The Airbus A380 wing-crack debacle may turn out to be a blessing in disguise for the largest financier of the super jumbo.
“It
will, in a strange way, be positive long term because it has slowed
down production,” said Mark Lapidus, managing director of Doric Asset
Finance Ltd, which has financed 13 of the world’s largest passenger
aircraft so far. “Anything that slows down the production rate increases
the value of the existing fleet we have.”
Airbus SAS’s flagship
model has struggled with cracks that emerged in wing components,
disrupting production that will drop in 2013 and is trailing behind the
annual goal of 30 deliveries this year. Airbus is working with
regulators on a long-term fix for the cracks, and the company has
cautioned that reaching its goal of 30 new orders this year is a
stretch.
Doric has financed eight A380s for Emirates Airline, the
biggest operator of the double-decker jet, and five for Singapore
Airlines (SIA), the A380’s first customer in 2007. There are 80 A80s in
operation around the world today, and customers have ordered 257 of the
double-decker, according to Airbus’s tally at the end of July.
The
London-based financing company will see its fleet grow to 18 A380s by
the end of April 2013, Lapidus said in a telephone interview. Doric is
in financing talks with other A380 customers, including China Southern
Airlines Co. (1055), Korean Air Lines Co. (003490) and Malaysian Airline
System Bhd. (MAS)
‘Underappreciated’
“It
is not that we are fascinated with the A380,” Lapidus said. “We see it
as an underappreciated aircraft by both the lessor community, about
which we are very happy, and by some of the airlines that have not
tasted the aircraft in their fleet yet.”
One case where product
familiarity may lead to additional A380 orders is British Airways (IAG),
Lapidus said. The International Consolidated Airlines Group SA unit is
scheduled to receive the first of 12 of the aircraft it has on firm
order next year.
“They will have to operate more,” Lapidus said,
pointing to the carrier’s network and service to major cities such as
Hong Kong or New York. On flights to the New York area alone, British
Airways “would need less crewing and fewer pilots and their costs would
improve significantly” by using the A380, he said.
Doric’s
portfolio now includes $4.6 billion in aviation assets under management.
The company yesterday took delivery of its 13th A380 to bring its total
fleet to 30 aircraft placed with nine airlines. The A380 was acquired
under the Sky Cloud IV fund that has leased the aircraft for 12 years to
Emirates.
In addition to A380s, Doric has financed six Boeing 777 wide-bodies, two Airbus A340-600s, one A330-200 and eight A320s.
The
company has also bid on financing Boeing 787 Dreamliners, Lapidus said,
though so far failed to win a customer. Financing more 777s is also on
the agenda.
To help with aircraft financing at a time when many
banks have withdrawn access to debt, Doric this year used a first of its
kind U.S. corporate bond offering for four Emirates A380s, selling
$587.5 million in secured debt. More such deals are being looked at,
Lapidus said.
Doric wants to expand its investor base beyond its core German and U.K. market, Lapidus said.
“We
are definitely looking into the U.S. and we are very interested in
developing something in Japan,” he said. Those efforts are likely to
materialize next year, Lapidus said.
Source: http://www.businessweek.com
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