Premium #312 – Is there a Glut in the Wide-Body Market?

Earlier this week, at the Airline Economics Growth Frontiers conference in Dublin, AerCap’s CEO Angus Kelly indicated that “we see big deferrals in the wide body market.”  He indicated that in the short-term, there is over-ordering, and that some of the big airlines are chasing the same passengers.

He implied that the order books at Airbus and Boeing don’t reflect “what is going to be delivered” and that some airlines may not take their orders.  We’ve recently seen Airbus cut A380 production and Boeing cut 777 production, and defer an increase in 787 production as wide-body orders have cooled.   While Mr Kelly’s forecasts large-scale order deferrals and doesn’t trust the official backlogs from the OEMs, he cites that fundamentals such as traffic growth continue in the right direction, and he is not concerned about the number of overall passengers – the question will be who is flying them, especially if multiple airlines are pursuing the same passengers.