Lessor Amedeo set to take disruptive influence to placing the A380

For Irish lessor Amedeo, a bold move to establish its own airline operation may be its only solution to finding a home for its Airbus A380 fleet and a process that could bring a new level of disruption into the airline sector. With the first production aircraft, formerly of Singapore Airlines, entering a period of storage in the south of France after no immediate customer was found by owner Dr Peters Group, and with Airbus yet to add a new aircraft order in two years, Amedeo is having to think outside the box to place its aircraft - the lessor has an existing fleet of eight aircraft (all with Emirates), manages additional aircraft with Emirates and Etihad Airways and has a further 20 units on order.

Summary:

• Dublin-based lessor Amedeo set to establish own airline operation to fly A380s for other parties.
• Amedeo sees airlines and current non-airline customers for the A380 through short-haul leases, ad hoc charters down to commoditised seat-only sales.
• The lessor is currently the second largest outstanding customer for the A380 behind Emirates Airline with 20 aircraft still on order.
• Having shown continued faith in the A380 despite low demand, Amedeo CEO Mark Lapidus is adamant the company "will take delivery" of its aircraft.

According to its chief executive officer Mark Lapidus, the new airline's business model will see it offer seats to existing carriers, but also, most interestingly, to potential third parties on a charter basis, with the likes of Airbnb, Expedia and Google highlighted as potential partners. As per traditional charters passengers would buy ticket through the charter company with Amedeo operating the flight on an Aircraft, Crew, Maintenance and Insurance (ACMI) lease basis, using its own flight and cabin crew but tailoring the service to the requirements of the client.

Speaking at a finance conference at the start of this year, Mr Lapidus had called an airlines to be more disruptive in their operations to take advantage of the sound economics a fully laden A380 can deliver. "We need airlines that would use the A380 with the ability to sell very cheap tickets," he said. However, finding airlines reluctant to sign up for long-term leases, as the manufacturer has found with the placement of new aircraft, Amedeo is no longer talking about disruption, but attempting to spearhead it in order to find a future use for A380.

Amedeo is currently the second largest outstanding customer for the A380 behind Emirates and while it will take a significant investment establishing and running its own airline operation, it believes there are sufficient airlines and non-airlines that could utilise an A380 on an ad hoc or commoditised basis, taking advantage of the asset without the challenge and costs of direct asset ownership - either through purchase or lease.

"Joint ventures and codeshares are making passengers feel accustomed to buying tickets with one [airline] but flying with another," Mr Lapidus told The Financial Times, confirming there is no doubts the company won't ultimately take the aircraft it has on order. "We will take delivery," he said.

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While Amedeo has been pitching the aircraft to customers in a four class configuration of around 590 seats, Mr Lapidus argues that the aircraft, when "properly configured with 600- to 700-seats beats the economics in terms of unit costs of anything flying". It is unclear how it will configure its future fleet of aircraft, but with plans to apply for an air operator's licence next year, it will currently be defining market needs ahead of a likely launch of the business in the early part of the next decade.

"Amedeo has little choice but to try a new approach, but there will be challenges," warns CAPA - Centre for Aviation in a recent Insights analysis. Given the circumstances, Amedeo has little alternative other than to seek innovative ways to use the capacity that it will be taking on, but CAPA notes "aircraft operation is a very different business from aircraft leasing and asset management, and one in which Amedeo has no direct experience."

Amedeo is not alone at looking at the ACMI market as the saviour for the A380 programme. Malaysia Airlines was the first to consider forming a new separate airline to fly its own fleet of the type following their retirement, although plans may have stalled after CEO Peter Bellew made his return to Ryanair. Established European ACMI operator HiFly has also expressed an interest in sourcing a couple of second-hand aircraft, with Royal Air Maroc and Turkish Airlines already linked as potential customers for aircraft.

READ FULL CAPA ANALYSIS: 'Amedeo: with no airlines to take its 20 Airbus A380s on order, the lessor will operate them itself'