By Padraic Halpin
DUBLIN (Reuters) – Boeing is “undoubtedly” making significant progress in getting on top of quality issues, the head of Avolon, the world’s second largest aircraft leasing firm and a major Boeing customer, said on Thursday.
Boeing was hit by the latest in a series of problems on Jan. 5 when a door panel flew off one of its 737 MAX 9 jets in the midst of an Alaska Airlines flight.
Avolon CEO Andy Cronin said preliminary findings from a U.S. regulatory investigation into the incident were “positive”, in not appearing to show any design implications for the aircraft or systemic production issues.
“I think undoubtedly they’re making significant progress on what they’ve been trying to achieve,” Cronin told Reuters when asked if Boeing was getting on top of its problems.
Boeing has been under fire from regulators and airlines over a succession of quality issues that have snagged production and development timelines. Aircraft lessors are major buyers of aircraft and Avolon has 116 737 MAX on order.
Cronin said Avolon had discovered a large number of “lower level” quality issues on aircraft recently delivered by multiple manufacturers, adding they were not confined to Boeing or the MAX.
“As supply chains are scrambling to reinstate production, we are seeing compounding factors impacting quality and delivery but not at a level where it’s impacting safety,” he said.
Examples of the issues might be around cosmetic items or “second, third order” type fittings, Cronin added.
Boeing, its main competitor Airbus and the big suppliers both manufacturers work with, are now playing much more of a role across the supply chain as a result, and that is having a positive impact, Cronin said.
The constrained supply of aircraft and increased demand for travel has benefited lessors over the last year, with average lease rates rising by 20%-30% in 2023 for current-technology aircraft that are increasingly in demand to rent.
Avolon reported a full-year core profit of $2.5 billion on Thursday and a 34% year-on-year increase in net income to $339 million, excluding the impact in 2022 of a heavy writedown on aircraft stuck in Russia due to Western sanctions.
Cronin said he saw “plenty of room” for a further increase in lease rates in 2024, though not at the “exceptional” pace of 2023.
(Reporting by Padraic Halpin; editing by Jason Neely and Mark Potter)
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