With the aim of spurring demand for the second-hand jets leasing firm Doric is offering its used Airbus Group SE A380 superjumbos at a 40 percent discount compared to the $2 million-plus monthly rental rate for a new plane.

Sibylle Paehler, the lessor’s managing director, said in an interview that following the completion of 10-year leases the company expects to receive the return of a tranche of the double-decker airplanes from Singapore Airlines Ltd. and Dubai-based Emirates starting from 2017 and hence Doric is in talks with a number of potential operators for future renting of the airplanes.

Companies that specialize in so-called wet-lease services, in which jets are provided for a limited term complete with crews, charter carriers and a number of second-tier airlines that haven’t yet flown the A380 are among the parties that are reportedly interested in the renting and are part of the talks.

“Each has a different business model, so it’s hard to make precise forecasts on the most-likely future use,” Paehler said. “Nobody wants to be first” in announcing a deal for a 550-seat plane is the main stumbling block for the aircrafts whose popularity as a second-hand transport has yet to be demonstrated, added Paehler.

Since a single example wouldn’t be enough to serve the average long-distance route, Doric is offering the jetliners as a whole or in bundles of two and three aircrafts. The company owns the first five A380s that Singapore Air is entitled to return in conjunction with Dr. Peters Fund KG of Germany.

Paehler said that the leasing company is looking to create accommodating conditions for lease a some carriers might want A380s only at certain times of the year such as the Hajj pilgrimage to Saudi Arabia and added that leases for as little as five years — half the usual lease term — could be accepted in order to maximize interest.

The executive of Doric, which has its main offices in Offenbach, Germany, said that company view is that the assets would offer a bigger return if it retains ownership even though there are some carriers who have inquired about buying the planes from Doric.

While it is possible for buyers of new jets to negotiate significant discounts in the $428 million list price for a current version of a jumbo jet, a 10-year-old super flier might sell for $100 million, which is comparatively lower than the $428 million for a new one.

By plying on six-to-eight-hour routes for low-cost Asian airlines, the A380 might have a second life, Airbus has already suggested. However its participation in the marketing of used aircraft could get complicated since the manufacturer is continuing to seek fresh sales avenues after order momentum slowed in recent years.

(Adapted from Bloomberg)

Categories: Economy & Finance, Uncategorized