Airbus and Rolls-Royce have combined on a program to enhance the residual values and market viability of the A340-500 and -600, which have been removed from many airline fleets due to unfavorable economics. Rolls-Royce has stepped up with a “four for the price of two” program in which they will guarantee engine maintenance costs at the same level for maintaining two GE90s on a Boeing 777-300ER. This will help bring the economics of the A340-500/600, which suffers from unfavorable engine maintenance costs, in line with two-engined competitors.
In addition, Airbus is certifying the A340-600 to a maximum of 475 seats in all economy seating, in an effort to become a viable replacement for the 747-400 for many carriers currently operating that type, making the aircraft more attractive to ULCC and charter operators.
Airbus has a significant number of residual value guarantees for the A340, and is taking this action to avoid potential losses from guarantees, and convince customers that the A340 can be a viable interim aircraft, if not for a longer period, before the A350 arrives.
One potential solution to Airbus difficulties with the A340 program is waiting in the wings, as Iran Air needs a new fleet. With the current economic sanctions likely to disappear in the near future, there is a ready potential market for the 25 A340 aircraft currently in storage. Iran Air needs new lift, and Airbus and Rolls-Royce have new programs that will make that option economically viable. At the current lower aircraft values, used A340s could provide Iran Air with the opportunity to re-fleet with modern aircraft quickly, at much lower capital costs than would otherwise be possible. This is especially important in a market with multi-year backlogs for the most popular new models, and the age of Iran Air’s current fleet.
Could Iran Air be a big part of win-win solution to the A340 dilemma? It makes sense for both parties, so stay tuned.
© 2013, Ernest S. Arvai. All rights reserved.