Airplane sales show signs of recovery after pandemic downturn

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During the Covid-19 pandemic, the business of buying and selling commercial aircraft worth billions of pounds was put on hold. But the rare public quarrel between Ryanair’s owner Michael O’Leary and Boeing over the latest 737 Max 10 jet ordered by Aer Lingus indicates that this high-stakes game is coming back to life.

This also indicates that the aircraft market is recovering, as airlines are back to the negotiating table and place orders for passenger aircraft in anticipation of the return of more passengers.

The pandemic has dealt a heavy blow to the aviation industry, and Boeing said the virus has cost the industry two years of growth. According to industry observers, the breakdown of negotiations with O’Leary on a new batch of Max 10 jets indicates that the American manufacturer is more confident.

“Boeing has shown a certain price discipline, which is a good thing for the industry. The Max is a good aircraft. They shouldn’t be pressured by O’Leary to abandon it,” said John Leahy, former commercial director of Airbus. Tell the Financial Times.

Boeing has been silent on the differences with O’Leary, only to point out that it values ​​Ryanair’s business but must abide by discipline. After two fatal crashes, Max’s new orders will boost the American group as it continues to build confidence in the aircraft.

The company won a series of orders this year, including 150 Max 10s from United Airlines. According to market observers, it has also reduced the backlog of Max jets that have been built but have no buyers to about a few dozen.

“In the past year or so, Boeing has been through Maxes’ friends and family, and provided a good price to help it clear the backlog of Maxes. Vertical Research Partners analyst Rob Stallard said that all existing buyers are Bought more.

John Leahy, former commercial director of Airbus: “Boeing’s demonstration of a certain price discipline is good for the industry” © Christophe Morin/Bloomberg

Throughout the industry, although the recovery of passenger flow is not complete, airlines have resumed ordering new aircraft.

According to data from the aviation consulting company Ascend by Cirium, so far this year, Airbus and Boeing have recorded a total of 902 new orders, excluding canceled orders and orders from non-commercial customers. In comparison, the total number of orders for 2020 is 672. North American airlines, especially United Airlines and Southwest Airlines, led the order this year.

“You can see the obvious impact of Max orders from large U.S. companies [airlines],” said Rob Morris, Cirium’s Ascend Consulting Director.

However, the actual delivery volume is much lower. During the same period, only 572 aircraft were delivered.

Mark Allen, Boeing’s chief strategy officer, said the company’s sales team is in discussions with “a large number of customers worldwide.”

“We see demand from many different regions. Many airlines realize that now is an opportunity for them to reformulate their plans and fleet intentions.”

Dómhnal Slattery, chief executive of Irish aircraft leasing company Avolon, said that especially in the past six months, American Airlines’ recent orders are a positive sign. “It conveys a message of confidence in the market’s recovery, and it also conveys a message of confidence in Max.”

Since the outbreak of the Covid-19 pandemic in January 2020, Airbus, another leading jet manufacturer in the world, set the best month for aircraft orders in August.

The European company’s order flow this year lags behind Boeing because its American rivals have already filled up its Max backlog. The company reported a total of 102 orders in August, including deals with Delta Air Lines and British low-cost airlines. Jet2’s big deal. The British Airways’ order for 36 A321neo jets is seen as a coup by Airbus because it has traditionally been purchased from Boeing.

The airline boss also obviously feels more confident. Delta Air Lines chief executive Ed Bastian said at an investor conference that crises would also “create opportunities.”

“They created an excellent opportunity for us to accelerate the development of our fleet. They not only eliminated many inefficient old aircraft, but also purchased many new aircraft. [Airbus] 321neos, etc., but entering the second-hand market, we are not afraid to use some amazing bargains to enter, and these bargains will exist as capital-friendly decisions in the next few years,” he said.

Southwest Airlines’ incoming chief executive, Robert Jordan, said at the same meeting that the airline expects 2022 to be “a year of substantial growth in the number of new aircraft” as it seeks to restore its network after the pandemic.

An industry executive said that even in Europe, where the recovery rate is slower than that of the United States, airlines have begun to consider updating their fleets, noting that the strong summer has boosted confidence.

Although negotiations with Boeing broke down, O’Leary was known for his optimism, and he was particularly optimistic. He told investors on Thursday that the airline’s new Boeing fleet will help achieve a step change in growth. Ryanair expects that by March 2026, the number of passengers will exceed the number previously predicted.

However, the recovery of air traffic is still temporary. Last week, several of the largest airlines in the United States stated that demand has slowed, blaming the increasing number of cases of the infectious coronavirus delta variant.

Avolon’s Slattery also warned that on a global scale, “it will take at least a few years to really get through the worst period.”

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