.

The A330's range development and the launch of the A350 XWB ultimately killed off the original CFM International CFM56-powered A340-300, with Airbus ironically securing its 1,000th order for the twinjet as the last of 246 A340-200/300s rolled off the line.

Airbus retained the four-engined approach for long-range/high-capacity and ultra-long-range missions in the form of the A340-600 and -500, respectively. The $2.9 billion A340-500/600 programme was launched in 1998. The new family sold reasonably well early on before Boeing finally evolved 777 variants with similar size and range capabilities - the -300ER and -200LR - which entered service in 2004 and 2006, respectively.

The subsequent development of these new variants gave Airbus a hard time in the marketplace trying to sell the A340 quad with its higher operating costs. Even Airbus' chief salesman John Leahy admitted in 2006 to a "single-digit fuel burn penalty" over the 777, which he said could be "traded off" through competitive pricing. However, the last few year's fuel price rises exaggerated this gap, and it was no surprise that Airbus has had relatively few orders since 2005.

Virgin Atlantic, which operates 14 aircraft of the type, cancelled its six outstanding A340-600 aircraft it had on order in January this year and firmed its previously-disclosed order for six Airbus A330-300s in 2009. The carrier signed a letter of intent with AerCap Holdings for the 12-year purchase and leaseback for these aircraft and a lease agreement for another four aircraft. The aircraft are scheduled for 2011 and 2012. Virgin Atlantic says they will provide capacity that was to have been added by the now much-delayed Boeing 787-9 aircraft.

 


Air Canada initially deferred the delivery of its three aircraft order by 18 months and eventually cancelled them, 10 years after placing its order for the type. The carrier took advantage of the second-hand market to renegotiate the lease of 747-400s at the time when economic conditions were challenging.

Egyptair abandoned plans in 2003 to take two A340-600s as part of its long-haul fleet renewal following its decision to order seven A330-200s.

All the 95 aircraft in commercial services have stayed with their original customer, except three aircraft at Hainan Airlines. The three 2002-vitnage A340-600s were initially placed by ILFC to Cathay Pacific but after a six-year operating lease, were placed with Hainan Airlines for seven years to 2015.

Lufthansa is the largest customer of the type with 24 aircraft in service, or 26% of the total fleet.

Iberia replaced its ageing Boeing 747-200B/300 fleets with the A340-600 model. South African Airways replaced its Boeing 747-200B/300/SP fleets as well as some 767-200ERs with the A340-300/600s. The SAA A340-600s were Swissair's delivery positions.

Values and Lease Rates

There's no denying that the market for the -600 is fairly limited. There are no aircraft available for sale or lease but on the other hand few customers are openly talking about the A340-600 applications.

IBA Group says the fleet is fairly concentrated with only 12 operators, mainly national carriers, and Lufthansa is the largest with 24 models.

IBA says operators are satisfied with the aircraft performance and holding onto their models. "The limited availability for both the -600 and its dominant rival, the 777-300ER, should help to reduce downward pressure on A340-600 values in the short-term," says senior analyst Alice Gondry.

IBA values a 2002-vintage aircraft at $74.08 million current market value (CMV) while base value is $82.031 million. Morten Beyer & Agnew (MBA) says the same aircraft has a $55.93 million CMV.

"The A340-600 is facing increasing pressure from its competitors. Although it is one of the largest commercial aircraft, its lower fuel efficiency when compared to the twin-engine Boeing 777, has continued to impact its values negatively. However, when operated outside of ETOPS parameters, the aircraft still fulfills a valuable mission," comments MBA.

A 2004 delivery has an $81.87 million CMV and a $90.97 million base value for IBA, while MBA values the aircraft at $63.55 million CMV.

A 2007 delivery has a $95.08 million CMV and a $105.65 million base value for IBA, while MBA values the aircraft at $78.24 million CMV.

However both appraiser companies have a current market value of $116 million for a new delivery.

Monthly lease rates for older models are in the $650,000 and $730,000 range for IBA and between $410,000 and $640,000 for MBA.

A 2004-vintage aircraft would attract lease rates between $705,000 and $770,000 according to IBA. MBA has a range of $440,000 and $675,000 a month.

IBA says a three-year old aircraft would have monthly lease rental between $800,000 and $860,000 while MBA says lease rates are between $470,000 and $731,000.

On a new delivery, IBA has lease rates between $880,000 and $950,000 a month. MBA says lease rates are between $643,000 and $793,000.