(Corrects "1,046 billion" to "1.046 billion" in para 8)
PARIS Dec 5 Airbus and its engine makers have
acted to try to shore up the value of second-hand A340 aircraft
as the European planemaker tries to reduce its financial
exposure to depressed market values of an aircraft that it no
Airbus has told bankers, airlines and other owners of the
aircraft that it is working on plans to increase the maximum
capacity by 8 percent to 475 seats in a bid to make it more
attractive to airlines looking to replace Boeing 747-400s.
Britain's Rolls-Royce is also restructuring engine
service contracts so that airlines can maintain the aircraft's
four engines for a similar cost to servicing the two General
Electric engines on the rival 777-300ER, according to
industry presentations released on Thursday.
The move comes after parent EADS said in its 2012 annual
report that Airbus was "currently engaged in taking mitigation
action to reduce the impact of asset value guarantees falling
due in the coming years relating to A340s in particular".
Airbus stopped making the A340 in 2011 after improvements in
engine technology caused airlines to switch to two-engined
models such as the Boeing 777 and, in future, the A350.
But it has been left with a financial exposure to the
aircraft after issuing guarantees underpinning its resale price
when striking deals to sell it during a period of weak demand.
Additionally, it faces potential losses on deals to buy back
old A340s as it sells new aircraft of other types, people
familiar with the matter said.
As of 31 December 2012, EADS had 1.046 billion euros of
asset value guarantees outstanding, excluding 333 million euros
where the risk of execution was considered to be remote.
It says the risk covers just part of the residual value of
the aircraft and is included in total EADS provisions for asset
value risks of 712 million euros, as of Dec. 31 last year.
The company does not break out the guarantees by plane type
but analysts say the A340 makes up a significant share.
Industry sources say airlines have begun breaking up old
A340s because their parts are sometimes worth more than the cost
of scrapping the plane. Some have been trying to sell them
because of the perceived inefficiency of running four engines
instead of the now-standard two engines on long trips.
Some 25 second-hand A340s are currently posted for sale.
Airbus officials urged a special meeting of A340 owners
hosted by Airline Economics to reconsider the value of the
four-engined aircraft and argued it could hold its own as an
interim long-haul plane before the arrival of the new A350.
Airbus said it is working to get the plane certified for 475
seats in all-economy seating.
(Reporting by Tim Hepher; Editing by Sonya Hepinstall)