LATAM MRO 4 2 scaled
One door closes, and another opens. It has been four days since the delivery of the new aircraft. Last year, Southwest Airlines took delivery of a new MAX every four days. Things are changing for the worse. At least for some.
But not everyone is hurting from the lack of new deliveries. Bernstein SocGen Group adjusted the price target for GE Aerospace to $225 from the previous $201 while retaining an Outperform rating. It’s not just GE that benefits. Pratt & Whitney and others in the spare parts business also look at great business. And it’s not for new engines, mostly its parts for previous generation engines.
The table lists new deliveries from 2021, and the industry has struggled ever since the pandemic. Even if we double the October 2024 number, the month-end number appears headed for a 59% drop from September and a 66% decline from October last year. Readers can use our data model in the table below.
As new deliveries falter, air travel continues to grow. How is this traffic going to be moved? Older airplanes is how.
A380 operators are bringing them back as quickly as they can. British Airways has had to cancel routes because of Rolls-Royce engine troubles on their 787 fleet, and now there is a concern about overworking the 777 fleet. A shortage of parts and skilled people to work on aircraft has backed up MRO shops. The MRO challenge has been documented for over a year.
A strike at Boeing helps to crimp new deliveries more than anyone likes. However, it does push up demand for MRO services worldwide and the costs for these services. Aviation is masterful at arbitrage, and aircraft routinely fly worldwide for MRO work. At least somebody benefits from the strike. But the sooner it ends, the better for the entire industry.
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Who is maintaining the older aircraft in the airlines? And what has caused the 777x delivery problems?