Date: Monday, February 6, 2023
Source: Wall Street Journal
The world’s biggest passenger airliners—many of which had been earmarked for the scrapyard—are being brought back into service as carriers rush to restore long-haul air travel.
Aircraft lessors said airlines are clamoring for their once-parked fleets of big jets, which typically each ferry hundreds of passengers on long-distance routes. The demand is limiting availability and pushing up the prices of rentals.
The wait for new aircraft, meanwhile, stretches for years. Sought-after wide-body planes, which contain seats spread across two aisles, include Boeing Co.’s 787, which has suffered production delays related to quality issues, and Airbus SE’s A350, the plane maker’s biggest jet still in production.
“There has been a tremendous acceleration in the last eight to 12 months in the wide-body marketplace,” said John Plueger, chief executive officer of Air Lease Corp., one of the world’s biggest airliner-leasing companies.
Boeing and Airbus sales staff are chasing several big orders for new planes from carriers and lessors. Airlines including British Airways—owned by International Consolidated Airlines Group SA—Deutsche Lufthansa AG and Qantas Airways Ltd. are flying their double-decker Airbus A380 jumbo jets again, after mothballing the planes at the height of the pandemic.
“Knowing and working on the existing campaigns with customers around the world, I feel pretty good about the wide-body,” Airbus executive Christian Scherer said in a briefing.
The scramble for big planes has upended conventional wisdom in the industry. Even before the pandemic temporarily shut down most air travel, airlines had been shifting away from the biggest wide-body planes, convinced that smaller twin-aisles, or longer-range narrow-body jets, offered more flexibility with better fuel economy and cabins that are easier to fill.
When the pandemic hit, the shift toward smaller planes intensified. Airlines deferred and canceled orders for twin-aisle planes and moved to park the biggest, most fuel-guzzling jets, including dozens of the humpbacked Boeing 747s and Airbus A380s, permanently.
As travel restrictions started to lift, airlines initially sought to bring back only their smaller narrow-body jets. Demand for domestic and short-haul leisure trips, already serviced by smaller planes, started to return before long-haul international flights.
Wide-body flying is still short of a full recovery. The total number of flights operated on twin-aisle jets in January came in at 76% of the total flown in the same month in 2020, according to flight-data specialist OAG. Airbus and Boeing are being cautious about raising the production rates of their biggest planes, even as they chase orders for them.
They are already battling manufacturing pressures on their narrow-body output and are cautious about overwhelming already-stretched production lines. Any global economic softening could test the resilience of the recent surge in passenger numbers.
On Jan. 31, Boeing marked the delivery of its final 747 aircraft after more than five decades of production. The jumbo, which stretches 250 feet, has been an icon of long-haul air travel. The jet’s four engines and size had made it harder for airlines to justify keeping it in their fleets, ultimately relegating new deliveries of the plane to freighter-only variants.
Still, airlines for now are moving quickly to bring bigger planes back into service or fast-track replacements as passengers flock back to airports. The industry is also now betting on pent-up demand for foreign travel from China after that country dropped most pandemic travel restrictions.
Lufthansa said in January that in addition to its A380 fleet it was returning a handful of its decades-old, four-engine Airbus A340 jets to service as it deals with delays of deliveries of new 787 Dreamliners from Boeing. In addition, the U.S. plane maker’s newest entrant to the wide-body market, the 777X, is running about five years behind schedule. Lufthansa has ordered 777Xs to replace its remaining 747s.
The Irish leasing company Avolon Holdings Ltd. said it has placed almost all of its wide-body planes with airlines, with the exception of two Airbus A330neos. “The aircraft are getting deployed,” said Chief Executive Andy Cronin.
In a market forecast published in January, Avolon said it is expecting global traffic to recover to 2019 levels by June this year, spurred by a resurgence in long-haul travel and an expected recovery in China.
The return to the skies of bigger aircraft is driving new sales and campaigns for Boeing and Airbus after years of slumping demand. Last year Boeing and Airbus reported 301 gross orders for wide-body jets.
The combined orders marked a 64% jump from the 184 gross orders for bigger-model jets booked in 2021. The 2022 figure included part of a mega order for 100 Boeing 787s from United Airlines Holdings Inc., which also includes options to purchase 100 more.
Last year “was kind of the inflection point,” said Boeing’s vice president of commercial marketing, Darren Hulst. He said the sales bonanza was “a leading indicator of where the market’s headed.” In total, Boeing booked orders for 217 wide-body planes, including freighters, in 2022, the most it has taken since 2014.
So far this year, Airbus has booked an order from Air France-KLM Group for seven of its A350s, including four new cargo variants to replace the airline’s aging 747 freighters. The two plane makers are also on the cusp of signing a mega order from Air India Ltd., which is expected by analysts and industry officials to be one of the biggest combined orders in aviation history.
The deal is expected to be for some 500 jets split between Airbus and Boeing, and include orders for wide-bodies including the 787, Boeing’s in-development 777X and the A350.
China Aircraft Leasing Group Holdings PLC, the country’s biggest independent leasing company, is assessing new orders for Boeing and Airbus jets, according to the company’s CEO, Mike Poon.
“We don’t have the order book on wide-bodies. This year is the time to get,” Mr. Poon said at a recent conference in Dublin. “The top agenda this year is wide-bodies, wide-bodies, wide-bodies.”