Tag: grounding (Page 2 of 3)

Resurgent Boeing 737 MAX Could Trigger Jet Surplus

November 4, 2019 / WIL BALDWIN

– Market faces potential surplus of 1,000 jets next year

– Air Lease CEO less worried about surge in MAX deliveries

– Older aircraft won reprieve during MAX grounding

– Boeing aims to deliver record-matching 70 MAX a mth on return

HONG KONG, Nov 5 (Reuters) – Airlines struggling to cope with the grounding of the 737 MAX could face a markedly different problem when Boeing Co’s best-selling jet is cleared to re-enter service: a switch to concerns about aircraft oversupply, carriers have been warned.

The U.S. planemaker has continued to produce the jet since it was grounded in March after two fatal accidents, and is expected to speed deliveries by 40%, to 70 units a month, when its factory doors reopen, in a bid to clear the backlog.

Rob Morris, global head of consultancy at UK-based Ascend by Cirium, said the combination of any rapid rebound in deliveries, economic worries and an accumulation of market pressures dating back before the crashes could make it hard to absorb the jets.

“Next year is the challenge. When the dam breaks and the MAX starts to flow, there are going to be a lot of aircraft,” Morris told financiers at a Hong Kong briefing late on Monday.

“There could potentially be as many as 1,000 surplus aircraft next year.”

The forecast is based on both a rebound in MAX deliveries and a potential glut of second-hand airplanes flooding back onto the market after standing in for the MAX during the grounding.

The crisis has rekindled demand for older and less efficient jets, with airlines using more than 800 planes that are more than 15 years old, compared to conditions four years ago, Morris told the Airline Economics Growth Frontiers conference on Tuesday.

TWO-YEAR LOG JAM

Until now, most concern has focused on whether regulators would permit an orderly return to service by avoiding gaps in approvals by different countries.

But Morris, who has warned a long up-cycle in aviation is nearly over, said there were also risks in opening floodgates too quickly, overwhelming fragile growth in travel demand.

Still, he and other delegates at back-to-back aviation finance gatherings in Hong Kong agreed it would take Boeing 18 months or longer to deliver all the stranded aircraft.

The operation will be one of the industry’s biggest ever logistical challenges and any glitches or delays could further brake supply.

“Getting all those aircraft, that are currently parked, off the ground could take two years,” John Plueger, chief executive of Air Lease Corp, told Reuters, adding he did not see fundamental changes as a result of the MAX’s return.

“It is not as if all these MAX could be delivered over a one-, two- or three-month period … so it is not an open floodgate and 350 planes all coming onto the market tomorrow,” he said on the sidelines of last week’s Airfinance Journal Asia Pacific conference.

Boeing aims to return the 737 MAX to service in the United States by the end of 2019, after making software changes in the wake of the crashes, which killed 346 people.

Europe’s top regulator said on Monday the airliner is likely to return to service in Europe in the first quarter of 2020.

Analysts say more than 300 MAX aircraft have been produced since March, when commercial flights were banned and deliveries frozen. This could rise to 400 by the time it resumes service.

Boeing is additionally expected to deliver close to 600 jets straight from the production line next year. It has indicated it plans to deliver up to 70 jets a month, equal to a previous record. Of this, analysts say around 20 are expected to be drawn from inventory parked at its factories and the rest newly built.

(Reporting by Tim Hepher and Anshuman Daga in Hong Kong Editing by Matthew Lewis and Clarence Fernandez)

New Swiss A220 Jet Engine Failure Forces Checks

October 15, 2019 / WIL BALDWIN

PARIS/ZURICH (Reuters) – U.S. engine maker Pratt & Whitney faces new checks on engines for small jetliners after an engine failure forced a Geneva-bound Swiss jet to divert to Paris and prompted a brief grounding of the rest of the airline’s Airbus A220 fleet.

French air crash investigators classified the problem that disrupted the Swiss flight shortly after departure from London Heathrow on Tuesday as a “serious incident” and said it would be investigated by the U.S. National Transportation Safety Board.

It was the third engine incident involving the same airline and model of jet in as many months and resulted in a small amount of debris being scattered as the aircraft landed at Paris Charles de Gaulle, an airport source told Reuters.

It came just hours after France’s BEA agency launched an unusual appeal for 150 volunteers to scour an uninhabited wood in eastern France for a titanium engine part dating from the first blowout in July, which affected a Geneva-London flight.

A second incident in September caused a Swiss A220 to divert to Geneva, but on that occasion the engine’s housing contained fragments torn loose from the engine, the BEA said.

Swiss, owned by Germany’s Lufthansa <DLAKY>, said after Tuesday’s incident it had initially grounded its fleet of Airbus <EADSY> A220 jets for a “comprehensive inspection” of their engines.

Late on Tuesday, it said the first aircraft had already returned to service but that the inspections had forced it to cancel 100 flights, affecting 10,000 passengers.

Operations are expected to return to normal from Thursday.

ADDITIONAL CHECKS

Tuesday’s incident highlighted scrutiny of the performance of new-generation Geared Turbofan engines developed by Pratt & Whitney, a unit of United Technologies Corp <UTX>.

A spokesman for the engine maker said it was recommending additional checks for versions of the engine that power the Airbus A220 – an engine known as the PW1500G – and a rival Brazilian jet, the Embraer 190/195-E2.

A similar engine for the larger A320neo family, Airbus’ most-sold aircraft, was not affected.

“Pratt & Whitney and our airframe OEMs (manufacturers), working in coordination with the regulatory authorities, have recommended additional inspections of the low-pressure compressor for PW1500G and PW1900G engines to keep the fleet operational,” a spokesman said.

“The engines continue to meet all criteria for continued airworthiness. We are working closely with our customers to minimise disruption to their operations.”

Prompted by the earlier incidents in July and September, the U.S. Federal Aviation Administration ordered inspections on the same engine part in A220s and some Embraer jets in September.

On Tuesday, Delta Air Lines <DAL> said its A220 jets were flying as normal.

Air Baltic, which also flies the A220, said it was closely following Pratt’s latest recommendations but that it used a different version of the PW1500G engine from Swiss.

A total of 90 of the 110-130-seat A220 aircraft have been delivered, initially by Canada’s Bombardier <BDRBF> which designed the carbon-fibre jet, and later by Airbus, which bought the loss-making programme last year.

Airbus said it was working with Pratt & Whitneyand would co-operate with any investigation.

In Brazil, Embraer <ERJ> had no immediate comment.

The company uses Pratt’s PW1900G engine in larger versions of its upgraded 80-120-seat E2 jets.

It has delivered six E190-E2 planes split between Norwegian carrier Wideroe and lessor Aercap <AER>, and one E195-E2, which is not yet in commercial service but has been delivered to Brazilian airline Azul SA <AZUL>.

Azul said its operations were not affected.

(Reporting by Tim Hepher in Paris, Tracy Rucinski in Chicago, John Revill in Zurich, Michael Shields in Vienna, Marcelo Rochabrun in Sao Paulo, Allison Lampert in Montreal, Laurence Frost in Paris; Editing by Jane Merriman and Matthew Lewis)

BOC Aviation Expects Delivery Delay of up to 30 Jets

July 29, 2019 / WIL BALDWIN

SINGAPORE (Reuters) – Aircraft lessor BOC Aviation Ltd said on Tuesday it expected up to 30 Boeing Co <BA> and Airbus SE <EADSY> jets that had been scheduled to arrive this year could be delayed, primarily due to the Boeing 737 MAX grounding.

BOC said 18 jets that had been due in the first half had been delayed, including 12 A320neo’s due primarily to industrial constraints and 6 737 MAX’s as a result of the grounding.

For the full year, up to 7 A320neo’s and 23 737 MAX’s could be delayed, including three for which an airline customer has the right to acquire upon delivery, Asia’s second-biggest aircraft lessor said in a statement.

BOC said it was working with Boeing on a revised delivery timeframe.

Boeing last week estimated a return to service for the jet would begin early in the fourth quarter, but it did not rule out further reducing or temporarily shutting down production of the plane if that forecast needed to be revised.

U.S. carrier Southwest Airlines Co <LU V> last week removed the 737 MAX from its schedules until Jan. 5, 2020, saying it would need one to two months following regulatory approval to train pilots and prepare the jets for fresh commercial service.

(Reporting by Jamie Freed; Editing by Stephen Coates)

Airbus Closes In On Air France Jetliner Deal

July 20, 2019 / WIL BALDWIN

LONDON (Reuters) – Airbus is close to a deal worth billions of dollars to sell dozens of A320neo-family and smaller A220 aircraft to Air France as the French network carries out a keenly awaited renewal of its medium-haul fleet, industry sources said.

The deal could include as many as 50-70 Canadian-designed A220 jets, formerly known as CSeries, to replace Air France’s ageing fleet of roughly 50 A318 and A319 aircraft, they said.

Air France is also expected to pick the A320neo family to replace approximately 40 earlier versions of the Airbus A320 that are up to 18 years old.

A spokeswoman for Franco-Dutch parent Air France-KLM said: “Air France is pursuing work on its medium-haul fleet renewal. No decision has been taken at this stage.”

Airbus declined to comment on the deal, which is expected to be formally discussed at an end-month Air France-KLM board meeting.

The expected deal marks a rebound for Airbus after rival Boeing poached part of the fleet of British Airways owner IAG at last month’s Paris Airshow.

That deal caught Airbus off guard, though in the longer term sources say it may also have eased the European planemaker’s anxieties over the grounding of Boeing’s 737 MAX following the Ethiopian Airlines crash in March.

Airbus privately hopes the MAX will survive the crisis to avoid a costly race to develop all-new aircraft and to ease the prospect of a radical change in certification rules.

The anticipated Air France deal also illustrates Airbus’s recent deliberate effort to boost A220 sales by packaging deals together with its benchmark A320, industry sources said.

Airbus bought the loss-making A220 programme from Canada’s Bombardier last year and immediately began offering it to customers that already have other Airbus aircraft, allowing it to juggle prices and ancillary services across the fleet.

Air France-KLM, formed from a merger of French and Dutch flag carriers in 2004, continues to operate a mixed fleet between its two main national networks.

KLM last month provisionally became the first major European customer for the newly certified E195-E2 offered by A220 rival Embraer of Brazil, whose commercial aerospace arm is being acquired by Boeing.

KLM signed a letter of intent for 15 of the upgraded aircraft and options for another 20.

The Dutch carrier and Franco-Dutch low-cost subsidiary Transavia both operate the Boeing 737 family.

(Additional reporting by Laurence Frost; Editing by Geert de Clercq and Luke Baker)

Boeing 737 Program Manager to Retire Amid Jet’s Grounding

July 11, 2019 / WIL BALDWIN

SEATTLE, July 11 (Reuters) – Boeing’s 737 jet program manager, Eric Lindblad, will retire in a matter of weeks after roughly 12 months on the job, according to a company memo seen by Reuters on Thursday.

Lindblad’s departure, after a 34-year career at Boeing, comes as the world’s largest planemaker navigates one of the worst crises in its history. Boeing’s money-spinning 737 MAX jetliner has been grounded in the wake of two deadly crashes that killed nearly 350 people in the span of five months.

Taking Lindblad’s place as the lead of the 737 program and the Renton, Washington, factory will be Mark Jenks, who has been leading Boeing’s potential new mid-market airplane (NMA) project, Boeing Commercial Airplanes Chief Executive Kevin McAllister wrote in the memo to employees seen by Reuters.

Mike Sinnett, Boeing Commercial Airplanes vice president of product development and future airplane development, will assume the role of vice president for NMA in addition to his current role, the memo said. Sinnett, who originally led preliminary work on the NMA, has been seen a figurehead of the program.

“Let me be clear – the NMA team will continue to operate as a program, and I am looking forward to Mike’s leadership in this important effort,” McAllister said in the memo.

In naming Jenks and Sinnett to run marquee projects at such a crucial time, McAllister is choosing two of Boeing’s most high-profile engineers. Jenks has been credited with turning around the 787 Dreamliner program, and his appointment on the NMA was seen as key to putting the potential twin-aisle aircraft on a path to a rapid launch.

But industry sources say the launch of the NMA has been delayed by the 737 MAX crisis. The NMA program, if it goes ahead, will most likely not be launched before spring or summer of next year, the sources said.

(Reporting by Eric M. Johnson in Seattle and Tim Hepher in Paris; Editing by Leslie Adler)

Boeing Deliveries Fall 37%

July 9, 2019 / WIL BALDWIN

(Reuters) – Boeing Co said on Tuesday its deliveries fell about 37% to 239 planes in the first half of 2019, hurt by the grounding of its best-selling 737 MAX jets, putting it on track to lose the world’s biggest planemaker title after eight years.

Boeing’s deliveries lagged those of European rival Airbus SE, which handed over as many as 389 planes in the same period, up 28% from a year earlier, according to sources.

A new problem identified with the grounded MAX jets last month has delayed the aircraft’s entry into service until at least the end of September, disrupting schedules for airline operators and possibly adding to costs for Boeing.

The American planemaker’s net orders for the first six months was in the negative, with a total of minus 119 net orders. Boeing had minus 125 net orders as of the end of May.

Deliveries of the MAX aircraft were stopped in March, a few days after an Ethiopian Airlines crash killed all 157 people on board. Since then, Boeing has not reported any new order for the MAX planes.

Last month, British Airways-owner IAG signed a letter of intent to order 200 MAXs.

Boeing shares were down 0.5% at $349.4 in morning trade.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Arun Koyyur and Anil D’Silva)

Ural Airlines Set to Receive First Boeing-737 MAX in December

July 8, 2019 / WIL BALDWIN

MOSCOW (Reuters) – Russian airline Ural Airlines plans to receive the first of 14 previously ordered Boeing-737 MAX aircraft for leasing in December, Interfax news agency reported, citing its chief executive Sergei Skuratov.

Two Boeing MAX aircraft crashed in Ethiopia in March and Indonesia last October, triggering the global grounding of the aircraft. Regulators must approve the fix and new pilot training before the jets can fly again.

“These are good aircrafts. Mistakes have been made, but they are going to be fixed,” Skuratov was quoted as saying by Interfax.

Ural Airlines signed a deal for the leasing of 14 Boeing-737 MAX 8 in the spring of 2018. The delivery was expected between October 2019 and May 2022, Interfax said.

When asked whether the company considered cancelling the deal, Skuratov told the agency that “Boeing has certain advantages: seven hours 45 minutes (of flight) without refueling fully loaded.”

Ural Airlines plans to receive its first Airbus A320neo in August with an additional four jets expected to arrive by the end of 2019, he added.

(Reporting by Polina Devitt,; Editing by William Maclean)

Taiwan’s China Airlines Signs MOU for 11 Airbus A321neo Jet’s

June 19, 2019 / WIL BALDWIN

Le Bourget, France, June 19 (Reuters) – Airbus unveiled an aircraft deal with Taiwan’s China Airlines on Wednesday, snatching the carrier’s medium-haul fleet renewal from Boeing a day after its U.S. rival made a shock entry into the single-aisle fleet of British Airways owner IAG.

The European planemaker said China Airlines had signed a preliminary deal to buy 11 A321neo aircraft, worth about $1.4 billion at list prices, while leasing another 14.

Although much smaller than the IAG letter of intent for 200 Boeing 737 MAX announced on Tuesday, the China Airlines deal signals intensified competition in Asia where Boeing this week predicted 40 percent of jets would be delivered over the next 20 years.

Airlines can rarely be persuaded to jump ship to rival suppliers because of the costs of training and parts, but this week’s Paris Airshow has witnessed two such announcements as sold-out planemakers mount incursions to continue their growth.

In a further competitive twist, Boeing announced on Monday it would take over the supply of spare parts for the remaining Airbus A320 fleet at British Airways.

China Airlines announced the leasing part of the deal in May and Reuters reported it would pave the way for the Taiwan carrier to switch its medium-haul fleet to the Airbus A320neo.

The rare deal to replace older 737s took years to complete and was drafted before the 737 MAX was engulfed by a crisis involving two crashes and a worldwide grounding, sources said.

(Reporting by Tim Hepher, Editing by Mark Potter)

Boeing May Deliveries Fall 56% on 737 MAX Groundings

June 11, 2019 / WIL BALDWIN

FILE PHOTO: An aerial photo shows Boeing 737 MAX airplanes parked on the tarmac at the Boeing Factory in Renton, Washington

(Reuters) – Boeing Co said on Tuesday it handed over 56% fewer airplanes in May, compared with a year earlier, as deliveries of its top-selling 737 MAX jet remained suspended following a deadly crash in March.

Total deliveries fell to 30 planes, compared with 68 in 2018. Net orders for the first five months remained in negative territory, with a total of minus 125 net orders.

The company has been facing its worst ever crisis after an Ethiopian Airlines’ 737 MAX plane crashed, killing all 157 people on board, in the second fatal accident involving the jet in just five months.

Boeing reiterated on Sunday it was working with global regulators to certify a software update for the jet as well as related training and education material to safely return the plane to service.

Global airlines that had rushed to buy the fuel-efficient, longer-range aircraft have since canceled flights and scrambled to cover routes that were previously flown by the MAX.

European rival Airbus SE delivered 81 aircraft in May, up 59% from last year and 313 in the January-May period, a rise of 40%.

Boeing shares were down 0.6% at $351.44 in morning trade.

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil D’Silva)

Ryanair Posts Weakest Annual Profit in 4 Years

May 20, 2019 / WIL BALDWIN

Reuters • May 19, 2019

Profit could fall further in coming year
Fares likely to fall further this summer
Says 737 Max delay a factor
Sees first Max deliveries in October (Adds quotes; details on Max 737 delays)

DUBLIN, May 20 (Reuters) – Ryanair reported its weakest annual profit in four years on Monday and said earnings could fall further as European airlines wage what Chief Executive Michael O’Leary described as “attritional fare wars.”

After initially falling 6%, the shares made up some ground after O’Leary, who helped to develop the no-frills airline model in Europe, argued that lower fares and profitability for a couple of years were a price worth paying to boost market share and hasten consolidation.

O’Leary said the lower fares and profit were cyclical and that four or five European airlines were likely to emerge as the winners in the sector.

“Our strategy would be to keep adding capacity as quickly as we can in all the markets where we can,” said O’Leary, who has been in charge of Ryanair since 1994.

“Will it be painful for a year or two, yes it will. But will it shake out more of the competition, yes it will.”

Ryanair, Europe’s largest low-cost operator, had already signalled a sharp fall in profitability due largely to overcapacity in two warnings last year.

Its 29% fall in after-tax profits to 1.02 billion euros ($1.14 billion) for its financial year to March 31 was in line with investor forecasts.

But its profit forecast for the current financial year to end-March 2020 of between 750 million and 950 million euros, was “considerably worse than expected,” Goodbody analyst Mark Simpson said in a note.

A company poll of analysts published ahead of the release had forecast a figure of 977 million euros.

O’Leary said the forecast was effectively for profits to remain flat as the 2020 figure includes recently acquired and loss-making Laudamotion unit for the first time and would be a “very good outcome.” The equivalent figure in 2019 would have been 880 million.

737 MAX GROUNDING

Several rival airlines have warned of a worse trading environment – partly due to overcapacity and partly because European travellers are holding off booking their summer holidays for fear of how the Brexit process will pan out.

Alistair Wittet, portfolio manager at Comgest, which has a 0.74% stake in Ryanair according to Refinitiv Eikon, said some investors appeared to have been convinced by O’Leary’s line of argument.

“The long-term opportunity is fantastic for a company like Ryanair because that capacity will come out” even if Ryanair has to go through a lot more pain than expected in the meantime, Wittet said.

Ryanair has also been affected by delays in the delivery of the Boeing 737 MAX after its worldwide grounding in March following a fatal Ethiopian Airlines crash.

The airline, which has ordered 135 737 MAX 200s and has options on 75 more, was expecting to receive its first five planes between April and June but said it now expects them to be flying by November. O’Leary said he was “reasonably confident” it would have around 50 MAX aircraft flying next summer.

The grounding has forced Ryanair to cut around 1 million seats in the year to March 2020. But it still expects to fly 153 million passengers in the period, up from 139 million last year.

The airline plans to have a conversation with Boeing about “modest compensation”, Chief Financial Officer Neil Sorohan said.

Ryanair’s shares were trading down 3 percent at 10.46 euros at 1250 GMT, down over 40% from a peak of 19.39 euros in August 2017, before the airline was hit by a wave of industrial unrest, fare weakness and the grounding of the MAX.

In what O’Leary described as a vote of confidence from the board, Ryanair will begin a 700 million euro share buyback in the coming days. ($1 = 0.8966 euros)

(Additional reporting by Helen Reid; Editing by Subhranshu Sahu and Louise Heavens)

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