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A350-900ULR Values Will Not Suffer Same Fate as A340-500

October 29, 2018

The re-launch of the direct Singapore-Newark route by Singapore Airlines using the new A350-900ULR variant will fortunately not likely see the same fate for residual values of the A340-500 or even B777-200LR.

Singapore-Newark route, a distance of nearly 8,235 nautical miles, takes some 19 hours but was last flown by SIA in 2013 using the A340-500. The next longest route is between Doha and Auckland with Qatar Airways, a distance of 7,848 nautical miles.

The four engined -500 with a reduced density interior, nonetheless still proved to be uneconomic. The high fuel burn, limited number of seats, higher relative ticket price and competition from hub operations meant that the route was not sustainable. Yet, the A340-500 was specifically designed for such routes and could not be employed efficiently on other sectors even when increasing seating density. With no other use values of the A340-500 experienced a sharp fall and today are barely worth more than an A340-300.

For the A350-900ULR, this is a derivative variant rather than a distinct model. Airbus do not divide out the -900ULR in their orderbook. SIA took delivery of their first -900ULR in September 2018 and the variant features a modified fuel system, a higher MTOW of 280 tonnes, which compares with 275 tonnes although 260 tonnes and low is available. The ULR also has a MLW of 205,000 kgs and a MZFW of 192,0000 kgs. There are also some minor aerodynamic changes. The forward cargo hold is deactivated so no cargo can be carried in this section. The fuel capacity is increased by nearly 20 percent compared to the standard -900. There are no changes needed with respect to production. The turnaround time on the A350-900ULR is increased to 83 minutes compared to the standard 61 minutes mostly due to the extra time needed to refuel the aircraft ULR. The configuration inevitably differs from the norm due to the need for lower density. There are 67 business class seats and 94 premium economy. There are no first class suites nor economy seats and although some passengers would prefer first class accommodation, such a three class layout would further reduce the revenue earning potential of the aircraft as load factors in First are usually lower than average.

SIA will inevitably be paying more for the ULR aircraft but in view of the size of the overall A350 order, the premium will likely be relatively small. The additional value of the -900ULR compared to the standard -900 is likely to be approximately $2 million. The most significant aspect regarding the ULR is that the aircraft is primarily a –900 and therefore can be used in the same role when a sale takes place in perhaps 10-12 years. The premium for the ULR will be lost but there is no need to discount the aircraft below that of a standard -900. Should the aircraft be owned by a lessor through a sale and leaseback then one of the most important considerations would be with respect to the interior reconfiguration. With the existing low density arrangement, there would be a need to introduce an economy section. Such reconfiguration could cost in the region of $10 million given the need to perhaps also to reconfigure galleys and lavatories.

The residual values of the A350-900, despite issues with respect to finishes, are among the strongest of any widebody. With the efficiency that the -900ULR offers, it is likely that there will continue to be demand for such long range service. The relatively small size of the aircraft means that it can be used by a number of airlines and is not restricted to a few flag carriers as with the A380. This should mean that there will continue to be a market for the -900ULR in its current form after SIA and others dispose of the aircraft.

 

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