Airbus Production Cuts To Impact A380 Aftermarket, Analyst Predicts.jpg

Airbus Production Cuts Could Impact A380 Aftermarket, Analyst Predicts

OEM announced reduced annual deliveries over the next two years in July.

Airbus’ decision to reduce A380 deliveries from 15 this year to 12 in 2018 and eight in 2019 will have noticeable effects on the aftermarket in the near-future, an industry analyst has forecast.

Jonathan Berger, managing director of Alton Aviation Consultancy, says the cuts announced in July 2017 will present a barrier to entry for MRO providers assessing whether to enter the A380 market for a few reasons.

“It could be difficult to achieve economies of scale and meet shareholder return on invested capital requirements,” says Berger. “A significant capital investment is required for facilities, training, tooling, and inventory in order to enter the A380 MRO market.”

As a result, Berger feels that existing MRO providers for the superjumbo who invested early should benefit from greater leverage and pricing power.

Conversely, Berger says that because a secondary market for the aircraft has yet to develop, “significant challenges” do exist for MRO providers.

Read more about the Airbus A380 aftermarket in the September issue of Inside MRO.

TAGS: Airframe
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