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July 22, 2024


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FOMO, or fear of missing out, is raising its head in aviation. With supply chain issues impacting Airbus and supply chain, regulatory and safety issues impacting Boeing, new commercial aircraft are in short supply. The situation is probably not going to improve markedly until 2026-2027, when Boeing can clear its certification and regulatory shortfalls, after a partial turnaround. Some industry observers like Emirates Tim Clark, are predicting that it could take 5 years or more for a return to normal at Boeing.

What happens to airlines whose orders have been delayed? Do they investigate alternatives, including more expensive leased aircraft?  Should they place additional orders because future order books may be too full to obtain the lift required to grow in key markets?  When essential items are in short supply, the fear of missing out, and taking actions based on that fear, can occur.

ELAL’s CEO stated that they must make an Airbus or Boeing decision soon, or otherwise risk losing delivery slots.  Missing the boat is not an option for airline CEOs.   The Farnborough Air Show is an event that airlines and OEMs typically use to publicize orders, so be ready for an exciting July.  

We’ve seen some massive orders from international airlines in recent years, and this year will be no exception. The question is when airlines expect delivery of new aircraft they will order this year. Skylines at Boeing and Airbus are six to eight years out, depending on model. The Boeing MAX 10 is gaining popularity, but is not yet certified in an uncertain environment for Boeing. The A321 order book and skyline is so accounted for that United Airlines cannot find additional aircraft to fully replace a MAX 10 order that has been affected by multiple delays.

What’s an airline to do? The answer is place orders, with options for additional deliveries that can be firmed up later. If demand eases, those options can be cancelled, but if the market is tight, those options will have value as the airline will be able to obtain aircraft. Of course, the OEMs will want a significant portion of any order to be a firm commitment when aircraft are in short supply, so we may expect an interesting summer airshow.

This week we’ve seen several stories about forthcoming large aircraft orders.  They include a 225 aircraft order for Turkish Airlines, Airbus selling 100 jets to China, Saudi Flyadeal looking for 20 Airbus or Boeing wide-bodies, Korean Air mulling a 30 plane order, Qatar looking at 200 jets to refresh its fleet,  and these are all headlines from yesterday and this morning!  The industry is heating up, and a FOMO frenzy could result if order books continue to be so tight that airlines worry about their position in the delivery skyline.

The Bottom Line

This could be a very busy Farnborough Air Show, and the show at which wide-body demand fully rebounds to pair with the record levels of narrow-body demand. Airbus and Boeing will both likely need to raise production rates on their flagship A350 and 787 models, and Boeing may soon need to take the 777-9 off the certification back burner even as it works through two quarters in which it is bleeding cash. The airlines are ready, willing and able to order new aircraft for growth and fleet renewal, even farther in advance than before. The question now is whether the OEMs will be able to actually deliver on time with increased lead times?


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author avatar
Ernest Arvai
President AirInsight Group LLC