Aviation Industry Bets on Boeing's Recovery Amid Production Woes

In a recent development, Avolon CEO Andy Cronin has expressed confidence that Boeing's current production challenges will be resolved, despite recent setbacks including increased scrutiny from the U.S. Federal Aviation Administration (FAA). Avolon, a leading aircraft leasing company and significant Boeing customer, continues to back the aviation manufacturer.

FAA Halts Boeing's Production Increase

The FAA's decision to halt a planned production increase of the 737 MAX series came after an incident involving an Alaska Airlines Boeing jet, which heightened industry concerns. Nonetheless, Avolon, which has ordered more than 100 MAX airplanes, has downplayed safety worries, predicting minor impacts on this year's delivery targets. However, Avolon notes that tighter regulations are expected to cause delays, potentially stretching recovery efforts through the end of the decade.

Production Setbacks and Recovery

Since the advent of COVID-19, the aviation industry has seen a production shortfall of 12% annually according to Avolon. The combination of quality control, supply chain hurdles, and manufacturing delays is anticipated to protract recovery time. Yet Avolon's CEO maintains that Boeing's technical and production capabilities will enable it to surmount current challenges.

Optimism for 737 MAX 10 Certification

Despite lacking a precise certification date for the 737 MAX 10, the largest model in the MAX series, Cronin remains optimistic about its eventual approval, a sentiment not fully shared by major customer Ryanair. While Boeing had aimed for certification this year, contrasting expectations like those of Ryanair hint at a potential 2025 timeline.

Economic Outlook

Avolon's own forecast paints a promising picture for the future, projecting a 15% increase in the value of new aircraft deliveries by 2024, reaching $100 billion. Moreover, airlines' net profits are expected to ascend by 10%, culminating in $26 billion, signaling positive momentum for the aviation sector.

Avolon, Boeing, FAA