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A bumpy recovery among global airlines has given an unexpected early boost to one corner of the market: demand for aircraft paint. It has come roaring back as production of new jets rises and pandemic-idled old ones change operators.

At Akzo Nobel, the world’s biggest supplier of plane coatings, sales across the product range were back to pre-pandemic levels during the second quarter.

“This was a surprise to us,” CEO Thierry Vanlancker said in an interview. “We thought this was only going to be in 2023.”

The drivers are two-fold. Aircraft manufacturers Airbus and Boeing have been scaling up output, with deliveries surging 70% to 453 new aircraft in the first half from a year earlier.

Ownership turmoil has also played a role, and every time a plane changes hands it needs to be repainted. While airline failures have dropped off sharply since last year, new carriers are still being formed, according to aviation consultancy IBA. The upstarts are picking up leased jets from companies that are defunct, struggling or otherwise slimming down their fleets.

Established players such as Delta Air Lines have also gone shopping for used planes. This month, the US major added almost 30 Boeing 737-900s that were part of Indonesian carrier PT Lion Mentari Airlines’ fleet. It also leased seven Airbus A350-900 twin-aisle jets let go by Chile’s Latam Airlines Group, which is in Chapter 11 bankruptcy.

Since January, airlines have returned 790 planes to lessors, while 609 new and used planes have been placed with customers, according to aviation, intelligence and advisory firm IBA.

Struggling operators will continue to dispose of leased jets, IBA said, while lessors will stop deferring new-plane deliveries as their cash positions improve.

Akzo Nobel rival PPG Industries also reported a second-quarter rise in sales volumes to the aerospace industry, as aftermarket activity begins to recover. The US company said it expects to benefit further as air travel revives in the second half of the year.

Amsterdam-based Akzo’s coatings for the interior and exterior of planes, as well as for structural components, can be required no matter how a plane changes hands. Generally, the company has said it has been able to pass along cost increases on its products to customers.

Vanlancker said demand on used planes has come back “pretty quickly” because flying is getting back to normal in the US. Paint sales for new deliveries are also rebounding, as well as for refurbishing the insides of jets.

Akzo benefited twice on some aircraft, the CEO said. First they were painted white, and then later with the colours and livery of an airline. So-called white tails are newly built aircraft that do not have an end customer, a rarity until the 2019 Boeing 737 Max grounding and the pandemic that followed a year later. Before then, both major manufacturers were struggling to keep up with demand.

Bloomberg News. For more articles like this please visit Bloomberg.com.


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