A Southwest Airlines jet over charts showing production figures that dipped during the pandemic
A shortage of new jets is the latest challenge for the global airline industry, which has been grappling with resurgent passenger demand © FT montage: AP

Southwest Airlines has a problem. America’s largest low-cost carrier has been forced to reduce the number of daily flights because the company does not have enough planes and is also short of pilots to fly them.

The airline “sold more flights than they’ve been able to operate”, said Captain Casey Murray, president of Southwest Airlines Pilots Association. It has gone from offering about 5,000 flights a day to a range of 4,000 to 4,300 as it waits for Boeing to deliver jets.

“As we move forward and staffing is corrected, airframes will become the issue,” he said.

A shortage of new jets is the latest challenge for the global airline industry, which has been grappling with resurgent passenger demand following the pandemic while at the same time facing an exodus of staff and spare parts.

Deliveries of new jets have been hampered by severe constraints in the supply chain, particularly for engines, pushing back delivery times for many airlines.

Airbus, Boeing’s European rival and the world’s largest plane maker, was this summer forced to slow down an aggressive ramp-up in the production of its best-selling A320 family of jets, citing supply chain disruptions, logistics and energy supplies among its challenges.

United Airlines chief executive Scott Kirby told investors Boeing and Airbus were “probably two to three years away” from making aircraft at pre-pandemic rates.

Delta Air Lines chief executive Ed Bastian added that manufacturers’ “difficulty with . . . producing aircraft” was one challenge among many facing airlines as demand to travel increases.

Derek Kerr, chief financial officer at American Airlines, also said on Thursday that the carrier now expects to receive 19 737 Max jets from Boeing next year instead of 27.

The airline has planned its schedule around receiving the planes on a new timetable, and “they need to meet those dates for us to hit the level of [operations]”.

Boeing said the company continued “to work closely with suppliers to address industry challenges, stabilise production and meet our commitments to customers”.

Analysis by Cirium, the aviation consultancy, indicates that both Airbus and Boeing are lagging their stated production targets for their single-aisle jets of 45 and 31 a month respectively.

Anecdotal evidence suggests delivery delays of “three or more months” are frequent, said Rob Morris, head of global consultancy at Ascend by Cirium.

Airbus, he added, appeared to have very limited availability of delivery slots for its single-aisle planes “through 2027 or 2028”. 

Morris said his mind was “a little blown away” by an order this week from British travel company Jet2.com for 35 new Airbus A320neo planes, which are due to be delivered between 2028 and 2031.

Aside from factors such as the uncertain inflation outlook, Morris said that in “sustainability terms if we assume a 25-year operating life cycle, then the last of these will still be in service several years after 2050, by which time we are supposed to have achieved net zero”.  

The bottlenecks in the aerospace supply chain were a “major problem” contributing to the shortage of jets, said Kevin Michaels, head of Michigan-based consultancy AeroDynamic Advisory.

Suppliers ramped up manufacturing during the 2010s, but it then juddered to a halt following the grounding of Boeing’s 737 Max jet and the Covid-19 pandemic, which forced big cuts in production rates.

Many suppliers now have too little working capital and too few workers to meet their customers’ demand for forgings, castings and machine parts, with inflation also taking a toll.

“There’s a lot that hit at once,” Michaels said. Demand for jets cannot be reliably forecast “without understanding the supply chain for the next five years”.

The shortage has the potential to worsen, too. Boeing must win regulatory approval by the end of the year for two variants of the 737 Max, or their cockpits will need to be reworked to meet standards established following the deadly crashes that led to its grounding. That would further delay deliveries.

“I do not envy the planning teams at airlines for next year,” said Savanthi Syth, an analyst at Raymond James. “Demand is so strong, but the Fed is going to kill it at some point, and Airbus and Boeing can’t seem to deliver aircraft when you want them to. So good luck planning that.”

So far, Airbus has delivered 437 jets this year, while Boeing has delivered 328, including 277 Max jets. But chief executive David Calhoun cut the forecast for the workhorse single-aisle jet in July, saying it would be in the “low 400s” rather than an earlier estimate of 500.

Southwest, which is supposed to receive 114 Max jets this year, said in an August Securities and Exchange Commission filing that it expects to wait until 2023 for some of those deliveries.

Ryanair chief executive Michael O’Leary said he expected Boeing would deliver no more than 13 of the 21 jets the airline was scheduled to receive before Christmas.

A remaining 30 aircraft are scheduled for delivery after Christmas. The company is due to hold meetings with Boeing this month, where the problems will be raised.

“We are not confident we will get 51 aircraft in time for summer next year, we are about their second-largest customer . . . we are not confident we are going to get our deliveries . . . that really affects our growth rate,” O’Leary told the Financial Times this week.

Boeing, he added, is “highly unreliable, they are coming up with all kinds of excuses about their supply chain. We don’t believe the supply chain is the problem, is it production delays?”

Ryanair and Southwest are operating the planes they have efficiently, which means “they have nothing to gain by not getting those aircraft”, Syth said. “They’re more likely to leave money on the table because of this.” 

Aengus Kelly, chief executive of AerCap, the world’s largest lessor, told an industry conference this month that he thought Boeing and Airbus would “at best” get to 90 per cent of their stated production targets.

Vinod Kannan, chief executive of Vistara, India’s second-largest airline, told the Financial Times the company had experienced delivery delays of “months” on an order for A320neo jets but was in talks with Airbus about them.

Asked about the challenges for the industry at an event in London this month, Airbus chief executive Guillaume Faury reaffirmed the company’s target to deliver 700 aircraft by the end of the year.

But he conceded that the supplier base had not been as prepared as it might have been as the industry sought to bounce back after the pandemic.

He stressed, however, that Airbus’ plan to produce 75 A320-series planes a month by 2025 was still “likely to happen”.

This article has been corrected since publication after the name of analyst Savanthi Syth was confused with the name of her firm

Copyright The Financial Times Limited 2023. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article