– Incident-free return to service crucial for 750+ MAXs currently on ground –
18th September, 2020: The commercial aircraft leasing market is set for considerable turmoil in 2021 with over 1,000 aircraft set to be returned to lessors without clear options for onward placement.
In a webinar yesterday, IBA outlined how around 1,300 aircraft, including 200 widebodies, had been scheduled (prior to the Covid-19 pandemic) to be returned to their lessors in 2021. IBA believes that, whilst the majority of those leases would have been extended, that option is now extremely unlikely.
IBA forecasts that, due to the drop in demand caused by the Covid-19 pandemic, the vast majority of these aircraft will not now have follow on leases secured at the point of return. With increasing numbers of airlines looking to terminate longer leases earlier due to restructuring, and also because of airline failures, the number of aircraft returning to lessors without onward placement is only likely to increase.
This uncertainty is set to break the model established in recent years of seamless redeliveries between lessees, and IBA expects a higher level of disputes between airlines and lessors around lease returns and redeliveries.
IBA also forecasts that this drop in aircraft leasing activity will drive a corresponding fall in engine shop visits. Prior to Covid-19, these were expected to rise from 3,200 in 2019 to 4,500 by 2023, according to data from IBA.iQ – the leading platform for aviation intelligence. It now forecasts that there will be only 1,000 shop visits this year, and it will take until 2026 to reach the originally forecast 2019 levels, with MROs expected to introduce more flexibility into their shop visit programmes.
These factors are set to drive resourcing pressures, with the risk of significant redundancy programmes, at lessors and MROs, including the early retirement of many experienced staff.
Phil Seymour, President of IBA, says: “The buoyancy in the commercial aircraft leasing market of the last few years is being brought to an abrupt end by Covid, and we foresee a significant impact not only on lessors but across the supply eco-system – particularly in the MRO sector.”
IBA also addressed the unique circumstances of the Boeing 737 MAX’s forthcoming return to service. Not only has the extended storage period for the aircraft created a set of technical issues that will need addressing, but the number of aircraft originally grounded has been swelled by those manufactured during the grounding period. In total, over 750 aircraft will need to be returned to service efficiently.
Seymour adds: “It’s crucial for Boeing that it handles the MAX’s return to service efficiently and without incident. Given the large number of aircraft involved, we forecast this process will take up to two years.”