Air Lease Corporation, the world’s ninth-largest airline leasing company, has decided to swap 15 Boeing 737 MAX orders for five Boeing 787 aircraft, as the firm tries to limit its exposure to the ongoing 737 MAX grounding disaster.
What are the details?
Air Lease currently has an outstanding order for 150 Boeing 737 MAX aircraft. However, the grounding of the type has made them nervous enough to seriously consider the possibility that Boeing will be unable to deliver any new 737 MAX aircraft to them this year.
Speaking to shareholders earlier this week, Air Lease CEO John Plueger was quick to assure that the delayed return of the 737 MAX was on their part, not Boeing’s, as reported by Flight Global.
“Frankly, I hope our assumption is wrong, as we do look forward to delivery recommencement of the MAX as soon as possible,” insisted John Plueger “much of our new lease placement activity has been somewhat muted pending return to service of the MAX”.
Until then, Air lease has decided to take advantage of a swap option presented by Boeing to change 15 of their 737 MAX orders to five Boeing 787-9 orders. Air Lease believes that 2020-2022 will see strong demand for the type and that their portfolio currently lacked enough of the Dreamliner variant.
“[The] wisest thing to do was to convert 15 of our MAX 8s and 9s into five additional 787-9s”
Who is Air Lease?
Air Lease is actually doing quite well out of the 737 MAX groundings and the A321neo delays. With narrowbody aircraft demand on the up, Air Lease is in an excellent position to increase rates and corner the market.
Air Lease currently has the following 297 aircraft in its portfolio plus 64 aircraft that they manage from other lessors:
|Aircraft Type||Fleet||Fleet %|
|Boeing 737-8 MAX||15||5.10%|
They also have 391 aircraft on order:
- 27 Airbus A321 XLR’s
- 23 Airbus A321neo’s
- 75 Airbus A220’s (50 orders and 25 options)
- Five Boeing 787-9s
- 135 Boeing 737 MAX
- Five Airbus A350-1000s
They actually make the majority of their sales before the aircraft are even built, with 97% of all aircraft leased to an airline prior to production. As you can see, narrowbody aircraft are incredibly popular for Air Lease (with the 737-800 representing 32.30% of their fleet) and having the 737 MAX knocked out of service could potentially be devastating.
But don’t feel too bad for Air Lease, as they are also getting away with charging fees for the grounded 737 MAX aircraft (they have 15 of the type leased out), as they claim they didn’t ground the aircraft but rather it was the manufacturer.
“To the extent that, any of those customers will demand concessions, please understand that we will look to Boeing to cover every dollar of any deficiency that might arise,”
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