Lessor Avolon sees sharp air travel recovery but no quick supply fix
By Tim Hepher
PARIS (Reuters) - China's reopening is driving demand and lifting leasing rates paid by airlines for passenger jets, but doubts remain over the capacity of planemakers to keep up, the head of one of the world's largest aircraft leasing firms said on Thursday.
Dublin-based Avolon said alongside higher underlying annual earnings it is sticking by a recent forecast for a recovery in global traffic to 2019 levels by June and is already seeing rising demand for wide-body jets.
"We remain confident about that forecast. We've seen already the dramatic ramp-up in activity in our fleet and other lessors' fleets within China," Chief Executive Andy Cronin told Reuters.
"The international network will understandably take a little bit more time to ramp back up. But from talking to our airline customers in China, they're already seeing really strong demand."
The International Civil Aviation Organization on Wednesday predicted a complete post-pandemic air travel recovery in 2023, while the International Air Transport Association, which represents airlines, is predicting full recovery in 2024.
Avolon reported a five-fold increase in adjusted net profit to $253 million for 2022, despite a sharp drop in unadjusted profit on a previously reported impairment charge for jets effectively detained in Russia following sanctions over Ukraine.
Cronin, who stepped up to become CEO last year after founder Domhnal Slattery retired, warned there would be no quick fix to the aircraft delivery delays that threaten to dampen the industry's recovery as planemakers wrestle with weak supply chains.
Cronin kicked off a volley of protests about last-minute delays from lessors at their annual summit in Dublin last month.
"It makes it exponentially more difficult to manage a business when you just don't know what you're going to be at or when you're going to get it," Cronin told Reuters on Thursday.
Airbus is expected to announce a flatter production plan next week to tackle industrial issues. A senior Airbus executive urged suppliers to carry more stocks on Wednesday, though industry sources have also pointed to some internal bottlenecks.
"We know where we stand based off the current plan," Cronin said, when asked if Airbus and Boeing had finalised 2023 schedules.
"The constant problem is the plan may continue to evolve as we move through the year. And it's that fear of the unknown that is driving a lot of the anxiety in our customer base."
Plane giants last month rejected the criticisms, with a Boeing executive telling the Airline Economics conference that restoring production was "not as easy as an on/off switch".
(Reporting by Tim Hepher; editing by Jason Neely, Kirsten Donovan)