Aircraft shortage fears 'overblown', smaller parked fleet could add 375 aircraft

With both the major OEMs Airbus and Boeing underperforming in their deliveries and growing fears surrounding global aircraft shortage, a Bloomberg Intelligence report says these fears are overblown. 280, or 2%, of the narrowbody fleet deliveries still being awaited as of the first quarter 2024. The report said: ""Profitability and return on capital for global airlines such as Delta, United, Southwest and Lufthansa don't indicate an aircraft shortage."" Analysis from the report claimed there does not appear to be a large shortage with air carriers in most regions are underperforming margins from before the pandemic. Capital returns and the weighted average cost of capital are falling behind the heights of the last decade. ""The aircraft deficit, primarily for narrowbodies, appears slight compared with the total numbers in service,"" the report added. ""Though, these problems may worsen, it still seems fears are overblown."" It added the deficit of narrowbody fleet deliveries is expected to grow to 700 by 2026, signalling a more material impact in the future. It added: ""Many airlines aren't generating an adequate return on capital, indicating plenty of aircraft flying. Of the 34 airlines, 23 have a return on invested capital (ROIC) below what it was in 2016 or 2019. An appropriate ROIC needs to exceed at least the weighted average cost of capital."" A separate report from Bloomberg Intelligence said the number of parked narrowbody jets fell to 1,033 in May, or 5.8% of the global fleet. This comes despite more GTF engine inspections, with 359 planes grounded in May as a result of the engine's powdered metal flaw. The report said: ""Reverting to 2019's 1.8% parked rate could add over 375 planes, offsetting slow new deliveries and easing aircraft-shortage fears."" 273 of the 737 aircraft were parked in May, falling from 304 in April. Though, still well above the 162 grounded in January 2019. 758 of the A320-family aircraft, representing 7.6% of the A320 fleet. In January 2019, 1.4% of its fleet were parked. However, once excluding the aircraft impacted by engine issues, 4.5% of the A320 fleet were parked. With the GTF issues potentially grounding aircraft over 10 months, the report said a spare engine investment strategy may help offset the slowdown from GTF inspections. Wizz Air is building an inventory of spare engines, with it noting that it had seen some engines returned after 180 days. Look out for issue 79 of Airline Economics which features an exclusive interview with Wizz CEO Jozsef Varadi.