Breaking News

EU Targets Bortnikov, Head of Russian Secret Service, in Draft of Sanctions
Tweet TWEET

Airbus’s Longest Aircraft Gets More Seats to Help Rebuild Value

Airbus SAS plans to lift the seat count on the A340 wide-body jet and cut maintenance costs in an effort to prop up the market value for its longest aircraft, which went out of production two years ago after slack sales.

The plan, which needs approval from regulators, would see the seat count on the twin-aisle airliner go to 475, according to a presentation by Airbus and engine makers in London yesterday to A340 owners. Service costs on the four-engine jet would fall to the equivalent of two powerplants to improve its economics.

Airbus stopped building the plane in November 2011 after customers picked up more fuel-efficient two-engine models such as Boeing Co. (BA)’s 777 and the shorter Airbus A330. Adding more seats would underpin Airbus’s efforts to bolster the A340’s value in the secondary market as operators renew their fleets.

“This will revolutionize A340 economics,” Airbus Chief Operating Officer John Leahy said in a e-mail following the presentation, where engine makers Rolls Royce Holdings Plc and CFM International, a joint venture of General Electric Co. (GE) and Safran SA (SAF), also spoke to a group of about 100 people with an interest in A340 values.

The new high-density version of the A340 would compare to the A340-600 that can seat 359 in a two-class layout. The A340 can seat nine abreast in seats 16.7 inches wide, said the Toulouse, France-based aircraft maker, which has been publicly pushing for an 18-inch seat standard for long-range planes.

More Revenue

The 8 percent increase in capacity would translate to a potential $5.5 million in extra revenue per year, according to the presentation at the London gathering, which sought to assure A340 customers of the residual value of their asset.

The extra seat count would bring the A340 close to the capacity of the largest four-engine aircraft, the Boeing 747 jumbo and the A380 double decker. A handful of airlines have also boosted jet capacity, and operating economics, by cramming large numbers of economy seats onto existing air frames.

Air Canada (AC/B) squeezes 458 people into its Boeing 777-300ERs with 10-abreast seating in its economy cabin. Japan Airlines Co. seats 500 in its 777-300s, used primarily for domestic flights. The Japanese carrier used to seat 546 people on its Boeing 747-400D fleet, which it has retired.

Shrinking Demand

Demand for the A340 shrank after large twin-engine models like Boeing’s 777 won regulatory approval for the long over-water flights that were once the domain of four-engine planes. Airbus built 377 A340s, of which 359 remained in operation at the end of October.

Deutsche Lufthansa AG (LHA), Europe’s second largest carrier, is the biggest operator of the A340, with 48 still in service. The German airline said it plans to fly the aircraft for some time, and that the residual value is irrelevant for the airline.

CFM makes the turbines for the A340-300 with Rolls-Royce Holdings Plc (RR/) the sole powerplant provider for larger the A340-500 and -600 models.

Rolls-Royce may ease the terms of long-term maintenance agreements it calls TotalCare to better suit second-hand operators. Leased engines may also be provided, said the London-based company, which operates a small turbine leasing unit.

To contact the reporters on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net; Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.