February 21, 2017 / 5:21 PM / 10 months ago

UPDATE 1-AerCap CEO questions durability of jetmakers' output plans

(Adds quotes, details)

PARIS, Feb 21 (Reuters) - The head of aircraft leasing group AerCap on Tuesday expressed confidence in airline demand despite a slowdown in the aerospace business cycle, but questioned the durability of plans by Airbus and Boeing for some output increases.

Speaking after reporting stronger than expected fourth quarter earnings, chief executive Aengus Kelly said he expected Airbus and Boeing would follow through on plans to lift narrowbody production to around 60 jets a month, but doubted this could be sustained for long.

Boeing and Airbus have set out plans to increase production of best-selling models by 30 percent near the end of the decade.

Boeing will increase production of its 737 family to 57 a month in 2019, while Airbus aims to boost its competing A320 family to 60 a month in mid-2019.

“If the market isn’t there, they aren’t going to produce them. I think it is a struggle to see 60 a month on a long-term, permanent basis,” Kelly told reporters in a conference call.

“I do think all the aircraft that have been ordered will ultimately get delivered, not in the timeframe however that they have been ordered.”

Kelly said he continued to expect delays of “several months” in deliveries of Airbus A320neo jets with delayed engines from Pratt & Whitney. Separately, AerCap will study a potential new Boeing 737 MAX 10 model, he added.

AerCap, which is the world’s largest independent aircraft leasing company, plans to take a total of 67 new aircraft in 2017, including all types, and all have been placed with airlines in a sign that demand remains solid for now, he said.

“Assuming we don’t have any political risk later in the year, I think that tone will be maintained,” he said.

Still, analysts have raised concerns over weakness in the market for wide-body long-haul jets as economies slow and a glut of aircraft works its way into the market later this decade.

Kelly said the market was split between the most in-demand new-technology models such as the Boeing 787-9 and the A350-900 and the largest aircraft in each particular model range.

For example, when Sri Lanka’s national carrier was unable to take three A350-900s for financial reasons, AerCap was able to find new homes within three weeks, he said.

“If you are in the 787-9 or the A350-900, that is a market that you can place airplanes into,” Kelly said. “The bigger airplanes will have a challenge: probably the A350-1000, the 787-10 and the 777X and A380, the very large aircraft. But other markets are liquid. On used A330s, we are moving those all the time.”

Reporting by Tim Hepher; Editing by Sudip Kar-Gupta and Jane Merriman

Our Standards:The Thomson Reuters Trust Principles.
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