((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Correction of engine order from 100 to 150 and addition of the word “new” in paragraph 4) by Tim Hepher and Nathan Gomes
The head of aircraft leasing giant AerCap AER.N predicted on Wednesday that tight global jet markets would last until the end of the decade, fueled by supply chain problems and corporate conservatism. production at engine manufacturers.
Demand for air travel has rebounded since the pandemic, as plane makers work to return to production levels seen before the health crisis severely disrupted markets.
“I think it will take until the end of the decade for the aircraft manufacturers and the supply chain to come together and find a solution; I think it will be in 2030,” chief executive Aengus Kelly said at a investors conference.
He was speaking after the world’s largest leasing company bet on continued bottlenecks at aircraft repair shops by agreeing to buy 150 new replacement LEAP engines made by CFM, which equip all narrow-body aircraft from Boeing BA.N and certain Airbus AIR.PA.
The engines will be managed by Shannon Engine Support, a parts joint venture between AerCap and France’s Safran SAF.PA, which co-owns CFM with GE Aerospace GE.N.
The shortage of spare engines, particularly those made by CFM’s rival Pratt & Whitney RTX.N , has forced airlines to ground planes while waiting for repair slots, which are already scarce due to wear and tear. faster than expected in harsh climates.
Mr. Kelly, who oversaw the gradual transformation of AerCap from a bad-asset-containing rump of the defunct Irish leasing empire GPA to the world’s largest lessor through acquisitions, said the issues related to the management of maintenance delays.
AerCap claims that maintaining an aircraft at MRO or repair stations costs more than purchasing the aircraft.
“MRO shops are like dentists. They only get paid when they open something, take something out and put something back in place. The difference with these engines is it takes a million dollars to put something back together. something in place every time,” says Mr. Kelly.
“And if you don’t know what you’re doing, you’ll spend millions more. You’ll find yourself going to MROs you don’t have influence with, where you’ll be at the back of the queue.”
Despite announcing an initial cash dividend, Mr Kelly said the Dublin-based leasing company’s main method of returning resources to shareholders would remain share buybacks.
AerCap said its board of directors approved a new $500 million share repurchase program through Dec. 31.