The A380 fleet has been put through a rather unseemly rapid retirement. Our friends at AeroANALYTICA (you’ll hear more about them soon) shared this model on the fleet’s status.
- Far fewer than Airbus forecast will be produced. The debate over the need for VLA aircraft will continue. Especially in light of the soft market the 777X is seeing. The Mega-City to Mega-City argument, in our view, still holds water. Perhaps the OEMs moved too soon? Airbus certainly did. Has Boeing, too?
- The A380 really only caught Emirates’ fancy. With it, Emirates managed to build a global footprint rapidly. Emirates bet early and well. We will now see how that bet plays out.
- Only two airlines did re-orders on the A380 program, while several canceled.
- The current pandemic underscores how fragile the commercial aviation business is. Despite its size and reach, commercial aviation remains a highly vulnerable industry. It is also an industry that, because of its global reach, is impacted by exogenous shocks faster than any other industry. It is first to suffer and last to recover. But it does recover.
- Therein lies an established lesson for any investor, which is frequently overlooked because this is an unusually attractive business. When times are good, and cashflow is robust, it is a great place to trade. But as we have seen, such rude health is easily disrupted.
- This leads to another lesson that everyone in the industry gets to re-learn every cycle: Commercial aviation should avoid the siren song of chasing new technologies. Playing it safe is always a better strategy. At the same time, it is these new technologies that enable the next wave of industry advancement. The ongoing challenge: Get your timing right.