Air Lease mulls going ahead with Boeing Max deals
London/Dubai/Chicago — Air Lease is considering reinstating some previously cancelled Boeing 737 Max orders, though not until more regulators clear the jet’s return, chair Steven Udvar-Hazy says.
Los Angeles-based Air Lease, one of the world’s largest aircraft leasing firms, had committed to 195 Max purchases at year-end 2019, including orders, options and planes already delivered.
Then came the coronavirus, which sapped demand for aircraft and led to the loss of more than 1,000 Max orders. The jet’s extended grounding after two deadly crashes gave struggling buyers leverage to cancel purchase contracts that are normally iron-clad.
Udvar-Hazy’s comments suggest at least a portion of the dropped orders could reappear in Boeing’s backlog, though restored purchases are likely to have terms more advantageous to the airlines and lessors.
Air Lease cancelled 19 Max orders last year, while converting some to larger Boeing 787s. It has 107 unfilled orders for the single-aisle jet, according to the Chicago-based manufacturer’s website.
Udvar-Hazy said Air Lease expects to firm up its fleet plans by this summer, with a focus on the -8 and -9 versions of the Max. He said the new total would not approach 200 jets.
Boeing is trying to place dozens of unsold 737 Maxes. Delivering more planes, and finding airlines or leasing firms to claim the orphaned ones, depends on more regulators following the US Federal Aviation Administration, which lifted its 20-month ban in November, Udvar-Hazy said.
Not having approvals from the EU, China and Russia “makes it hard for us to reactivate orders for white tails,” Udvar-Hazy said on Monday, using an industry term for newly built planes that lack a buyer.
“China is a question mark,” Udvar-Hazy said on an Airline Economics Growth Frontiers webinar. That was likely to become a political issue, and the new Biden administration will have to resolve it, he said.
Airlines in North America are using the Max on commercial flights, while the EU Aviation Safety Agency could clear the plane’s return this month. Canada said Monday that it will lift its ban on the Max on Wednesday.
China, the fastest-growing market for aircraft sales, was the first to idle the plane in March 2019 after the second of two Max crashes that killed a total of 346 people. It has not said when it will allow the plane to fly, and the relationship with the outgoing Donald Trump administration is raw as president-elect Joe Biden prepares to be sworn in on Wednesday.
“The next 90 days are critical,” Udvar-Hazy said. He added that Boeing should drop the “scarred” Max name.
Boeing did not respond to a request for comment.
In the longer term, Hazy expects Airbus SE to take market share from Boeing in the market for narrow-body jets, citing the superior economics of the European manufacturer’s A321neo, which can seat more passengers at lower operating costs than the competing Max-10, he said.
Udvar-Hazy said he expects Airbus to eventually capture a 65% share of the global narrow-body market.
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