Lack of Russian Titanium Doesn’t Affect Airframers — Yet

Madhu Unnikrishnan

April 11th, 2022 at 12:01 AM EDT

Airbus’ plans to aggressively ramp up aircraft production are on track, despite new constraints on the global supply of Russian titanium, a critical metal for aerospace manufacturing.

The European airframer quashed rumors that its A320 and A350 production increases will be delayed by titanium-supply issues. “We continue to assess the impact of the current situation in detail, but we do not see any issue in the short to medium term,” an Airbus spokesperson said. “Regardless, we are accelerating our efforts to secure alternative sources of supply.”

Airbus previously indicated that it sourced as much as half of its titanium needs from Russia. It continues to buy the metal from the country. “Airbus is directly sourcing titanium from Russia as well as from other countries, and indirectly sourcing it from Tier 1 suppliers,” the spokesperson said. “This is done in accordance with all sanctions and applicable export control regulations in place.”

Airbus plans to increase production of its A320 family to 65 aircraft per month by the middle of next year, an aggressive target that analysts and even Air Lease Corp. Executive Chairman Steven Udvar-Hazy have questioned. Last year, analysts pointed to other supply chain problems, not least of which were staffing issues at the airframer’s suppliers.

But CEO Guillaume Faury stood by the company’s targets and said Airbus can deliver 20 percent more aircraft this year compared with last year. “We are ready,” he said in February before the conflict began.

Before the war in Ukraine, Russia provided up to 20 percent of the world’s raw titanium, and VSMPO-AVISMA is the world’s largest producer of the metal for the aerospace industry. Before the conflict, Boeing and VSMPO-AVISMA were in a joint venture to provide part of the U.S. airframer’s titanium requirements. But European, Japanese, and U.S. sanctions have prompted aerospace firms to avoid Russian supplies of the metal in order to comply with broader sanctions. China, Japan, Kazakstan, and the U.S. produce the balance of the world’s supply of titanium.

Earlier this year, Boeing CEO David Calhoun assured investors that the company’s supply of the metal was secure. “As long as the geopolitical situation stays tame, no problem,” he said on January 26. “If it doesn’t, we’re protected for quite a while, but not forever.”

But the company started diversifying its supply in 2014 after Russia annexed the Crimean Peninsula. Boeing accelerated the process after Russia invaded Ukraine on February 24, and has since suspended all titanium purchases from the country.

“Our inventory and diversity of titanium sources provide sufficient supply for airplane production and we will continue to take the right steps to ensure long-term continuity,” a Boeing spokesperson said. “As aerospace is a longer cycle business, we largely have longer-term agreements that bridge short-term supply issues, which give us priority and protection from the fluctuations in the market.”

Embraer sourced much of its titanium from Russia before the war broke out, raising questions about its ability to meet its delivery targets this year. But in a recent filing with the U.S. Securities and Exchange Commission the Brazilian airframer said it had enough supplies for the near term.

“Embraer informs that there is no immediate concern over the availability of titanium in its supply chain, considering its strong current inventory position and the existing contracts for the provision of this material with companies in other countries,” the company said. “Embraer will continue to monitor its supply chain and to seek alternative sources.”

Madhu Unnikrishnan

Fleet Briefs

  • Air Lease Corp. ordered 32 Boeing 737 Max aircraft — of both the -8 and -9 variants. The lessor recently added 18 Maxes to its orderbook, and its backlog for the type is for 130 aircraft. “The addition of more 737 MAXs, including 737-8s and 737-9s, will enable ALC to respond to accelerating market demand as air travel continues to recover,” said Ihssane Mounir, senior vice president of commercial sales and marketing at Boeing. ALC Executive Chairman Steven Udvar-Hazy has stressed strong demand for next generation narrowbody aircraft as the world’s airlines focus on shorthaul demand as they emerge from the pandemic.
  • CDB Aviation is providing five Airbus A320neos to Volaris in a sale-and-leaseback deal. The lessor now has 13 aircraft placed at Volaris, four of which have been delivered, with the balance to be delivered by the fourth quarter of 2024.
  • Lessors’ exposure to Russia is coming into clearer focus. Avolon last week said it had 16 narrowbodies leased to Russian carriers and, as of the end of March, 10 remained in the country. The exposure is less than 1 percent of Avolon’s portfolio of 592 aircraft. By contrast, AerCap has 135 aircraft worth $3.5 billion in Russia.

    Separately, Avolon said it signed 54 new leases in the first quarter and delivered six aircraft. The lessor also signed deals for Vertical VX4 eVTOLs with AirAsia, Gozen Holding, and Air Greenland.
  • WestJet took delivery of the first of four converted 737-800 freighters last week. Its three stablemates are expected to follow by the end of the year. WestJet will operate the freighters on its existing route network, with crews sourced from the passenger operation. Elsewhere in Canada Lynx Air took its first flight, from Calgary-Toronto, on a 737 Max. The carrier plans to operate 148 flights per week on as many as 12 routes across Canada as it ramps up.

Madhu Unnikrishnan

Madhu Unnikrishnan

April 11th, 2022 at 12:01 AM EDT