Eleven years after entering commercial service with Singapore Airlines, the first Airbus A380 has undergone dismantling but the sale of its parts should give investors in the aircraft a modest though positive return, according to research by Scope Analysis.
A closed-end fund called DS 129 launched in 2007 by Dortmund, Germany-based fund provider Dr. Peters Group owns the aircraft. After the 10-year lease agreement with Singapore Airlines expired, Dr. Peters Group couldn’t conclude a subsequent lease agreement or find a buyer for the aircraft, prompting the fund’s shareholders to opt for the part-out of the A380. Dr. Peters Group confirmed the dismantling option in June and said that VAS Aero Services will carry out the sales of the components.
“On the plus side, even the most pessimistic scenario presented by Dr. Peters should result in positive returns for investors, albeit well below the 7 percent to 8 percent annual returns anticipated at the time of the fund’s launch,” said Frank Netscher, associate director of alternative investments at Scope. “But while investors are unlikely to suffer losses, the scenarios outlined are uncertain because no A380 has yet been parted out,” he cautioned.
Dr. Peters Group has mapped out three scenarios for sale revenues from the components: $40 million, $45 million, and $50 million. It expects the sale of the aircraft’s four Rolls-Royce Trent 900 powerplants to deliver another $24 million. The lease of the engines from the British manufacturer will continue under existing conditions through 2020, after which the engines will be sold. Plans call for the sale of the rest of the A380’s components by the end of 2020.
Proceeds from the sale of the components and engines will initially go toward repaying bank loans and then to investors.