Airlines Delay Aircraft Orders Amid Profitability Hurdles and Engine Issues
JetBlue Airways, Spirit Airlines, and United Airlines aircraft land at Newark Liberty International Airport on May 30, 2024. Airlines, enduring financial stress, especially low-cost and deep discounters, are postponing expenditure on new jets to regain profitability and navigate engine repair challenges. A surge in flights this year has depressed fares, impacting revenues while costs have climbed. Major carriers are profitable again, but Spirit, JetBlue, and Frontier, last seen profitable in 2019, are still struggling.
Frontier Airlines is deferring the delivery of 54 Airbus planes to 2029, trying to balance supply after past delivery delays. Similarly, JetBlue will save $3 billion by delaying 44 Airbus A321 deliveries through 2029, amidst grounded jets due to a Pratt & Whitney engine recall. JetBlue CEO, Joanna Geraghty, noted the dilemma of needing planes for growth versus the cost burden of idle new aircraft. Spirit Airlines, facing substantial losses and the engine recall impacts, is deferring aircraft deliveries until at least 2030 and furloughing pilots.
Despite the deferrals, Airbus and Boeing continue to experience high demand for their aircraft, with lease rates for new Airbus A320s and Boeing 737 Max models hitting record highs. Both companies face production challenges due to a post-COVID skilled worker shortage and supply chain issues. Airbus and Boeing have substantial backlogs, with no signs of easing demand. However, airlines are slowing hiring and growth due to these delays. Southwest Airlines, grappling with Boeing delivery lags, is leveraging order book flexibility and might outline new fleet plans soon.
Original Story https://www.cnbc.com/2024/08/30/where-are-low-cost-airlines-cutting-back-now-new-planes.html
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