“Boeing strikes could set them back a further five years” says Steven Udvar-Házy as he discusses OEM delays
Air Lease Corporation executive chairman, Steven Udvar-Házy believes that ongoing setbacks at Boeing could push the struggling aircraft manufacturer back by “a further five years.”
Following the latest rejection from workers at Boeing for a pay rise of 35% over the next four years, speaking at the APG World Connect conference in Malta, Udvar-Házy said that Boeing has “underestimated” the popularity of Airbus’ Neo aircraft. "Boeing is a tragic story as they kind of missed the boat, underestimating the popularity of the Neo aircraft, with Airbus able to gather around 2,000 orders for its aircraft in a very short space of time,” said Udvar-Házy, before they launched an updated 737 as a reaction to Airbus
Air Lease Corporation had 11 Boeing aircraft scheduled for delivery between September and December of this year, but the lessor does not anticipate receiving any of these aircraft this year, unless the labor strike is quickly settled.
Speaking about the Boeing strike, Udvar-Házy would like to see the manufacturer to reestablish production as it will take some time for it to return to a level of normalcy, adding that the strike could not have come at a worse time for the company. “You don’t just turn the switch, and the lights come back on, it is going to take several weeks to return to some level of normality. A lot of suppliers to Boeing have also had to shut down or reduce operations, have let go of people, so it will be a real monumental transition back to normalcy after the strike end,” commented Udvar-Házy.
In relation to other aspects of Boeing’s business such as failed space missions and military programs that are in the red, he added: “Everything that Boeing touched has turned to poison, and I sincerely hope that they can recover from this.”
In addition to problems at Boeing, Udvar-Házy also made comment on delays experienced with Airbus. Since 2017, he commented that Air Lease Corporation had not received a single narrowbody aircraft – such as the A320, A321 and A220 – on the contacted month of delivery; with the lessor having received 250 narrowbody jets from the European manufacturer over the past seven years.
OEM delays also mean that “If you go to Boeing or Airbus to order a long-range aircraft you are looking a five-to-six-year wait for that aircraft at a minimum, the wait could be longer,” said Udvar-Házy.
Away from the big two aircraft manufacturers, Udvar-Házy also commented on Chinese manufacturer COMAC which he believes will face challenges to become the third major aircraft manufacturer. “Major airlines in China – all of whom are our customers – have learnt a lot from operating western aircraft for a long time. They lack in avionics technology, and they don’t have the in-house capabilities to build a technologically superior engine. As a lessor I am asking myself what the residual value of COMAC’s aircraft will be in 10 years, as they don’t have a global support network for spare parts, product support and engineering modifications.”
Udvar-Házy believes more can be done elsewhere to improve other areas of the aviation industry. He described current air traffic control (ATC) systems as “antiquated” noting that current procedures are causing flights to fly routes that are not as direct, therefore causing an increase in jet fuel usage, especially in Europe.
Commenting on this Udvar-Házy said: “Millions and millions of litres of jet fuel are being wasted because of air traffic control efficiencies and it would not be that hard to fix this problem, but Eurocontrol, is still not operating an integrated system, with many European countries still having their own military air controllers.”
Among Air Lease Corporation’s upcoming deliveries Udvar-Házy noted that the company is set to take delivery of 57 A220s, alongside 140 Airbus A321neos. Notably, about half of these A321neo orders are for the LR and XLR variants of the A321 aircraft. Aer Lingus has deployed its A321LRs on transatlantic routes from Ireland to the US and Canada, complementing its existing fleet of Airbus A330 aircraft.
In the wake of two crashes involving the Boeing 737 MAX, 30 of the original 190 strong order were cancelled but the lessor still has 74 MAX deliveries yet to be fulfilled by Boeing.
Other notable orders include six A330neo aircraft, with customers like Virgin Atlantic and Delta Airlines, and 14 787 Dreamliners in the backlog. Additionally, two more Airbus A350 passenger jets are slated for delivery along with seven new A350 freighters.
Air Lease Corporation currently has $31 billion worth of assets, $20 billion worth of new planes on order and a $7.9 billion credit facility.
Udvar-Házy emphasised that the airline industry worldwide will continue to grow in size and passenger traffic, citing optimism about the future.