Airlines struggle with flight shortages as summer travel reaches record levels By Reuters

Rajesh Kumar Singh

CHICAGO (Reuters) – The global airline industry is facing summer pressures, with travel demand expected to surpass pre-pandemic levels while production problems at Boeing (NYSE:) and Airbus lead to a sharp decline in aircraft deliveries. .

Airlines are spending billions of dollars on repairs to keep older, less fuel-efficient jets in service and paying a premium to secure aircraft from lessors. However, some airlines are still faced with having to shorten their schedules to cope with a shortage of available planes. At the same time, the number of global travelers is expected to reach historic levels, with 4.7 billion people expected to travel in 2024, up from 4.5 billion in 2019.

“We can expect strong performance from airlines throughout the summer, especially with higher airfares,” said John Grant, senior analyst at travel data firm OAG.

Last December, the International Air Transport Association (IATA) predicted that global air transport capacity would increase by 9% per year this year. These estimates appear optimistic following Boeing’s safety crisis.

Passenger airlines will receive 19% fewer aircraft than expected this year due to production problems at Boeing and Airbus, said Martha Neubauer, senior associate at AeroDynamic Advisory.

Neubauer said U.S. airlines will receive 32% fewer aircraft than planned a year ago because several airlines rely on Boeing’s 737 MAX aircraft. Boeing’s production has been curbed since an aerial panel ruptured in January.

Boeing is reeling from a widespread crisis following the Jan. 5 Alaska Airlines explosion. Regulators placed limits on production of the 737 MAX, but the company hasn’t even reached that level.

Last year, RTX said up to 650 Airbus A320neo jets could be grounded in the first half of 2024 for inspections to address defects in RTX Corp’s Pratt & Whitney engines.

In Europe, low-cost airline Ryanair has reduced some routes. In the United States, United and Southwest have reduced flights and adjusted hiring and staffing plans.

rental market boom

Analysts expect production capacity at most U.S. airlines to grow in the second quarter at a slower pace than a year ago. Airlines will update their growth plans and explain how they plan to offset capacity constraints when they report quarterly results starting Wednesday, starting with Delta Air Lines (NYSE:).

The aircraft rental market is booming due to a shortage of new aircraft. Lease rates for new Airbus A320-200neo and Boeing 737-8 MAX aircraft have reached $400,000 per month, the highest since mid-2008, according to data from Cirium Ascend Consultancy.

John Heimlich, chief economist at Airlines for America (A4A), which represents major U.S. airlines, said airlines are spending 30% more on aircraft leases than before the pandemic.

They also have jets that are past their economic lifespan and now require serious maintenance that could take months, Heimlich said. Repair costs at United, Delta and American were up 40% last year compared to 2019.

Despite high demand, rising rental, repair and labor costs will dent profits, Heimlich said. The U.S. passenger airline posted a pretax margin of 4.5% last year, with most contributions coming from Delta and United.

A survey conducted by travel website Vacationer found that fewer Americans are planning to fly this summer than a year ago due to high inflation. Airfares have fallen compared to the same period last year, but are showing an upward trend every month.