Photo credit: Boeing is struggling to meet 737 Max delivery targets due to supply chain issues. Flickr / LunchWithaLens
Air Lease Corp.’s Executive Chairman Steven Udvar-Hazy is frustrated with Airbus and Boeing. The lessor faces delivery delays for “every one of our single-aisle” aircraft from the two major airframers as supply chain issues mount.
“The supply chain, starting with the engine manufacturers, the people that make landing gear … the people that make bits and pieces, are not equipped today to meet the production goals,” Udvar-Hazy said in a wide-ranging conversation at the ISTAT Americas conference on Tuesday. He added that he only found out “this morning” — March 8 — that all of ALC’s 2022 Max deliveries are delayed. The delays average a month.
The lessor is scheduled to take delivery of 27 Airbus A320neo-family and 33 Boeing 737-Max family aircraft this year, according to its 2021 annual report released in February. All of the aircraft are already placed with customers.
The latest narrowbody delays raise series questions about the airframers’ plans to raise production rates. Airbus aims to deliver 720 commercial aircraft, and Boeing as many as 500 aircraft in 2022 — both represent double-digit increases over last year. And both companies have ambitious goals to ramp production to a combined 110-120 A320neo and 737 Max monthly over the next few years. Executives for neither planemaker have said the increases will be easy, but see the targets as achievable.
Cowen & Co. analyst Cai von Rumohr also questions Boeing’s delivery targets. In a report Tuesday, he said the 500 aircraft target increasingly looks “like a stretch” and cited the planemaker’s weak February numbers when it delivered just 20 aircraft.
Asked whether Boeing’s relationship with the U.S. Federal Aviation Administration (FAA) is delaying the Max, Udvar-Hazy said no and again pointed to the airframer. Boeing needs to “get their act together,” he said.
This is not to say FAA relations are not negatively affecting Boeing and its customers. ALC has no view on when the airframer will resume 787 deliveries, Udvar-Hazy said and called a summer resumption “optimistic.” The departure of FAA Administrator Steve Dickson on March 31 has left the agency a “headless ship” amid rework on the 787, certification of the 737 Max 7 and 10, and the 777X program.
“This is all because of the Max, and what Boeing did with the Max,” he said of the slow pace of the FAA.
In January, Boeing CEO David Calhoun said the regulator had identified work on fuselage door surrounds on 110 787s in its inventory that needed to be completed before deliveries can resume. The FAA has indicated that it must sign off on each individual aircraft once work is complete.
Udvar-Hazy estimated that the rework necessary for the 787s in Boeing’s inventory will take up to two years.
“Every conversation we’ve had with Boeing is ‘mañana, mañana, mañana,’ and it’s been that way for months … I hope [deliveries resume] soon,” he said.
On Russia’s invasion of Ukraine, Udvar-Hazy said the Russian government may soon find itself “between a rock and a hard place” in terms of internal connectivity due to its airlines’ reliance on Airbus and Boeing jets. Nearly three-quarters of the 861 in-service aircraft in Russia were Airbus or Boeing models — specifically, 304 Airbus and 332 Boeing planes — in February, according to Cirium.
Both airframers, as well as the web of suppliers and lessors around them, are barred from delivering new aircraft or providing maintenance support for existing planes under the Western economic sanctions on Russia. This has prompted Aeroflot to suspend all international flights to protect its foreign-owned fleet from repossession, and talk of potentially cannibalizing select aircraft for their parts to support other planes in the fleet.
“They really need [the air transport] network to connect Russian cities,” said Udvar-Hazy, who added that some sectors to the country’s Far East are longer than transatlantic flights between Europe and the U.S. There is no in-production Russian commercial aircraft that operate those routes.
International lessors have broadly accepted that they are unlikely to recovery any more aircraft leased to Russian airlines.
Udvar-Hazy spoke briefly of the freighter market at ISTAT. ALC is looking at Boeing’s new 777-8 freighter but said that the company does not “see a compelling case” yet for the jet, which he said is heavier than the new Airbus A350 freighter. The lessor launched the A350F at the Dubai Airshow in November with a commitment for seven aircraft.