Air France evaluates A330neo as A380 replacement
Air France-KLM intends to replace the French flag carrier's fleet of 10 Airbus A380s with no more than nine long-haul twinjets.
Chief executive Ben Smith said during a results briefing today that the group was in "advanced" talks with Airbus about ordering A330-900s or A350-900s and with Boeing about a possible deal for 787-9s as replacements for the double-deck type.
On 30 July, Air France-KLM disclosed that it would phase out the A380 by 2022 under an "accelerated" retirement plan. The group had previously decided to decommission an initial three A380s.
The 10 aircraft will be "progressively" retired, and the last will leave the fleet in 2022, notes chief financial officer Frederic Gagey.
Smith argues that opportunities for profitable deployment of the A380 are "limited due to high cost of operation in addition to challenges faced in terms of operational performance" of the type.
He describes the prospect of having seven A380s as "suboptimal" because operation of six units would require "a minimum" of one spare aircraft.
Furthermore, he says, the airline's A380s would require cabin refurbishments, which would cost "upwards of €35 million" ($39 million) per aircraft, and 12-year maintenance checks, which would bring total expenditure for each aircraft to €85 million.
Air France-KLM foresees that retirement of its A380s will generate capital-expenditure savings around €400 millions. But the airline also sees one-off costs of the same magnitude – largely as a result of faster depreciation of the long-haul jets – for the 2019-22 period.
From 2022, the type's withdrawal will generate "positive equity" for the group, Smith predicts.
He says that Air France-KLM is under "absolutely no pressure" to make an immediate decision about the A380s' replacement, and has "plenty of flexibility".
A new long-haul order could be combined with a potential replacement of older widebodies in Air France-KLM's fleet, beyond the A380.
"Were the right offer to come in from Boeing or Airbus, we would look to replace other aircraft," Smith says. But he adds: "We are being very conservative on capex."
He insists: "Nine aircraft would be the maximum to replace the A380." FG
