ILFC chief Steven Udvar-Hazy pulled no punches on the future of the A380, entertaining a cancellation, expressing concern about the production plan, conversion costs and future cargo variants.
"We are asking ourselves if we are really going to take delivery of the 10 planes," said Udvar-Hazy at this years IATA general meeting in Kuala Lumpur to German business weekly Wirtschaftswoche.
Udvar-Hazy cited changing market dynamics and waning interest in the European superjumbo as the factors driving the lessors decision making.
ILFC says it can cancel its order without penalty between January and June 2009, with options of delivery deferral or conversion to another aircraft type also being considered. It would be the first cancellation for the passenger version of the A380.
Udvar-Hazy expressed concern about the aircraft's ability to operate on as many routes as previously expected, adding that "interest is weaker than expected in particular among the Chinese."
"In this recession, operating economics are critical," said Sir Richard Branson exclusively to FlightBlogger.
"Airlines need to ensure that they have the right number of seats during a period of lower demand otherwise their bills are going to be unmanageable. 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," said Branson.
Virgin Atlantic Airways holds firm orders for 6 A380 aircraft.
The A380 is good for niche routes but "if Dubai - New York doesn't work, I'm not sure what does," said Richard Aboulafia, vice president of analysis for the Teal Group.
Emirates, the largest customer for the A380, downsized its Dubai - New York-JFK flight on June 1st from a daily A380 to 777-300ER after poor load factors on the route.
ILFC's order for ten A380s is valued at $3 billion and is the only lessor to have placed an order for the type.
Udvar-Hazy also sees the estimated $25 million cost of converting the airplane from one airline to another as prohibitively for lessors. Adding, that the development of the A380 freighter variant is "dead."
Udvar-Hazy sees the slowing A380 production rate as a threat to Airbus as well.
"If I were Airbus I would be very worried," said Udvar-Hazy. "At current production rhythms, it will be very hard to make money with this plane," he said.
Airbus announced a 2009 A380 production cut on May 6th from 18 to 14 aircraft, with "more than 20" planned for delivery in 2010.
Aboulafia sees "no hope" that Airbus will ever be able to pay back its non-recurring launch costs and that the A380 program will survive on cash flow enabled by accelerated production, though the economy leaves the company in a precarious situation as it looks to the future.
"What matters now is the A350. That's a seriously important plane," says Aboulafia.
Airbus holds orders for 200 A380s from 16 customers.
in http://www.flightglobal.com/blogs/fligh ... 380-t.html