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(Adds comments from Air Lease Executive Chairman, paragraphs 11-12) by Tim Hepher and Padraic Halpin
Global airline financiers are meeting for the first time since a mid-flight cabin explosion plunged Boeing BA.N into a new safety crisis, deepening plane shortages as regulators step up factory inspections.
Lessors, bankers and airlines meeting in Dublin – home of a booming global aviation finance sector – are examining the supply-side implications of a recent partial grounding of the Boeing 737 MAX 9, following the Alaska Airlines incident in early January.
For months, aviation has been struggling to keep pace with the post-pandemic travel boom due to shortages of labor and parts.
But widespread outrage over the near-disaster that led to an emergency landing with a breach in the plane’s side, but without serious injuries ( ), added a new layer of regulatory risk.
“Demand is more or less assured; the question is when supply will catch up Rob Morris, head of global consulting at Ascend by Cirium, told Reuters ahead of the week-long airline economics conference flights which begins Monday.
“We have estimated 2026 or 2027, but there must be a downside risk now because of the MAX
Last week, the Federal Aviation Administration took the unusual step of ordering Boeing to halt production of the 737 MAX until quality control issues are resolved.
She gave no indication of the duration of this limitation. But when it is lifted, industry experts say regulators are expected to maintain additional controls that could reduce production forecasts.
While a previous safety crisis linked to fatal MAX crashes in 2018 and 2019 prompted regulators to step up scrutiny of aircraft design and development, the blowout and subsequent discoveries of loose bolts elsewhere in the fleet could weigh on production.
Analysts say this means the two crises will make planes harder to develop and slower to produce, respectively.
These restrictions add to widespread supply chain problems since the pandemic.
“We face enormous OEM (manufacturer) challenges, whether at the airframe or engine level, or subcomponents such as seats and galleys,” said Steven Udvar-Hazy, executive chairman of ‘Air Lease Corp AL.N, during the Airline Economics conference.
This is potentially good news for leasing companies who have already placed large aircraft orders and will now secure a better return on investment as airlines flock to lease aircraft.
But for airlines, it could mean a delay in receiving new technologies needed to reduce costs and emissions, as well as higher rental rates. This could result in an increase in prices.
After Boeing came under fire from regulators and politicians, the Dublin conference will be a new test of the confidence that owners representing more than half of the world’s airliner fleet have to the manufacturer.
Several industry commentators, including influential analyst Richard Aboulafia, have called for Boeing Chief Executive Dave Calhoun, or other executives and board members, to step down.
Boeing declined to comment directly on the remarks.
Aviation is a close-knit industry with few suppliers and a long memory, so explicit attacks on sitting executives are rare, at least in public.
But investors will pay close attention to the tone of speeches by executives from major leasing companies like AerCap AER.N, SMBC Aviation Capital, Air Lease AL.N and Avolon at the industry’s main annual conference, delegates said.
Mr. Calhoun pledged that Boeing would own up to its mistakes and ensure that an accident like the Alaska Airlines accident never happens again