In an era where air travel is crucial for global commerce and connectivity, the aircraft leasing sector is vital in ensuring planes remain airborne and airlines stay operational. Leading this industry is AerCap, the largest aircraft leasing company worldwide, under the leadership of CEO Aengus Kelly. Recently, Kelly shared his perspective on the challenges facing aerospace giant Boeing and the broader ramifications for the aviation sector.
Kelly was candid when discussing the potential effects of new trade tariffs proposed by former U.S. President Donald Trump. These tariffs, which could surge up to 60% on global products, are designed to protect American jobs. However, Kelly pointed out potential drawbacks of such measures, especially for Boeing.
The aerospace sector relies on complex global supply chains, sourcing parts and components from various countries. Kelly illustrated this complexity by questioning the practicality of imposing tariffs on engines partially made in France. "What would you do with an engine that's partly made in France? Are you going to put a tariff of 20% on that engine? Is that counterproductive?" he wondered aloud.
Boeing's largest engine supplier, CFM International, is a joint venture between GE Aerospace and France's Safran, highlighting the international aspect of aircraft manufacturing. Kelly stressed Boeing's crucial need for cash, derived from delivering airplanes. Tariffs, he argued, could obstruct this process and worsen Boeing's financial hurdles.
The AerCap CEO emphasized that Boeing's foremost priority should be expediting the certification process for its 737 MAX 7 and 737 MAX 10 jets, along with the long-delayed 777X. "If it's not certified, there's no chance of getting cash. That is what I would say should be the number one focus," Kelly asserted.
While Kelly conveyed optimism that Boeing is improving under new CEO Kelly Ortberg, he noted limited visibility on Boeing deliveries for the year. AerCap itself has postponed some Boeing and Airbus jets due to ongoing supply chain disruptions.
The aircraft leasing industry, now comprising half of the world's fleet, originated in Ireland. AerCap, emerging from the legacy of Tony Ryan's Guinness Peat Aviation, has grown to lead the sector under Kelly's guidance. The company expanded through strategic acquisitions, including the purchase of ILFC and GECAS, bringing the Irish leasing industry full circle.
Looking forward, Kelly anticipates supply constraints in the aerospace industry will persist for years. This has heightened demand for older aircraft as airlines battle to acquire new, fuel-efficient models. Kelly foresees this demand continuing unabated in the foreseeable future.
The AerCap CEO also spoke on geopolitical risks affecting the industry. He tempered expectations of lessors quickly returning to the Russian market if a Ukraine ceasefire occurs, citing insurance market caution. Similarly, perceived geopolitical risk has influenced AerCap's presence in China, though Kelly affirmed that the country would remain a significant part of the company's operations.
As the aircraft leasing industry navigates these complex dynamics, AerCap's leading position provides a unique perspective. Kelly's views offer insight into the challenges and opportunities ahead for both lessors and manufacturers in the constantly evolving aviation world.
Kelly's comments also highlight the need for developing diverse skills and adapting to a rapidly changing financial and industrial landscape, similar to the approach advocated by platforms like Limex, which focus on practical experience and mentorship to bridge the gap between theory and practice.
