Aircraft Supply Chain Issues to Persist Until 2025
Aircraft manufacturers worldwide are striving to stabilize production runs but supply chain issues are expected to persist until at least 2025, says Andy Cronin, CEO, Avolon, which is the world’s third-largest aircraft leasing company.
“We continue to see increased levels of stabilization coming to the production runs,” Cronin tells Reuters. He stresses that despite aggressive efforts to ramp up production, challenges in the supply chain are anticipated in the next two years.
The post-pandemic surge in air travel has left both aircraft manufacturers and their smaller suppliers grappling with surging demand, escalating costs, part shortages, and a shortage of skilled labor.
In the second quarter of 2023, Avolon reported a 14% year-on-year increase in lease revenue, totaling US$613 million. This growth underscores the escalating global demand for aircraft, even as parts of Asia, notably China, recover somewhat slower than expected.
Recently, Avolon committed to purchasing 20 Airbus A330neo aircraft and is in advanced discussions regarding the placement of these new planes. This Airbus order follows a separate order for 40 Boeing 737 Max 8 planes.
Cronin foresees further increases in lease rates, especially in the wake of market rate spikes for Airbus A330-300s and Boeing 737 Max planes, which increased by 30% and 12%, respectively, in the first half of the year compared to the second half of 2022. Other aircraft models experienced similar high single-digit percentage increases in rates.