Thursday, 6 January 2011

Next up for the A380- Asia again.

The announcement that the first new A 380 customer for some time is Asiana of South Korea with an order for six for delivery between 2014 and 2017 comes as no surprise.The increasing density of A380 pegs on the Asian map and the lack of them in the Americas, the light sprinkling in Europe, the largely Emirates clump in the Gulf all indicate the relative health ,current prospects and ambitions of airlines in the respective parts of the globe.

There is also an apparent difference between eastern and western views of the status of future liability for operating leases and other financing. The western view, enforced by accounting rules, is that a lease is a debt and has to be shown as such on the balance sheet. The eastern view is that while this may be so in accounting terms, it is in reality an operating cost especially as it is paid off year by year, in effect flying hour by flying hour, so that in the last year of a lease the future debt/liabilty is a fraction of that in year one although the outgoing in each year is the same. Hence the approach to aircraft leasing or other financing costs by many eastern carriers is far less cautious that it is by many western ones.

The two new airlines to receive A380s this year are both in Asia. Korean, who will have 5 mainly on US and European routes by the end of the year, and China Southern. British Airways will be the next new operator in Europe but not until 2013 and there is no sign at all of a US carrier signing up. Even Air Austral of tiny Reunion Island in the Indian Ocean is ahead of them in the queue. Put that up on the radar screen and see what it tells you. For one thing expect more orders from Asia and those will force others serving Asia to look again,- and talk to their accountants maybe.