This aviation heavy-hitter wants Airbus, Boeing to build fewer planes

Could the airline industry’s rush towards post-pandemic recovery trigger a glut of over-supply?

By Bloomberg News, September 21 2021
This aviation heavy-hitter wants Airbus, Boeing to build fewer planes

Veteran aircraft-leasing executive Steven Udvar-Hazy has warned Airbus and Boeing to avoid creating a glut of unwanted planes as they race to lift production following the easing of coronavirus travel curbs.

Accelerating build rates too quickly could result in surpluses that damage aircraft values, making such a move “one of the biggest dangers” facing the aviation sector, the Air Lease Corporation founder and chairman said Monday at an Airline Economics conference in London.

“Overproduction is not something that’s good for the airline industry, because it’s going to drag down residual values, it’s going to result in surpluses that the airline industry cannot really afford,” he said.

Airbus said in May it would lift production of its best-selling A320neo jets beyond pre-pandemic levels within two years.

Boeing, which is starting to emerge from a deep slump triggered by the grounding of its 737 Max model after two fatal crashes, plans to double output of the single-aisle jets by early next year.

Firms such as Air Lease, which buy aircraft direct from manufacturers such as Airbus, Boeing and Embraer and then lease them out to airlines who either don't want to or can't afford to carry the outright cost of a new jet, are now purchasing more passenger aircraft than airlines.

"Leased content has grown to around 60% of deliveries," Udvar-Hazy said.

Udvar-Hazy said he doesn’t expect any “dramatic new aircraft introductions” until the 2030s with the current generation of jetliner engines having pushed the limits in terms of fuel efficiencies. He said he’s not sure whether Boeing will go ahead with a model to replace the 757 in mid-distance markets.

Air Lease expects passenger numbers this year to be about half of 2019’s 4.5 billion, increasing to about 4 billion in 2022, the executive said.

Additional reporting by Executive Traveller

This article is published under license from Bloomberg Media: the original article can be viewed here

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Qantas - Qantas Frequent Flyer

26 Oct 2017

Total posts 83

Decreasing supply increases prices for the passengers. I suspect he must like what he's seeing in the automotive industry.


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