What we've witnessed over the last few months has basically been the negotiation process.

Emirates know they're the anchor customer with a strong negotiation position and so expect even bigger discounts than airlines normally get from airframers by playing hardball, and humiliating Airbus by not making the anticipated airshow order. Airbus's only counter was to look actually willing to accept the possibility of writing the whole programme off, with negative implications for Emirates' own prospects

Or the reverse, Airbus talking allot about stopping production knowing that Emirates built their business case around the plane....

> Emirates built their business case around the plane

Absolutely. Emirates needed this deal just as much as Airbus. At the end of the day AB has multiple other profitable lines to fall back on, especially their cash cow 32X program. For Emirates the 380 is irreplaceable, not even by the 777-10, if it was even flying yet, which it isn't.

I have no doubt EK got a good deal but Leahy isn't stupid. He was playing hardball too.

And interestingly, it has not been specified yet whether this order is for the current model or the plus..

+1. Parts and maintenance might have just tripled in price and awaiting time. Emirates protected their investment at a low price...plane for plane, why not get this and insure that someone will be there for the previous order's planes.

Parts and maintenance are negotiated as part of the purchase.

For an airline not to do so would be economic suicide.

Also has the side benefit of locking in gradual prices increases for the manufacturer.

Emirates does its own A380 heavy maintenance, but yeah, they'll have guaranteed the parts supplies

The real test will be how well they fare on the second hand market, when Emirates begin to retire their first aircraft over the next few years. Last year an A380 that had been with Singapore Airlines for 10 years was put into storage until a buyer is found [0], and an Irish leasing company decided to start their own airline as they couldn't find anyone to lease their A380s [1].

[0] http://www.traveller.com.au/first-retired-a380-superjumbo-pa...

[1] http://www.telegraph.co.uk/travel/news/leasing-company-force...

Is 10 years really the expected (first-owner) lifespan of a wide-body? Is that typical for narrow-bodies as well? Seems short, given the cost to purchase.

Don't think in terms of wide-body vs narrow-body. Think in terms of long-haul vs short-haul.

The lifespan of a plane tends to have more to do with the number of pressurization cycles it goes through (and the number of take-offs and landings) - they go together, after all. Pressurizing the plane stresses the plane, and eventually the frame just can't be trusted, no matter how good the airline is at maintaining the plane. Short-haul flights (say going back and forth between New York and Washington D.C.) could conceivably manage 5 round trips a day or more, which is much more stress than a plane flying one round trip per day between New York and London.

Even most planes used for short-haul flights would be expected to last more than 10 years, and planes used for long-haul flights can be used for 30 years by major airlines. But keep in mind that airlines will certainly replace planes earlier if a newer plane has enough efficiency gains that will allow costs to recouped more quickly.

Singapore Air returning this plane already (and there's a second as well) means that the plane simply isn't profitable (or profitable enough) for them to keep flying. Most likely whatever route this plane was used for will continue with a smaller flight that costs less to fly.

> Singapore Air returning this plane already (and there's a second as well) means that the plane simply isn't profitable (or profitable enough) for them to keep flying. Most likely whatever route this plane was used for will continue with a smaller flight that costs less to fly.

They returned a plane at the end of its lease and got a newly built one on a new lease as a replacement. They are doing the same with their 4 remaining planes that are nearing the end of their leases. They seem to be happy with the 380.

Also remember that the first few A380s had lots of issues with wiring harnesses, performance, etc and so may not be completely up to spec.

Exactly. The first 25 airframes (of which 22 were actually build to completion) have the wiring problems and were never expected to find much interest on the secondary market.

In that case, the planes will likely be parted out. Wings and tail removed and likely installed on another A380 body.

Interesting, I haven't seen that information. Do you have a link for that? --For my own interest, not because I don't believe you.

> Singapore Air returning this plane already (and there's a second as well) means that the plane simply isn't profitable (or profitable enough) for them to keep flying.

They were leasing that A380, and now they'll lease a newer and more efficient A380. The new one will be for sure more profitable for them, but you can't deduce the old one wasn't profitable.

There is no way a new A380 is more efficient in total cost of ownership given it’s going to cost more than twice as much. They took the biggest depreciation hit up front. If this made sense, all airlines would lease for 10 years and replace with new leases.

The comparison isn't with the potential new price of the old one, but with the old price of the old one. Say they were paying X per year for #1. Adjusted for inflation, they're going to pay roughly the same X per year for #2, but #2 is more efficient, AND in line with Singapore's positioning as a top airline with a very young fleet.

I also expect that keeping #1 would have a lower lease cost, but a higher maintenance and insurance cost.

Does this still apply to carbon fiber body planes like the 787? I know aluminum has can only be flexed so many times before it cracks but if the plane is made from a different material, would this rule still apply?

Yes. Every material ultimately has a fatigue limit; there's nothing you can stress indefinitely without it eventually breaking. Now, other materials can move the number of possible cycles up and down, and potentially move the number up sufficiently that it becomes a non-concern (because other factors would drive airlines to sell and scrap the old aircraft), but it'll never be infinite.

> Every material ultimately has a fatigue limit; there's nothing you can stress indefinitely without it eventually breaking.

That's not entirely true, see: https://en.wikipedia.org/wiki/Fatigue_limit

"Ferrous alloys and titanium alloys have a distinct limit, an amplitude below which there appears to be no number of cycles that will cause failure."

Well there is no "typical" for an A380-sized widebody and Emirates might have no choice but to keep most of theirs until the end of their lifespans (unless there's a freighter conversion programme). But in general a commercial passenger aircraft lasts around 25 years, so 10 years isn't really a short period of ownership for a first owner (and is a fairly long lease). Fixed maintenance intervals often require the aircraft to be almost totally rebuilt within that timescale, which is a good opportunity to transfer owner/operator and refit to some other airline's spec.

Most airframes - the A380 is an exception - can be readily resold or leased on a liquid market. There's big depreciation over the first few years, sure, but operating costs are bigger than capital costs, and newer aircraft are less thirsty for fuel. Airlines purchasing aircraft also usually get big discounts, and have specialist financial institutions willing to front up the capital and eat some of the downside risk on the depreciation. Airlines leasing aircraft typically do so for periods of more like five years, with lease extensions at their discretion.

Emirates leases their planes on 12 year contracts. They do this because they want to have a young fleet. Singapore Airlines does the same. The leasing company might be stuck with the plane after the lease is up, but the airline is not going to care all that much as long as leasing companies are ready to enter into new deals.

Those leases will typically cover the costs of the aircraft, so the leasing company will basically get a 12 year old airplane for free that they can use to generate a profit from (lease, sell or part out) as they wish. Though there does not seem to be any demand for used 380s right now. The one Singapore Airlines has returned (for an entirely new one on a new lease) is currently in storage without engines. Apparently the parts are worth 100 million dollars. It will be interesting to see how that continues to play out when more leases end, since it's unlikely that there will be buyers for say 200 planes worth of spare parts when ony 100 planes are still in service...

If the lease covers the cost of the plane, why not just buy it instead of lease it?

"Financial engineering": capital investment and depreciation vs. operational expenses, interest/taxes/tax-breaks on those things, that kind of stuff.

Singapore Airlines is a premium carrier that that is known for conisitently maintaing a young fleet, the take away is not that Singapore was getting rid of 10yo planes but that they did not buy more as replacements.

http://www.airfleets.net/ageflotte/Singapore%20Airlines.htm

One of the problems is that almost all A380 carriers are, as you say, "premium carrier[s] that that [are] known for consistently maintaining a young fleet" - but you need to be a pretty sophisticated operator to run an A380 safely. The operational sophistication you need to run one is really high - everything form maintaining the electronic systems to ensuring that all passengers have left the (very large) cabin can cause issues that require good solutions.

The problem is that just about every airline sophisticated to operate an A380 has either bought (at least) as many as they need (Qantas, Air France, etc.) or made a strategic decision that the A380 is not the plane for them (Cathay, the US big 3, etc.). There's a rumor that BA might pick of a few of the used frames, but that's it - and they only have (IIRC) 6, so it's not like that will make much of a dent in the market even if they double their fleet size.

They are getting more as 1 for 1 replacements, though.

If an airline wants to own it longer, buying outright makes more sense. They can still extend the lease but a lot can change in 10 years so that it give some flexibility. For Emirates, which has a lot of ultra-long routes, they can now get newer and more fuel-efficient A380s, selling the first-generation ones to airlines that fly on shorter routes.

10 years is a normal leasing term. You'd expect a significantly longer total service lifetime.

Something I think is being missed here is that Singapore and Emirates both sell their A380s as "palace in the sky" sort of experiences, with lavish suites in first class. A ten year old plane starts to get a little beat up.

Why are they sold if they are still usable? Put differently, why does the buyer see value in the used plane that Emirates doesn't?

First tier airlines like to have new planes with all the latest features. Second tier cheap airlines will often buy a used plane: when that money is applied to the cost of a new plane is cheaper (or the same cost) as refurbishing the old one. From there third tier airlines exist that will buy planes past their safe service life and pray they don't crash.

What would be an example of a “third tier” airline?

Usually cargo or charter operators in Africa, or the like.

The first ones off the production run aren't as fuel-efficient as the later ones. I read somewhere the first few A380s are several tons heavier than further down the line.

That doesn't explain why one wants to sell and another wants to buy the plane.

I will save my personal opinion on the A380 for later but about previous comments on HN you always have to remember the crowd is a bunch of professional guessers. It stops to be funny quite fast...

Yep, I thought the public musings about halting production were simply putting the pressure on Emirates. Seems to have worked.

https://news.ycombinator.com/item?id=16152902

Nobody outside of HN thinks anything of HN. I'd be deluded to believe otherwise

You misunderstood the comment. Parent was talking about public musings of Airbus.

I wonder if any of these Airbuses will be decked out as a private airplane. Really curious to know how the extra room can be used.