Singapore Airlines not to extend lease on first A380 jet

An Airbus A380-841 airplane of Singapore Airlines takes-off from Zurich airport, Switzerland, April 14, 2016. REUTERS/Arnd Wiegmann

SINGAPORE (Reuters) - Singapore Airlines Ltd (SIA) SIAL.SI will not extend the lease on its first Airbus A380 jet when it expires next year, a further blow for Airbus Group AIR.PA as the manufacturer seeks to bolster new sales of the world's largest passenger plane.

“Our first five A380s are on a 10-year lease, with options to extend. The first one will expire in October next year, and we have decided not to extend it,” a SIA spokesman said.

“For the other four, decisions will be made later.”

The Southeast Asian airline, which at present has 19 A380s in its fleet, was the first to fly the world’s largest jetliner in 2007. Airlines usually have to give around one year’s notice on whether to renew leases for large aircraft.

SIA’s decision not to extend the lease comes amid doubts over demand for the double-decker A380, after Airbus cut the jet’s production in July, but said it remained optimistic about its long-term prospects.

“We do not comment on the fleet plans of individual airlines. We are confident in the market for second-hand A380s, which can be leased or acquired at attractive rates. This will offer a great opportunity for new entrants with new business models to start operating the A380,” said an Airbus spokeswoman.

SIA said the decision not to extend the lease was the result of a regular review of its fleet requirements.

“The fact that an incumbent is moving on does leave a big question mark over the A380 program. Market dynamics have changed, though it partly depends also on each airline’s requirements,” said one executive at a Western lessor, who declined to be identified as he was not authorized to speak to the media.

“We have five other A380s on firm order with Airbus and deliveries will start in the second half of 2017,” SIA’s spokesman said.

Reporting by Aradhana Aravindan and Anshuman Daga; Editing by Sherry Jacob-Phillips