Podcast: The Future Airbus A380 Fleet And MRO

After Airbus ceased production and COVID-19 destroyed demand, the A380 program's fate appeared to be sealed. However, the past year has seen an unexpected volume return to airline fleets. Aviation Week's Lee Ann Shay, James Pozzi and Dan Williams discuss the present and future of the A380 and its aftermarket.

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Rush Transcript:

Lee Ann: Welcome to Aviation Week's MRO Podcast.

In this episode, we'll be talking about the world's largest passenger aircraft, the iconic Airbus A380 program, and the present and future of its fleet and aftermarket.

I'm Lee Ann Shay, Aviation Week's Executive Editor for MRO and Business Aviation. And I'm here with my colleagues James Pozzi and Dan Williams. James is our MRO Editor for EMEA, and Dan is our Senior Manager of Fleet, Flight and Forecast Data. That's a bit of a tongue twister.

Welcome, James and Dan.

James: Hi, Lee Ann. Good to be here.

Dan: Yes, thanks for having us today.

Lee Ann: You bet.

Let's start out with a scene setter. Airbus stopped producing the A380 in 2021. Dan, would you please describe the current A380 fleet?

Dan: Yes, the A380 has gone on a bit of a journey. Obviously, let's go back a little bit, pre-pandemic. The writing was on the wall almost before they even delivered the very first one with step change in engine technology that Boeing held a nerve and went for the twin jet and bus plowed on with a double Decker four engined behemoth. Then, we fast-forward a little bit towards just before the pandemic, and there was about 240, give or take a handful, A380s in service. And then, as the pandemic hit, I think a lot of people, and to a certain extent myself, thought the days of the A380 were numbered, even though they were still delivering technically A380s right to the very end. They've been on an interesting journey.

Where we stand today, we went from the 214 service pre-pandemic and we're back to about 160 in service where we are today. And that alone tells us about 68%, nearly two thirds of the fleet, are back, which is great considering during the course of the pandemic there were certain CEOs of Middle Eastern carriers that said they were never, ever, ever, ever, ever, ever going to bring the A380 back into service and, hey presto, it's back into service because I don't think anybody could have foreseen the labor shortages, the issues with new deliveries, the supply chain issues. And this lots of little things individually have created a big problem and, all of a sudden, the A380 looks great again.

Let's add on top of that` the slot constrained airports. BA always loved the A380 because it's one flight, it's one slot and it's a lot of passengers. And then, we've seen the announcement, for example, of Amsterdam where they're going to slot-restrain the airport. How do you get around that? You put bigger aircraft into it, so the A380s had a slight resurgence.

It's not all good news because, during the course of the pandemic, quite a few of them were parted out and scrapped. Air France, a couple were gone and Singapore and the like. It's not a perfect story but it's got a slight silver lining to the story. And in terms of utilization where we are today, they're still at about 60% of equivalent month 2019.

Again, their fleet is at about 66% of pre-pandemic. They're flying at about 66% of pre-pandemic. They're never going to get to pre-pandemic levels purely because they're not the aircraft available. It's not all a bad news story as we thought it was this time three years ago, just after we'd gone into the pandemic. However, it's not the best news story but it's a reasonably good news story.

Lee Ann: Those are some really excellent points and I agree with you. When the pandemic started, there's no way I would've said that 66% of the A380 fleet would be flying today. I was off on that one.

James, given that 66% of the A380 fleet is still flying, let's talk about the aftermarket. What are you seeing?

James: Yes, look at what Dan said. It's been a journey and certainly for the program over the last few years, and I guess really since the beginning of its life it's had many twists and turns really. If you'd asked me this question anytime from between 2019 when production was first announced to stop through to 2021 when it actually happened, I would've likely told you that the A380 aftermarket would descend in line with what we thought would be significantly reduced fleet size over the next decade. Also, of course, I can't talk about this without throwing in COVID. I would've doubled down on that opinion during COVID when it seemed that the end of the program would be sped up rapidly when we saw airlines, some of which Dan mentioned, either announce or actively start offloading their A380 eighties, of course due to the collapse in long haul travel demand and the fleet reductions that took place.

However, as it stands, the A380 is indeed having a bit of a comeback as more aircraft reentered the global fleet and some of its operators are reversing previous decisions to keep aircraft in long-term storage or retire them altogether. I'm thinking about the likes of Lufthansa had U-turn on that, Etihad are bringing back some of their A380s now, they obviously just announced that recently one aircraft reentered service after some maintenance checks took place in Abu Dhabi.

Yes, I would say the aftermarket looks pretty steady really, despite being obviously smaller than other major wide-body fleets given the lower volumes of aircraft worldwide. But I think it should show some signs of longevity over the next decade. And the recent spike in travel demands, as I mentioned, leading to the likes of Lufthansa, Etihads, and of course Emirates reactivating A380 aircraft after long-term storage, that can't hurt at all.

Over the next 10 years, based on some of the... I don't want to, obviously, steal Dan's thunder because I know he'll be talking about some of the data later on, I imagine. But yes, over the next 10 years I think the overall market is projected at 23.5 billion in MRO spending. And that's not insignificant, although there are relatively few A380 maintenance providers and of course they're all centered around the regions such as Middle East, Europe, Asia Pacific, and to a lesser extent there's a few obviously in China as well. And obviously later on, we'll be able to look at some of the market segments and see exactly where some of this maintenance will take place. But one of the really interesting ones, which I'll expand on a bit later, is in modifications. It seems to be quite a buoyant market around that in the next few years, and there's certainly reasons for that with various retrofit projects set to take place.

Of course, we can't really talk about any program at the moment without mentioning the supply chain. It's very interesting that Qantas stated early this year that a lack of slot availability for maintenance delayed the return to service of the six A380s it planned to bring back into the fleet. That's something to watch because of course, as Dan mentioned, there's around 160 aircraft in service at present, and this number will grow next year. I think there's a bit of a spike for leveling out after that, as more aircraft return to service. But of course, supply of parts and maintenance slots availability, they'll be, of course it goes without saying, will be really important.

For parts, we've seen the A380 become a reasonably attractive teardown option in recent years, following on from that retirement spike in 2020 that we saw. I think around 11 aircraft were retired that year according to Aviation Week's data. Although the wide-body segment hasn't been as impacted as the narrow-body segments by constraints of USM, that doesn't mean that's not happening and there will always be demand for more USM in the market and the A380 is certainly no different to that.

This year of course, we've seen fund investors in the A380. Dr. Peters who are of course based in Germany, in Dortmund, before COVID, they were looking to recoup on their investments with aircraft taken off lease, were selling them to head down specialists to take part and sell the parts of the A380, which I've always been fascinated by the fact they number more than a million parts, which is a huge, huge amount of course. But not surprisingly, really, for such a big aircraft. It'd be interesting to see what we see there in terms of the teardowns going on. A lot to think about there.

And of course recently our colleagues Jens Flottau and Sean Broderick reported on the issues around the A380s that sat idle in severe environmental conditions, being susceptible to wing-spar cracking, which is clearly linked to the wing's age. And as I said, Sean and Jens have done a lot of reporting on this.

As it stands, it seems that obviously EASA have adopted a broader inspection criteria which is recommended of course by Airbus, the manufacturer. And Airbus since then said that this will not change its storage guidance of the aircraft and the airlines impacted by that, one of which is Emirates, is being supported by them to overcome these issues.

As I said, that was quite a significant story report on a few months to go, and that could be interesting too. As I said, it seems Airbus have that under control but, as more of these aircraft returns of service, that could just be want to watch and want to keep an eye on. And that's sure to... Hopefully won't, but it could obviously cause a few headaches to operators and of course the manufacturers. Yes, that could be something to keep an eye on, I think, as more return to service maybe.

Lee Ann: Thank you, James. You just covered a lot. $23 billion, 160 aircraft, a million parts, wings, lots to follow up on there.

But Dan, since you are the manager of Fleet, Flight and Forecast, I think I just like saying those three words, are you seeing any interesting data sets related to the A380 aftermarket?

Dan: Yes. The A380, just in general, is fascinating. The issue that the A380 has is it doesn't really have a secondary market. I think this is the biggest problem of it all. Hi Fly tried it with a couple of A380s that they took and they are now USM. We have seen announcement by a company called Global who are taking some secondhand A380s. I don't know how successful they may be. I wish them well. I think they will probably find it quite tricky and quite difficult to fill those aircraft because the traditional carriers have.

In terms of the aftermarket MRO, let's be realistic about this. A380s are D-checked at 12 and 24. We're currently in the midst of our forecasting process now for our next forecast release. The chance of an A380 lasting higher than the age of 24 is somewhere between slim and nul. We are looking, over the course probably about our next 10-year forecast, the vast majority of A380s will slowly dwindle out of service purely because they get to old. Qatar have already said that, "Yes, we're never bringing them back. But then we'll bring them back," but they'll only bring them back until they get the A350-1000.

There's going to come a point, in the not to just in future, where those are going to come out and, again, I doubt they will find the secondhand market. They are well-used aircraft in what is deemed, from an MRO perspective, quite a harsh environment for them to operate in, at least every other flight.

The MRO is, whilst there's a huge number, don't get me wrong, it really is, we are looking at a number that is slowly going to be dwindling in because these A380s, like Emirates they built the backbone of their fleets on these, they're going to need replacement aircraft in the future. And the natural replacement ironically for the A380 is the Boeing 777X, similar passenger capacity, it does everything almost an A380 can do just with two engines rather than four. And when that enters service later in the decade, you can pick a number because I don't think Boeing can pick a number for a [inaudible 00:11:50] to service right now.

You will see some of that fleet replacement, and those traditional carriers who have had the A380 are the same carriers who have ordered the 777X. The MRO is still a huge number. Like James said before, there are only limited MRO people that can do it, companies that can do it because they are a specialist vehicle. It's tricky for Qantas to get a slot because, A, not many companies do it, B, it's one heck of an aircraft to try and get in. And they need a big slot to fit it in because it's down a long time and they need a big space to be able to do it.

There is some good news in this because, go back three years ago, and people were [inaudible 00:12:29] to a reasonable extent, other than Emirates who is going to operate the A380 again. And the nice thing is it's not just Emirates that are operating them right now.

Lee Ann: Thank you.

Really, the next decade is going to be the decade of A380 maintenance.

Dan: Yes. And come 2030s, that's probably the time that those MRO companies need to start looking at other platforms to service as their A380 replacement, just like the operators are looking for A380 replacements for the passengers.

Lee Ann: I guess for aftermarket providers who are doing the A380, you should maybe consider getting into the 777X, it sounds like, in a decade or so.

Speaking of market opportunities for MRO providers, James, are there particular market segments such as interior refurbishments?

James: Yes, I'll start with that.

As I said, there's some interesting things going on at the moment. I'll just start with saying, you mentioned looking at other aircraft types and I don't see a great need or will really for MRO providers that don't have A380 capabilities to add new capabilities in the area, particularly in engine overhaul and base maintenance, while things like C checks will take up a lot of the airframe MRO activity. I just don't think they have the will or logic or business sense to do that for MROs. And I think those providers that have existing capabilities would hope to service that because, as I said before, that's around Europe, Middle East, Asia Pacific and of course China to some extent as well now.

But I'll start with the modifications. Yes, it's a very interesting thing that's going on at the moment. Emirates, I think it's fair to say, are carrying this program and have done so because they comfortably have the largest fleet share in the A380 global fleet. And of course, they're undertaking a big retrofit program announced obviously last year, and it's numbering 120 aircraft in total and 67 of those are A380s with the remainders 777s. And this will target the retrofitting of everything from first class to business class areas, and looking at everything from seats, carpets, et cetera, taken out and replaced and modified. And yes, despite plans to reduce its A380 fleet overtime, Emirates of course still will have them in for, I think, maybe the longest or certainly among the longest of any of the airlines. I think their original plans were going all the way through to 2035 when they envisaged having them in their fleet.

Yes, this will continue for the next couple of years and that will provide, I think, a spike in the retrofit work over the next two years. Obviously, I've seen other airlines. Obviously, the Singapore, obviously the launch customer for the program back in 2007, they've retrofitted their older a three eighties with new, first and business class cabins. I wouldn't be surprised if the other carriers follow suit and embark on retrofit programs of this kind, especially if the demand is back and obviously the advantages we talked about of the A380. And there are still plenty of those. If they see it as certainly a mid to long-term prospect, throughout the rest of this decade, the 2020s, then certainly could see maybe more of that modification work taking place. As I mentioned before, yes, C checks will play a large part in this. And I know for the A380 they occur every 36 months and that was changed in 2017, that was revised. And I think, according to Aviation Week data, they're going to peak by next year. And of course a large share of that will be driven by Emirates.

We've seen a bit of activity risk maybe with contracts. Lufthansa Technik earlier this year taking on some contracts for the A380 related to C checks and landing gear overhaul. British Airways of course outsourced their base maintenance for all 12 of their A380s to look down to Lufthansa Technik Philippines business a year or two back. Companies are planning ahead for that and getting their contracts in place for the next five years or so, for the base maintenance.

Yes, I do agree with Dan who covered the heavy maintenance. It obviously only accounts for a very... Sorry, a D check. That accounts for a very small part of the predicted MRO events. However, given the time spans of when they take place, it's very unlikely that some of them will have a [inaudible 00:16:35] base I think in the 24 and the 36 numbers.

But I think overall there's plenty of activities and certainly the specialists already in the A380 space can... Provided the capacities there and the readiness for this reintroduction of some of these aircraft, there is certainly I'd say healthy MRO opportunities ahead for the next decade or so. And as I said, that's the established players already in the space.

And just one more thing. I mentioned about capabilities before. Possibly, the only thing we might see a bit of, and we've seen it with a couple of companies in the last year, smaller independent MROs, they've added CAMO approvals related to the A380. This is of course when a company oversees the scheduling and control of continuing airworthiness activities on the aircraft and their part. There could be demand of that as well as of course line maintenance, as flying picks up. Of course that's dependent on certain factors. I can't really think, off the top of my head, of any company that have really added line maintenance capabilities for the A380 in the last couple of years, in recent times. But certainly there are providers out there who will do that. They may see a bit of opportunity there to pick up some of that work, in the coming years.

Lee Ann: Lots of opportunities for the A380. We should not be writing off this iconic aircraft. And I was just thinking of when these iconic aircraft like the 747-400, made their last flights and were retired, just the fanfare around the world. I can only expect, when the A380 does make its last flights, how the world will be reacting.

Dan and James, thanks for your great insights and data. Really appreciate it.

And listeners, please don't miss the next episode. Subscribe to the MRO podcast wherever you listen to them. And one last request: if you're listening in Apple Podcast and would like to support this podcast, please leave us a star rating or please write a review.

Thank you so much. 


Lee Ann Shay

As executive editor of MRO and business aviation, Lee Ann Shay directs Aviation Week's coverage of maintenance, repair and overhaul (MRO), including Inside MRO, and business aviation, including BCA.

James Pozzi

As Aviation Week's MRO Editor EMEA, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.