The hunger for airplanes is growing. Can a new entrant take advantage of this?

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TOPIC

🛩️ Aircraft orders are breaking records

Manufacturers have never seen such interest in their aircraft. The airline industry closed last year with 15,700 backlogs for commercial aircraft, an all-time record, according to consultancy data McKinsey.

If the manufacturers were to maintain the current pace of production and not accept a single new order, it would take them 13 years to fulfill the existing orders.

In addition, it can be assumed that the growth of orders did not stop at the end of last year. The two dominant manufacturers, Airbus and Boeing, set new highs for backlogs in each of the first three months of this year, with the two companies totaling just under 14,900 aircraft in March.

In the first quarter, Airbus and Boeing delivered 227 new planes to customers, down 12 percent from the first quarter of 2023. This points to a major problem facing aircraft manufacturers. While they promise to increase the pace of production to meet the swelling demand, the opposite is happening due to difficulties in the supply chains and lack of employees.

Production of the Boeing 737 MAX|profimedia.cz

The situation worsened in connection with the coronavirus pandemic in 2020, when manufacturers also experienced a large drop in interest. Demand has shot up since then, but component supply problems haven’t gone away.

For airlines, the slow pace of production means they have to keep existing aircraft alive longer. And here they get into a vicious circle. It means more workload for service services and more downtime. In addition, as McKinsey points out, many suppliers of components for aircraft manufacturers also produce spare parts, so if they do not have time to deliver to primary production, deliveries to the secondary market will also be delayed. Precisely at the moment when demand is increasing, as airlines are forced to extend the life of aircraft for which they should have already had a replacement.

The growing gap between the rate of increase in orders and the rate of production could mean that there is room for a new player in the market to satisfy this hunger of carriers. And there really is such a manufacturer. Airlines that have ordered new planes from him will receive the first aircraft this year.

Introducing the C919 in 2016|Comac

The Chinese manufacturer COMAC has received orders for hundreds of aircraft in recent weeks, including the three largest Chinese airlines that will fly domestic aircraft. But there is a catch – the COMAC C919 aircraft has so far been certified for operation only by the Chinese authorities, the manufacturer has not yet applied for similar certificates in Europe or the USA.

For example, the head of the leasing company Air Lease Corporation, Steven Udvar-Házy, thinks that it will take several decades for COMAC to become a full-fledged competitor to Airbus and Boeing. “At this point, I don’t believe the FAA and EASA will certify the 919 in its current export version,” he said. He added that it is not just the certification itself, but also the absence of an international service network or training capacities for crews and mechanics. “Look how long it took Airbus to achieve this,” the server quoted him as saying Shift.

The head of the commercial aircraft division of Airbus, Christian Scherer, is not afraid of new competition. He recently told COMAC that the C919 “doesn’t rock the boat”. Boeing, on the other hand, according to CNBC includes competition in the form of the C919 in its long-term predictions.

NEWS

🛩️ GPS jamming by Russia can cause an aviation disaster, warns the Baltics

The foreign ministers of Lithuania, Latvia and Estonia have independently warned that jamming the GPS signal in the Baltic Sea region could cause an air disaster. During the past weekend alone, two planes taking off from Finland had to return due to satellite navigation failures.

Airlines have been complaining about GPS signal interference over the Baltic for several months, but according to the British newspaper Financial Times, signal outages have become stronger in recent weeks. “When someone turns off your headlights while driving at night, it’s dangerous. The situation in the Baltics near the Russian border is becoming too dangerous to ignore,” said the head of Lithuanian diplomacy, Gabrielius Landsbergis. “We consider what is happening with GPS to be part of Russia’s hostile activities and we will definitely talk about it with our allies,” said his Estonian counterpart Margus Tsahkna.

According to experts, tens of thousands of civilian flights have been affected by GPS jamming in recent months. Disruption of navigation systems also limits shipping in the region.

🛩️ We will get permission to take over ITA in the summer, the head of Lufthansa believes

The Lufthansa Group is conducting constructive talks with the European Commission for permission to incorporate the Italian carrier ITA Airways, the head of the German group Carsten Spohr said. The regulator could give the green light to the acquisition in the summer, Spohr assumes.

The German airline group is seeking a 41 percent stake in the company, which is the successor to Alitalia. Lufthansa originally wanted to complete the transaction by the end of last year, but the European Commission expressed concerns that the transaction would limit competition on some routes and launched a more detailed review of the deal. In March, it reported that its concerns related to some routes from Italy to Central Europe, long-haul routes from Italy to the USA, Canada and Japan, and the creation of too strong a position of ITA Airways at Milan-Linate airport, which could make it difficult for competitors to offer flights to this airport. The European Commission does not specify which lines these concerns specifically concern.

The market regulator moved the latest deadline for its decision to June 13. Negotiations between the European Commission, Lufthansa, and ITA Airways’ shareholder, the Italian Ministry of Finance, are currently ongoing. “Yes, I’m optimistic that these constructive negotiations, which we now have to extend, will result in an agreement,” Spohr said during a call with investors after announcing first-quarter earnings. “What fuels my optimism? More and more people understand that this deal is the right one for the future of ITA,” he added.

According to earlier reports, Lufthansa is ready to give up 11 pairs of take-off and landing slots at Linate airport. Spohr indirectly confirmed this. “How do we solve the dominant position of Lufthansa together with ITA on Linate? The answer, of course, can only be to give up a certain number of slots,” he said.

🛩️ Boeing 777X will arrive to customers only in 2026, Lufthansa already assumes

Development of a new version of Boeing’s current largest aircraft, the 777X model, is getting further delayed, according to major customers. Even Lufthansa, which until recently believed the manufacturer’s claim that the first customers would receive their planes in 2025, now expects the first deliveries only the following year.

Boeing 777X production|

The head of Emirates Airlines, Tim Clark, was the first customer to question the official start date of the Boeing 777X in March. He said a delay to early 2026 was likely. Carsten Spohr, head of the Lufthansa Group, said a few days later that Stan Deal, the head of Boeing’s commercial aircraft division, had assured him that Lufthansa would receive its first aircraft in 2025.

But that is clearly not the case now that Stan Deal has been forced to leave as part of a major personnel shakeup in Boeing’s leadership. “We no longer believe that we will receive the first aircraft in 2025,” Lufthansa CEO Jens Ritter told reporters. According to him, the company will be able to put the aircraft into operation at the earliest at the beginning of the summer flight schedule, i.e. in March 2026. Boeing still could not get approval from the FAA regulatory authority to start flight tests of the 777X, although this testing was supposed to start in March or April of this year according to Boeing’s schedule . At the same time, the head of the Lufthansa airline said that Boeing continues to promise its German customer the delivery of the first of the 27 ordered Boeing 777-9 aircraft in the summer of 2025.