German investment and leasing group Dr Peters has agreed the fate of the next AirFrance A380, which looks like it might be the pattern for the remainder.
Air France has agreed to pay a significant sum for maintenance as the aircraft wasn’t in agreed hand back condition.
On top of that the airlines has agreed to keep the engines on lease for the remaining fleet.
Dr Peters Group raised over €1.6 billion to finance the Air France A380’s on lease and is facing significant losses – it’s best estimates are that each aircraft will be worth €70 million when broken up.
The original leases and rates paid by AirFrance were based on the initial cost and the premium paid for an original new aircraft on ten year lease.
However that doesn’t recover the cost of the aircraft, only about 70%. The remaining costs are covered over secondary leasing or sale and are usually ameliorated over another 10 years.
With aircraft having no secondary market and little chance of one developing, Dr Peters is looking at around a 10% loss leaving its investors out of pocket.
It’s a significant burden for the company as it leased 21 A380’s to AirFrance, Singapore and Lufthansa. Only one, now with HiFly has moved on.