Airlines will suffer supply constraints for many years, AerCap CEO

Airlines may confront jet, engine, and part shortages for several years as they strive to meet a significant resurgence in travel demand, according to the chairman of aircraft leasing company AerCap. Aerospace companies have projected supply chain issues for at least the next 18 months as airlines scramble for new jet deliveries to satisfy the increasing demand. However, AerCap CEO Aengus Kelly expected that pressure will persist far into the second part of the decade.


"The most important point in the longer term is the supply constraint, which will last for many years," Kelly said in an interview, adding that this will expand beyond production lines and into already overcrowded repair or "MRO" facilities. Boeing CEO Dave Calhoun projected supply issues for a "very long time" last week. When asked to explain such a timeframe at the Qatar Economic Forum, he pointed to the company's order backlog, which spans the next five to six years.


"We feel very much the same, be it airframe issues, engine issues, MRO capability, both on the airframe and the engines," Kelly added, responding to Calhoun's reference to five years. Calhoun also predicted that it would be until the end of 2024 before jetmakers could significantly increase aircraft output. Part of the capacity pressure has been attributed to delivery delays.


Kelly stated that the supply issue has been exacerbated by the more frequent repair visits required by the newer engines. "The new assets have great fuel burn and wonderful engineering... but they are not as durable as previous assets, such as the (Boeing) 737, the (Airbus) A320." "As a result, they come off the wing faster and spend more time on the ground." And I don't see it changing for many, many years." Demand will likewise stay high for the "foreseeable future," he said. "I see strong global demand right now." Without a doubt, there will be parts of the world that experience ups and downs in the next years, which may influence specific carriers." The International Air Transport Association said that worldwide passenger traffic climbed by 46% year on year in April, ahead of a global airline summit in Istanbul on June 4-6. One possible benefit of the supply bottleneck is that airlines may be less able to respond to a surge in demand by adding too much capacity, as they did in the past, producing an overhang when the market swings lower. "I am confident that the supply-side constraint will significantly mitigate the impact of any demand downturn," Kelly added.

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