How much does an Airbus A350 cost and how to make it profitable?

As the airline industry continues its massive investments in aircraft purchases, let’s question the economic model.

The aviation industry is extremely opaque. It is difficult to get answers to simple questions like “how much does a long-haul airplane cost”. The final price depends on many secret parameters. Take the European aircraft manufacturer Airbus and its recent A350, the flagship of modern commercial aviation.

This aircraft combines comfort, range, and energy efficiency to keep its fuel costs and CO2 footprint in check. But behind these qualities lies a question: how much does such a device cost, and how does an airline manage to make a profit from an investment of several hundred million euros over several decades?

Airbus has not officially published a catalog price since 2018, but current estimates place the price of the A350-900 at around 317 million dollars (the industry’s currency internationally, about 280 million euros) and the A350-1000 at around 366 million dollars (314 million euros).

In reality, thanks to negotiations and bulk orders, an airline can obtain a discount of 20 to 40%. Thus, an A350-900 can be purchased for between 180 and 240 million euros. Many aircraft are financed through leasing, which reduces the initial investment but increases annual costs. In any case, no aircraft manufacturer finances its investments in cash.

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Airbus A350, a colossal investment

Unlike a medium-haul aircraft (like the Airbus A320), a long-haul aircraft does not multiply flights each day. Significant distances impose a slower rate of approximately 3 flights every 2 days, or about 550 flights per year.

Between flight times (from 10 to 13 hours) and ground times for disembarking, cleaning, refueling, cargo loading, and boarding, breaks are approximately 3 hours.

On top of that, scheduled maintenance must be added: regular inspections and longer interventions for checks or equipment upgrades. Every 6 to 10 years, the aircraft undergoes a D-Check, a complete inspection requiring 1 to 2 months of downtime. During this period, the aircraft generates no revenue, and the airline may sometimes need to rent a replacement aircraft to maintain its commercial rotations.  These downtimes can reduce the annual net margin by 5 to 10% in the affected years. Over 25 years, this represents an overall drop of 50 to 70 million euros in net profit.

For all these reasons, the operational lifespan of an Airbus A350 is expected to be 25 to 30 years.

What profitability to consider?

Let’s start from the low hypothesis of 25 years of operation to define a profitability scenario. The scenario includes a low inflation rate of 2% per year for revenues but 2.5% for costs. The aircraft configuration will have 325 seats (all classes included between Economy, Business, and First), with a load factor of 85%, an average ticket price of 800 euros per flight, and a negotiated purchase price of the Airbus A350 at 200 million euros.

Don’t forget the revenues related to freight activity, where the 12% rate of a flight’s revenue is authoritative and consensus. The same applies to variable costs (fuel, crew, airport fees, and routine maintenance): 60% of revenues.

As for fixed costs (administration, insurance, scheduled maintenance), they are estimated at 8 million euros annual per aircraft.

The demonstration by the numbers

In year 1, the Airbus A350 will transport 151,563 passengers for 121.25 million euros in revenue. Freight will bring in 14.55 million euros, for a total of 135.8 million euros.

On the expenses side, we expect 89.48 million euros, giving a gross margin of 46.32 million euros. The table below then develops the model over 25 years, including the D-Check maintenance.

Year	Income (M€)	Variable Costs (M€)	Fixed Costs (M€)	EBITDA (M€)	Depreciation (M€)	Net Profit (M€)	Cumulative Net Profit (M€)
1	135.8	81.48	8.0	46.32	13.33	32.99	32.99
2	138.52	83.52	8.2	46.8	13.33	33.47	66.46
3	141.29	85.6	8.4	47.28	13.33	33.94	100.4
4	144.11	87.75	8.62	47.75	13.33	34.42	134.82
5	146.99	89.94	8.83	48.23	13.33	34.89	169.71
6	149.93	92.19	9.05	48.7	13.33	35.36	205.07
7	140.7	94.49	14.28	31.93	13.33	18.6	223.67
8	155.99	96.85	9.51	49.63	13.33	36.29	259.96
9	159.11	99.28	9.75	50.09	13.33	36.76	296.72
10	162.29	101.76	9.99	50.55	13.33	37.21	333.93
11	165.54	104.3	10.24	51.0	13.33	37.66	371.59
12	168.85	106.91	10.5	51.44	13.33	38.11	409.7
13	172.23	109.58	10.76	51.89	13.33	38.55	448.25
14	161.62	112.32	16.03	33.27	13.33	19.94	468.19
15	179.19	115.13	11.3	52.75	13.33	39.42	507.61
16	182.77	118.01	11.59	53.18	0.0	53.18	560.79
17	186.42	120.96	11.88	53.59	0.0	53.59	614.38
18	190.15	123.98	12.17	54.0	0.0	54.0	668.38
19	193.96	127.08	12.48	54.4	0.0	54.4	722.78
20	197.83	130.26	12.79	54.79	0.0	54.79	777.57
21	185.65	133.51	18.11	34.02	0.0	34.02	811.59
22	205.83	136.85	13.44	55.54	0.0	55.54	867.13
23	209.94	140.27	13.77	55.9	0.0	55.9	923.03
24	214.14	143.78	14.12	56.25	0.0	56.25	979.28
25	218.43	147.37	14.47	56.58	0.0	66.58	1045.86

Over a 25-year period, taking inflation into account—which aids in repaying the bank loan—an aircraft will generate over one billion euros in net profit. When well utilized, a long-haul aircraft like the Airbus A350 is therefore an extremely profitable asset.

Now, multiply this figure by the number of planes in an airline, and you will understand why the airline sector continues to thrive. This is why the order books of Airbus, Boeing, and others remain full.

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