A plunge in Ryanair’s quarterly profits cast a shadow over the opening of the Farnborough air show on Monday, where aviation leaders were already fretting about supply-chain snags, aircraft delays and floundering plans to cut emissions.
Boeing announced a bumper order from Korean Air for 20 777X jets and 20 787s, worth $7 billion according to estimated delivery prices from Cirium Ascend, in a boost for the US planemaker’s long-delayed 777X programme.
But many delegates at the July 22nd-26th gathering of aviation leaders in Hampshire, England, were not expecting the traditional deluge of deals as Airbus struggles to reach output goals and Boeing adopts a low-key posture amid its safety crisis, which was triggered by a panel flying off a 737 Max jet in January.
Production slots at the two dominant plane makers are sold out for many years, resulting in long wait times for airlines wishing to replace and grow their fleets.
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Aviation was hit hard by the pandemic, which saw air travel collapse only to bounce back sharply. That left many firms scrambling to resolve labour and parts shortages.
The situation has been exacerbated by a spiralling crisis at Boeing, which has had to slow production of its bestselling 737 Max aircraft following the panel blowout.
Delays in delivering aircraft have hampered airlines’ efforts to capitalise on the post-pandemic surge in travel and inflated costs, and signs are growing they are struggling to pass those costs on to consumers as demand starts to normalise.
Ryanair chief executive Michael O’Leary said there had been some improvement on deliveries from Boeing, but that there were still delays and he was getting a little concerned about deliveries due next year.
Separately, Flydubai said its fleet expansion plans had been hit by delays in Boeing deliveries, while the boss of Air India said it was having to rob parts from other aircraft to keep its aircraft flying amid industry supply-chain snags.
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“The big question for the airlines here at Farnborough is what has happened to the halo effect of demand after the pandemic – has that recovery stalled?” said veteran aviation journalist Mark Pilling, who was due to host a panel of chief executives.
Pegasus Airlines chief executive Guliz Ozturk told reporters customers were going “back to basics” seeking lower fares.
“We have started seeing the normalisation of demand. What does it mean? I mean, the demand is there, but now the travellers are looking for, as before the pandemic, for the most affordable, the lowest, the best price for their travel,” she said.
Ryanair's warning on fares deepened worries about pressure on yields – a measure of average fare paid per mile by each passenger and a key barometer for airline profitability.
Airline shares were among the biggest fallers in Europe. Ryanair was down more than 14 per cent and set for its worst day since June 2016 in late morning trading , while rival EasyJet fell 8 per cent, TUI was down 4.9 per cent and BA-owner IAG lost 4 per cent.
With deal making likely to be limited, the focus at the air show is likely to fall on how manufacturers are tackling supply-chain blockages.
Stephanie Pope, Boeing’s new head of commercial aircraft, told a media briefing on Sunday that 737 Max production was improving and the company was undergoing “transformational change” across safety and corporate culture.
Airbus chief executive Guillaume Faury also said on Sunday it was making progress ramping up production of its top passenger jets.
Some deals will get over the line, delegates said. Virgin Atlantic is close to placing a top-up order for Airbus A330neos and Flynas, a Saudi low-cost carrier, is poised to order up to 30 of the same wide-body aircraft, industry sources said.
Japan Airlines is expected to firm up recent tentative orders for jets and Boeing is seeing leasing interest for its 737 Max, while Turkish Airlines is in the midst of negotiations to buy Boeing jets, industry sources said.
This week’s air show will be peppered with sustainability panels and workshops as aerospace giants and airlines seek to emphasise their commitment to reducing carbon emissions, even as they plan to massively expand global air travel. – Reuters
