Carsten Spohr, Chief Executive Officer of Lufthansa, noted that the recovery in business travel is developing at a faster pace than expected. Tourist flights, on the other hand, are experiencing an «extended summer season.»
According to Spohr, tourism continues to operate at an unexpectedly high level because «people are taking those trips that they couldn’t once the pandemic broke,» he told Reuters In addition, noted that «there is a positive trend in business travel, until the third quarter and added that this type of operation remained at a low level but is now picking up strongly»
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According to the executive, «there will be no sudden drop in winter demand this year.» Business travel, unlike tourism, does not usually have a strong seasonal component.
The strongest growth, according to Lufthansa, is occurring in the markets of Germany, Switzerland, Austria, Belgium, and northern Italy. The airline expects business travel to be around 90% of pre-pandemic figures in the medium term.
Industry warns Airbus about oversupply
Some of the world’s largest lessors, in conjunction with engine manufacturers, warned Airbus that an «aggressive ramp-up» of production could distort the market and hurt the value of aircraft while the recovery from the pandemic crisis remains fragile. Airbus announced in May its productioncción ramp-up target by 2025, with a peak of more than 70 aircraft per month.
The contact between the parties came through letters – supposedly from AerCap and Avolon, two of the world’s largest leasing companies – according to Reuters. Airbus responded by saying it will stick to its plans, which involve a production target of 64 A320 family aircraft per month by the second quarter of 2023. This figure will be a record for the manufacturer: it currently produces 40 and its maximum pace was achieved before the pandemic, with 60 units per month.
Airbus points out that its decision is not capricious
The manufacturer pointed out to the companies that «the demand exists» and that they are constantly analyzing and adapting their supply to it. It also added that their forecasts «are based on verified contracts» and that «the supply chain needs transparency about its future production plans».
Discussions about appropriate levels of supply are common between aircraft manufacturers and lessors. Since aircraft are one of their main assets, maintaining their value is extremely important for the companies finances. A «flooding» of the aircraft market would lower the price of airplanes, which would have a negative impact on the financial companies’ balance sheets.
They are not alone
Engine manufacturers are joining the lessors in their complaints. They fear that an overly rapid increase in aircraft production will affect their own recovery by causing aircraft to be retired rather than maintained. Both Safran – co-owner of CFM jointly with General Electric – and Raytheon Technologies – the owner of Pratt & Withney – expressed by mid-year their concerns about the pace of production.
