After Singapore Airlines and Air France, Emirates’ largest customer is now sending the giant planes into retirement. New hardship threatens investors.

Front view of an A380

Sit has been clear since February that Airbus intends to manufacture the last A380 in 2021. Interest in the world’s largest passenger aircraft has dwindled significantly. Meanwhile, even the main customer, Emirates, is turning away. And yet, regardless of its size – it could accommodate up to 850 people – the four-engine jet is still good for setting records.

The Emirates fleet currently has 113 of these giant planes – more than ever before. The Arab airline has ordered a total of 123 A380s, which should be delivered by the end of 2021. Originally there were 162.

However, Emirates only actually uses 111 of these aircraft in flight operations, two are parked, a company spokesman said on request. The two planes share this fate with other A380s, which have since ended their first service after around ten years on routes around the world for major airlines such as Singapore Airlines and Air France. Some used A380s are still waiting for buyers. Others have already been dismantled into individual parts because no suitable buyer or new lessee could be found.

1.6 billion euros have been invested

The misery of this wide-body aircraft moves many investors. According to calculations by the Scope rating agency, around 1.6 billion euros in investor money flowed into 21 A380 aircraft. The lessees of these aircraft: Singapore Airlines, Air France and Emirates. In total, German investors had invested more than 3 billion euros in around 70 aircraft funds by 2016.

One of the fund companies affected is Dr. Peters Group. With a view to A380 aircraft alone, it is about 13,000 investors and 360 million euros. The annual payouts of up to 7.5 percent attracted many investors – despite the higher risk. As a closed-end fund, the units cannot simply be returned or sold on a stock exchange like other securities. There is a secondary market, but it is less liquid.

Everything that can be used expanded

What about the funds of Dr. Peters in detail? Two A380s have been dismantled since the end of 2018 and are to be sold in individual parts. This applies to funds DS 129 and DS 130. In the meantime, all usable parts of the two aircraft have been dismantled, checked, packed and stored and are now being marketed within the component sales department, says Sebastian Podwojewski, spokesman for Dr. Peters. Since the start of sales in December 2018, more than 500 parts have been sold, such as the landing gear as well as essential parts of the cabin and the on-board computer.

“We are satisfied with this start,” says Podvojewski. The sales proceeds of a total of 35 million dollars so far are also solid. Since the sale of components is planned for at least two years, no final judgment can be given at the moment. In addition, there would be monthly income of around $ 480,000 for each aircraft from renting the engines to the engine manufacturer Rolls Royce.

In this way, both fund companies could have been completely discharged in the summer. In addition, these funds could have resumed their payouts at 5 percent in the fall. According to the prospectus, however, it should have been 7.25 percent. In the spring of 2020, 5 percent are also planned. The actual payout depends on the sales proceeds.

Up close: A380 at the Dubai Airshow
Up close: A380 at the Dubai Airshow: Image: EPA

There are two more A380s that Singapore Airlines has already sold to Dr. Peters returned. When it comes to reselling these aircraft, which were financed with the help of the DS 131 fund, they are still striving for a possible follow-up leasing contract or a sale of the aircraft, says Podvojewski: “Unfortunately, we have to state that the market environment for the A380 is changing after the decision to stop production by Airbus. ”Therefore, despite intensive marketing efforts, it has not yet been possible to achieve a complete connection solution for both aircraft. An economically viable interim solution for this fund company is an engine lease, which also generates stable monthly income of around 480,000 dollars per aircraft.