At the Farnborough Air Show on Monday, the spotlight was on the aviation industry’s struggles, as Ryanair reported a significant drop in quarterly profits amidst ongoing supply chain issues, aircraft delays, and ambitious plans to reduce emissions. The airshow, running from July 22-26, faced a clouded outlook with fewer expected deals compared to previous years.
Ryanair, Europe’s largest budget airline, saw a 46% decline in profits for the April to June quarter, amounting to $392 million. CEO Michael O’Leary highlighted persistent delays in Boeing deliveries, adding to the airline’s challenges as fare prices fell by 15%.
Boeing announced a significant order from Korean Air for 20 777X jets and 20 787s, valued at $7 billion. Despite this boost, Boeing’s 737 MAX production has slowed due to a recent incident involving a panel detachment, further complicating the company’s recovery efforts post-pandemic.
The aviation sector, which saw a dramatic rebound in travel demand after the pandemic, now grapples with labor and parts shortages, inflating operational costs. These delays hinder airlines’ ability to capitalize on the travel surge, with costs increasingly difficult to transfer to consumers as demand levels off.
Flydubai reported fleet expansion setbacks due to Boeing’s delays, and Air India resorted to cannibalizing parts from other aircraft to maintain operations amidst supply chain disruptions. Pegasus Airlines CEO Guliz Ozturk noted a return to pre-pandemic consumer behavior, with travelers seeking the lowest fares.
Air Canada also lowered its annual profit forecast, citing overcapacity and weaker pricing on international routes. This led to a near 4% drop in its share value, contributing to a broader decline in airline stocks, including Ryanair, easyJet, TUI, and IAG.
Despite these industry challenges, Boeing’s VP of commercial marketing, Darren Hulst, remained optimistic about plane demand, attributing airline warnings to a more realistic market outlook. Meanwhile, Airbus CEO Guillaume Faury reported progress in increasing production of its passenger jets.
The airshow also featured some notable deals. Japan Airlines ordered 10 Boeing 787-9s with options for 10 more, and Vietnamese budget carrier VietJet finalized a deal for 20 Airbus A330neos. Industry insiders indicated potential orders from Virgin Atlantic and Saudi low-cost carrier Flynas for Airbus A330neos.
Sustainability was a key theme, with panels and workshops highlighting efforts to reduce carbon emissions amid plans to expand global air travel. On the defense front, discussions focused on Ukraine and potential delays to the U.S. NGAD program, alongside a defense review by Britain’s new Labour government. British Prime Minister Keir Starmer underscored the importance of the UK’s fighter jet capabilities, though he did not guarantee the unaffected continuation of the joint combat air program with Japan and Italy.
