LONDON – Leasing giant AerCap has canceled 15 orders for the grounded Boeing 737 MAX aircraft. Its plan is to slow the pace of new plane deliveries to weather the COVID-19 crisis.
This leaves 80 Boeing 737 MAX still on AerCap’s order books. The world’s largest aircraft owner also called for more production cuts from Airbus and Boeing. The goal of the request is to help balance the jet market.
AerCap Boeing 737 MAX Uncertainties
AerCap has deferred dozens more MAX deliveries. The company said it remains uncertain when the five MAX planes already on lease will return to service. It awaits the regulator’s review changes to the jet after two fatal crashes.
U.S. authorities said last week they expect to give a green light in the “near future”. As a result, AerCap reached agreement with Boeing this month to restructure its order book, it said on Wednesday.
AerCap boss Aengus Kelly called for a further aircraft manufacturing slowdown. Kelly reported a drop in net income to US$246m in Q2.
This is compared from US$331 in Q2 2019, and a result of a global travel slump unleashed by the pandemic.
Statement from AerCap
“I think we’ll see more production cuts both from Boeing and Airbus, to help us get to that equilibrium,” said the CEO during an earnings call with analysts.
“I would be hopeful that tomorrow when Airbus releases its results we’ll see another production cut there.”
Airbus declined to comment ahead of its own results announcement on Thursday.
Hanging on to Consumer’s Desire to Travel
Leasing firms are traditionally conservative about production to preserve the value of their fleets. However, the call from the world’s largest lessor puts pressure on Airbus to defend output levels some analysts consider too high.
AerCap said it was well placed to weather the coronavirus crisis thanks to its US$27bn in unencumbered assets and record-high liquidity, including US$3bn in new funding.
Kelly said, “We have begun leasing airplanes again, but it’s almost exclusively focused on the European market.” He added that earlier signs of a U.S. travel rebound had since “run out of steam” amid new virus outbreaks and lockdowns.
Despite European reversals as the renewed British quarantine measures for Spanish arrivals, recovery is now “well underway” in the region. “No doubt there will be setbacks, but the willingness and the desire of the consumer to travel is very clear.”