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DUBLIN (Reuters) – Boeing’s production difficulties will “get resolved”, its 737 MAX 10 aircraft will get certified and the impact of U.S. regulators freezing a planned production ramp-up will be minimal this year, the head of major customer Avolon said.
In the medium term, however, tighter regulation will cause delays and it could take until the end of the decade for the industry to make up the production shortfall experienced since the start of the COVID-19 pandemic, Avolon CEO Andy Cronin said in an interview.
The Federal Aviation Administration (FAA) on Wednesday froze planned increases in production of the 737 MAX following the blow-out of a panel on an Alaska Airlines Boeing jet, raising concerns for airlines and suppliers worldwide.
Avolon, the world’s third-largest aircraft lessor and a major Boeing customer with over 100 MAX aircraft on order, said it was not concerned about the plane’s safety, but regulators’ increased focus on production was set to result in production delays. “They’ll clearly be very cautious now,” Cronin said.
Avolon, a subsidiary of China’s Bohai Leasing Co Ltd, estimates the shortfall in planned aircraft production in the wake of COVID equals 12% of annual production and is growing.
A combination of quality and supply chain issues and manufacturing delays “will continue to elongate the recovery time, which at this point, is through the end of this decade,” Cronin said.
But ultimately Boeing has the technical expertise and production know-how to get back on track, he said. “This will come together and will get resolved.”
The number of MAX aircraft that will not be delivered due to the FAA’s decision to halt the production expansion “is actually relatively minimal” so long as Boeing can consistently maintain its 38 per month production rate, Cronin said.
“I don’t think anyone’s overly agitated,” he said.
Cronin declined to forecast when the MAX 10, the largest MAX model, will be certified, but said he was confident it would happen. Boeing had planned to secure certification this year, but major customer Ryanair said it expects it in 2025.
Avolon on Friday published its annual outlook, predicting the value of new aircraft deliveries would increase by 15% in 2024 to $100 billion, while airlines’ net profit would rise by 10% to $26 billion.
(Reporting by Tim Hepher and Conor Humphries; Editing by Tomasz Janowski)
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