Boeing is "undoubtedly" making significant progress in getting on top of quality issues, the head of Avolon, the world's second-largest aircraft leasing firm, and a major Boeing customer, said on Thursday. Boeing was hit by the latest in a series of problems on Jan. 5 when a door panel flew off one of its 737 MAX 9 jets amid an Alaska Airlines flight.
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Avolon CEO Andy Cronin said preliminary findings from a U.S. regulatory investigation into the incident were "positive", in not appearing to show any design implications for the aircraft or systemic production issues. "I think undoubtedly they're making significant progress on what they've been trying to achieve," Cronin told Reuters when asked if Boeing was getting on top of its problems.
Boeing has been under fire from regulators and airlines over a succession of quality issues that have snagged production and development timelines. Aircraft lessors are major buyers of aircraft and Avolon has 116 737 MAX on order. Cronin said Avolon had discovered a large number of "lower level" quality issues on aircraft recently delivered by multiple manufacturers, adding they were not confined to Boeing or the MAX.
As supply chains are struggling to restore production, there are various factors affecting the quality and delivery of products. However, these factors are not yet impacting safety. According to Cronin, these issues mostly involve cosmetic items or "second, third order" type fittings. In response to this situation, Boeing, Airbus, and their major suppliers are now taking a more active role throughout the supply chain, which is having a positive impact. In the past year, the constrained supply of aircraft and the rising demand for travel have benefited lessors. The average lease rates for current-technology aircraft that are in demand to rent have increased by 20%-30% in 2023. On Thursday, Avolon reported a full-year core profit of $2.5 billion and a 34% year-on-year increase in net income to $339 million, excluding the impact of a heavy write down on aircraft stuck in Russia due to Western sanctions in 2022. Cronin believes that there is still "plenty of room" for further increase in lease rates in 2024, although not at the "exceptional" pace of 2023.