The new crisis at Boeing dominated the media headlines last week after a component fell off an Alaska Airlines flight, necessitating a dramatic emergency landing.
A number of major airlines, including Alaska, United Airlines, Turkish Airlines and Copa Airlines, have been forced to ground hundreds of planes while regulators examine the jets for defects.
The UK’s largest airlines appear to have so far avoided the brunt of the damage. There is no UK or EU airline that registers a Boeing Max-9 of the same configuration that was involved in the incident.
The British aviation authority said it was monitoring the situation, but its influence would mainly extend to the inspection of 737 Max 9s entering British airspace.
But Ryanair’s pugnacious boss Michael O’Leary used the opportunity this morning to sharply criticise the aircraft manufacturer, warning of the “short-term reputational damage” caused by the disaster and calling on Boeing to improve its quality controls.
In an interview with the Financial Times, he revealed that the airline, one of Boeing’s biggest customers, will likely be short five to ten aircraft during the peak season in summer 2024 due to delivery delays. Airfares would rise and profits would fall, he warned.
So what is bothering O’Leary, and will the Alaska Airlines incident also affect Britain’s low-cost airlines?
Not directly, say analysts. “The lack of price movements certainly suggests that,” said Russ Mould, Investment Director at AJ Bell, City AM
“Wizz Air has a fleet of Airbus A320s and has ordered more of them and A321neos. Ryanair is a Boeing customer but has not bought a 737 Max 9… That is probably why the share price did not drop after the Alaskan Airlines accident,” he explained. Last year, Easyjet placed a large order for 157 aircraft, but like Wizz, these were Airbus A320s.
However, the crisis could also have a number of indirect effects on Ryanair, which is much more closely linked to the aircraft manufacturer’s success.
“As Ryanair is one of Boeing’s largest customers, there could be indirect impacts on the aircraft’s reputation, supply chain and delivery delays, potentially including for the Max 10 orders,” said Conroy Gaynor, aviation analyst at Bloomberg Intelligence.
Any drop in Max 10 orders could pose a major problem for the Dublin-based airline, which placed a massive, multi-billion dollar order for 300 737 Max 10 jets last year, the largest ever for U.S.-made products by an Irish company.
Ultimately, what concerns O’Leary most are supply chain issues. He has never really gotten along with Boeing, and the aircraft manufacturer has recently struggled with a series of production problems with its 737 Max, forcing it to drastically reduce its delivery targets.
Both Airbus and Boeing are also struggling with major supply chain bottlenecks and are struggling to meet the post-Covid recovery in travel demand, leading to months of waiting times for their airline and leasing customers.
Wizz Air was forced to cut its capacity forecast by 10 percent last year after production problems at Pratt & Whitney, the manufacturer of geared turbofan (GTF) engines for Airbus’ A320neos.
“The real challenge for Airbus and Boeing is that they are both behind schedule on their plans to increase monthly production. This is largely due to supply chain pressures. I think both Airbus and Boeing, particularly Boeing, need to significantly improve their quality control,” O’Leary told the FT.
If the quality and timing of deliveries do not improve, Mould said there will continue to be “capacity constraints, leading to higher fares” as Ryanair focuses on maintaining short-term profits.
