For Carsten Spohr, the trip to the annual meeting of the International Air Transport Association (IATA) must have felt like an excursion into a parallel world. A world where you can fly in Jennifer Lopez and her band for a private concert. In which open football stadiums can be so cooled down by monstrous air conditioning systems that you have to put on a sweater inside, although it is still 36 degrees in the parking lot in front. Or even just: A world in which there are enough pilots, flight attendants and baggage handlers.
At home in his own world, things are currently looking different for the Lufthansa boss. There is a lack of staff at every nook and corner. The airline has already canceled well over 1,000 flights for July, but dozens are already canceled practically every day. Last weekend, crews had to operate 40 Lufthansa flights empty because airports refused to pass more passengers or luggage. “I’ve never experienced anything like this in my 35 years at Lufthansa,” writes one pilot. But these weeks it looks like this almost everywhere in Europe.
Spohr gives little hope of improvement: “It will get worse in the summer,” he predicts. Demand was later than expected, but returned all the more strongly. Business travelers, who have long been said to be switching to video conferencing in the future, are also booking air travel again, not yet at the old level, but they are much closer than the industry believed at the time. Neither the currently extremely high flight prices nor concerns about CO₂ emissions have so far prevented private and business travelers from boarding the plane – the pent-up demand is obviously enormous. Emirates Airline boss Tim Clark called it the “bow wave” in Doha, with which the airlines still have to cope for quite some time before a better balance between supply and demand will be restored.
Decommissioned A380 machines could soon fly again
Demand is currently so exceptional that Lufthansa is now even considering reactivating part of the Airbus A380 fleet for the summer of 2023. Spohr had categorically ruled that out until recently, six of the 14 machines have already been sold back to Airbus, but theoretically eight could fly again. A decision is expected to be made in July.
The visible part of the current state of emergency, which affects European air traffic in particular, is experienced by passengers every day, unless they are extremely lucky. But there’s another area behind the scenes in the industry that’s at least as chaotic. As in many other sectors, non-functioning supply chains have become a dramatic problem within a few months.
An example: aircraft engines for short and medium-haul aircraft from Airbus, Boeing and Embraer. Two manufacturers, CFM International (GE Aviation and Safran) and Pratt & Whitney share the market here. Insiders report that the three manufacturers are currently waiting on the various final assembly lines for several hundred engines that should have been delivered long ago. The result can be seen at the factory airports, whether in Sao Jose dos Campos (Embraer) or Hamburg (Airbus): fully assembled aircraft without engines are everywhere.
Jets are unused on the ground, there are no spare parts
But that’s just the tip of the iceberg: airlines have to ground rows of jets because there are hardly any spare engines. Even large customers like the Indian low-cost airline Indigo, who are usually pampered by their suppliers because they take hundreds of planes and pay reliably, are waiting for engines at the moment.
Manufacturers say they are trying to help their customers as quickly as possible, but are constrained by bottlenecks at their own suppliers or their suppliers. A CFM engine for an Airbus A320neo consists of around 23,000 parts. But if just one part, such as a gasket, is not available, it cannot be completed.
Another issue is maintenance. During the corona pandemic, the airlines shut down a large part of the fleet and postponed expensive maintenance work to save money. Now they are ramping up operations again in a hurry. That alone would more than keep the maintenance specialists busy, they say. In addition, however, there are literally mountains of aircraft engines in hangars waiting for a service appointment.
An aircraft engine consists of thousands of individual parts. If only one of them cannot be delivered, the assembly comes to a standstill.
(Photo: Ralf Hirschberger/dpa)
The final assembly lines for Airbus, Boeing and Embraer engines alone now lack production for around three months. Airbus delivered an average of 36 A320neo Family aircraft per month for the first five months of the year. According to its own plans to increase output to 75 by 2025, Airbus should have been around 50 by now and 60 by the end of the year. Things aren’t looking any better for Boeing either.
Engines are currently the biggest problem in the aviation production machinery, which is usually clocked in detail, but they are by no means the only one. The outfitters of the aircraft cabins are also going haywire. There are specialists for seats, luggage compartments, carpets, toilets or kitchens – and practically not a single one of them can currently work in routine operations without delays. Sometimes a screen that should actually be built into the backrest of a seat is missing, then again a chip. In the end, a batch of seats cannot be delivered on time and another plane is grounded for a few weeks. The value of the inventory that is currently lying around with the manufacturers is in the billions.
Problems that cost a lot of money
Here, too, Spohr’s prognosis applies that improvement is not in sight so quickly. The aircraft manufacturers hope that at least the engine builders will be back on schedule by the end of the year, but they will probably have to work off the mountain of delayed engines well into 2023.
All the complications cause unexpected additional costs. And that at a time when the airlines should actually be trying to reduce the debt from the Corona period. Despite everything (and despite high fuel costs), IATA has raised its earnings forecast for 2022, mainly because of strong demand: airlines worldwide will still make a loss of 9.7 billion US dollars, around two billion less than at the end 2021 predicted. In 2021 the industry made a minus of 42 billion, in the first Corona year 2020 even 132 billion. According to IATA, the sector should be back in the black in 2023 – unless the recession that many have feared becomes a reality. Then the results could be significantly worse again.