[ad_1]
The multibillion-pound commercial aircraft buying and selling business has been put on hold during the Covid-19 pandemic. But a rare public row between Ryanair boss Michael O’Leary and Boeing over the Irish airline’s latest 737 Max 10 order shows the high-stakes game is coming to life.
It’s also a sign that the aircraft market is recovering as airlines return to the negotiating table to place orders for passenger jets in anticipation of more passengers returning.
The pandemic has hit aviation hard, with Boeing claiming the virus has cost the industry two years of growth. The breakdown in talks with O’Leary over a new batch of Max 10 jets shows a more confident approach from the US automaker, industry watchers say.
“It is good for the industry for Boeing to show some discipline when it comes to pricing. The Max is a good plane. They shouldn’t be forced by O’Leary to give it away, ”John Leahy, former Airbus commercial director, told the Financial Times.
Boeing remained reluctant to disagree with O’Leary, noting only that he valued Ryanair’s business but had to exercise discipline. A major new order for the Max would have boosted the US group as it continues to build confidence in the plane after two fatal crashes.
The company won a series of orders this year, including 150 of United Airlines’ Max 10s. It also reduced the backlog of Max jets that had been built but had no buyers to about two dozen, according to market watchers.
“Over the past year, Boeing has reviewed the Maxes friends and family and offered a good price to help clear Maxes’ backlog. All the existing buyers bought more, ”said Rob Stallard, analyst at Vertical Research Partners.
Across the industry, although the recovery in traffic has been patchy, airlines have resumed ordering new aircraft.
Data from Ascend of Cirium, the aviation consultancy, shows 902 new gross orders, which excludes cancellations and orders for non-commercial customers, recorded by Airbus and Boeing so far this year. That compares to 672 orders for all of 2020. North American airlines, including United Airlines and Southwest Airlines, have led the charge this year.
“You can see the clear impact of the US majors’ Max orders [airlines]”said Rob Morris, Consulting Manager at Ascend by Cirium.
Actual deliveries, however, are much lower. Over the same period, only 572 devices were delivered.
Marc Allen, chief strategy officer at Boeing, said the company’s sales teams were in talks with a “number of customers around the world.”
“We are seeing demand from many different regions. Many airlines recognize that now is an opportunity for them to reset their planning and fleet intentions. “
Dómhnal Slattery, managing director of Avolon, the Irish aircraft leasing company, said recent orders from US airlines, especially in the past six months, were a positive sign. “It sends a message of confidence in the market recovery and it also sends a message of confidence in the Max.”
Airbus, the world’s other jet manufacturer, recorded its best month of aircraft orders in August since the start of the Covid-19 pandemic in January 2020.
The European carrier, which has fallen behind Boeing in the flow of orders this year as its American rival replenished its Max backlog, recorded 102 gross orders for August, including major contracts with Delta Air Lines and Jet2, the British low cost airline. The British carrier’s order for 36 A321neo jets was seen as a coup for Airbus, as it traditionally bought from Boeing.
The airline bosses also clearly feel more confident. Ed Bastian, CEO of Delta Air Lines, told an investor conference that crises “also create opportunities”.
“They gave us a great opportunity to accelerate the development of our fleet, not only to retire a lot of old inefficient planes, but to acquire a lot of new ones. Not just the [Airbus] 321neos and others, but going into the second-hand markets, which we are not afraid to tap into with incredible bargains that will be a pro-capital decision for years to come, ”he said .
Robert Jordan, the new chief executive of Southwest Airlines, told the same conference that the airline expects 2022 to be a “year of strong growth in terms of new net aircraft” as it seeks to restore its network after the pandemic.
Even in Europe, where the recovery has been slower than in the United States, carriers have started to consider renewing their fleets, according to an industry official, noting that confidence had been supported by a strong summer.
O’Leary, well known for his optimism, is particularly optimistic despite the breakdown in talks with Boeing. He told investors on Thursday that the airline’s new fleet of Boeing jets would help drive a dramatic shift in growth. Ryanair plans to carry more passengers than expected by March 2026.
However, the resumption of air traffic remains timid. Several of the largest U.S. carriers last week revealed slowing demand, blaming increased cases of the contagious Delta variant of the coronavirus.
Avolon’s Slattery also warned that globally it will take “at least a few more years for me to think we’re really going through the worst.”
Source link
