German firm Dr Peters has reached an agreement with Air France over the return of one of its Airbus A380s.
The deal will see Air France make a maintenance payment due to the aircraft not meeting its lease return conditions, and continue to lease its GP7000 engines.
As a result of those agreements and previous lease payments, investors’ capital will be preserved, although the fate of the aircraft, and any residual value, is uncertain.
Disassembly is the most likely option, although this needs the approval of three-quarters of shareholders in Dr Peters fund DS 135.
German investors have invested around €1.6 billion in 21 A380s through closed-end funds.
Shareholders in another Dr Peters fund agreed to part out its first A380 once the lease expired in 2017.
In 2018 Dr Peters predicted parts revenue of around $70 million from each A380. Two dismantling events have been completed thus far, including one from DS 129, with the parts sales process expected to take two years.
At the end of 2019, however, each scrapped A380 had generated only $19 million, with the prices of parts awaiting sale only likely to fall as more A380s head to the chop shop.
Nonetheless, part-out seems the best option in a market where onward demand for the A380 is almost non-existent.
“Interestingly, the prices of funds whose A380s are already in a part-out – selling the aircraft for their parts - have risen slightly from previous lows: the process has provided investors with greater certainty in the context of the expiry of the aircraft leases,” wrote Frank Netscher, an analyst for Scope Ratings, at the end of last year.
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