Further A380 concerns as Singapore Airlines opts out of lease renewal

Singapore Airlines, the launch customer of the Airbus A380, has decided not to extend the initial 10-year lease agreement under which it acquired the first aircraft in 2007. This is worrying news for Airbus, which has already halved its production rate for the A380, and concerns now surround whether the aircraft will slip back to making a loss for the manufacturer.
According to a Singapore Airlines’ spokesperson, “Our first five A380s are on 10-year leases, with options to extend. The first expires in October 2017, and we have decided not to extend it,” adding that “For the other four, decisions will be made later.”
The carrier was quick to point out that it currently has orders for five more A380s, with the first of these due for delivery in the second half of next year.
When the production rate reduction for the A380, commencing 2018, was announced in July this year, Airbus chief executive officer, Fabrice Bregier classed the measure as “prudent” and “proactive”. There would seem to have to be severe cost-cutting measures ahead as the proposed one-a-month production schedule falls well short of what is believed to be the current break-even target of 17 aircraft per annum.
With the delivery of 27 aircraft last year, Airbus had achieved production breakeven on the double-deck-type aircraft and it is understood the airline will deliver 20 aircraft next year. However, new orders for the A380 are not encouraging and the backlog has diminished as a consequence. While 2013 saw 42 orders for the aircraft, orders for 2014 and 2015 were 13 and 2, respectively, while there have been no new orders during 2016. Airbus has delivered 194 of the type to customers, out of an overall order book of 319, leaving a backlog of 125.
Industry analysts believe that large aircraft, such as the A380 and Boeing 747 Series, have fallen out of favour and demand is now switching to smaller aircraft which are easier to fill and cheaper to run, making them more profitable.