British Airways And Iberia Could Accelerate 747 And A340 Retirement Due To Coronavirus

British Airways has accelerated retirement of two 747-400s due to leave this year, the first step of a potentially faster 747 and Iberia A340 retirement that parent owner IAG said last week it is evaluating.

“We’re still working through those plans at the moment,” IAG CFO Steve Gunning said. “Our fleet at the moment has 31 747s, which are all owned. We have 15 A340s, nine of which are owned.”

As IAG started grounding aircraft in March, CEO Willie Walsh expected some of them would exit the fleet.

“We’re now evaluating how many of those that will be grounded will be permanently grounded,” Walsh said. “You should expect that to include a number of the 747s in the British Airways fleet and some of the A340s in the Iberia fleet and potentially a couple of A330s in the Aer Lingus fleet.”

British Airways started the year with 32 747s and was due to end the year with 25, have 12 in 2022, and then retire the last one in early 2024.

Its 747-400 fleet peaked at 57 before the Global Financial Crisis and then decreased to 40 in 2015.

British Airways kept its 747 fleet for longer than other airlines because it wanted to wait for the A350-1000 and 777-9’s leap in cost advantages.

The A350-1000 is 38% more efficient in British Airways’ configuration compared to its baseline 337-seat 747-400, Walsh said last November.

The 777-300ER could only be a partial replacement.

“We have about 293 seats,” Walsh said of the -300ER. “That would give us a saving of about 24%. It is significant, but we took a decision then not to invest all of our effort and money and capital into a very good aircraft when there was an even better aircraft coming along.”

Iberia’s A340-600s were to decrease from 17 to 10 this year, five in 2022 and then exit by 2025.

The 777-200s at British Airways were next to be retired, with the 46-strong fleet reducing to eight in 2029.

IAG has long seen the 747s and 777-200s being adaptable.

“Having a plethora of 747s still and 777-200s that are heavily depreciated gives us flexibility,” Walsh said.

In addition to owning all of its 747s, British Airways owns 36 of its 46 777-200s, allowing the airline to retire aircraft without negotiating an early lease return. Further, the aircraft are entirely or mostly written-down, reducing early exit costs.

Iberia’s 17 A340-600s at the end of 2019 include four aircraft on operating lease with one lease expiring in each of 2020 and 2021, and two in 2022. A further two are on financial lease. The remaining 11 A340-600s are owned, and include two frames that Iberia has stood down but not yet sold.