January 20, 2020 / 11:53 AM / a month ago

Boeing customer Air Lease says 'damaged' MAX brand should be dropped

DUBLIN (Reuters) - The chairman of major aircraft leasing firm Air Lease (AL.N), which has 150 of Boeing’s (BA.N) grounded 737 MAX jet on order, on Monday called on the U.S. manufacturer to drop the “damaged” MAX brand to avoid it undermining the plane’s value.

FILE PHOTO: Employees walk near a Boeing 737 Max aircraft at the Renton Municipal Airport in Renton, Washington, U.S. January 10, 2020. REUTERS/Lindsey Wasson

The comments by Steven Udvar-Hazy, one of the founders of the airplane leasing industry which finances around half of the world’s passenger fleet, echoes a call by U.S. President Donald Trump in April last year to “rebrand” its 737 MAX jetliner.

Boeing said last June it had no plans to change the name of the jet.

“We’ve asked Boeing to get rid of that word MAX,” Udvar-Hazy told the Airline Economics aviation finance conference in Dublin. “I think that word MAX should go down in the history books as a bad name for an aircraft.”

“The MAX brand is damaged and there is really no reason for it,” he added.

Boeing is halting production of the 737 MAX this month following the grounding in March of its best-selling plane after two fatal crashes in five months killed 346 people.

A U.S. official briefed on the matter on Friday said U.S. regulator the Federal Aviation Administration is now unlikely to approve the plane’s return until March, and that it could take until April.

Airlines are still trying to gauge passengers’ reluctance to fly on the MAX, and how long this will last, Udvar-Hazy said. “Will it be two months, will it be six months, will it be different in different parts of the world?”

“Will people in the U.S. after a few months forget about the accidents and think ‘oh, it’s just another 737’, or are there going to be parts of the world where people are going to be more superstitious and it will take longer for them to erase that stigma?”

The chief executive of another major aircraft lessor, Firoz Tarapore of Dubai Aerospace Enterprises (DAE), told the same conference he was worried he had not seen Boeing “addressing in a proactive way” the issue of customer confidence in the aircraft.

DAE has shelved plans to order hundreds of single-aisle jets from Boeing or rival Airbus, citing high prices.

Dublin-based lessor Avolon, which has 148 MAX jets on order, was more sanguine, predicting that strong demand for the plane as a Boeing product would support valuation.

“Boeing’s 737 MAX will safely return to revenue service in 2020 (and) airlines and passengers will turn up to fly,” it said in its 2020 Outlook publication.

Udvar-Hazy said he did not expect the MAX to flood the market and push down lease rates once it is cleared to fly, as Boeing is unlikely to be able to deliver more than 50-60 jets per month including new production.

Any fall in lease values due to concerns about the MAX were likely to be temporary, Udvar-Hazy said.

Reporting by Conor Humphries; Editing by Jan Harvey

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