Airlines Could Switch From Boeing To Airbus

AerCap has warned that possible tariffs could increase the prices of Boeing planes and push airlines to purchase from Airbus instead.

Spurred by political uncertainty across the United States, the effects are certainly felt on aircraft customers, ranging from airlines to leading aircraft lessors.

In a worst-case scenario, speaking with CNBC, the CEO of AerCap, a leading aircraft lessor providing solutions to airlines in need of capacity, stated that Boeing plane prices could increase.

The CEO’s comments come as the lessor confirms that Boeing is seeing steady improvements thanks to its investment in culture and safety following many incidents.

Focusing on the Boeing 787 Dreamliner, the CEO, Aengus Kelly, tipped the prices, which could rise a further USD 40 million on the popular model because of threats surrounding tariffs.

While this is isolated to one aircraft, in a worst-case scenario, the prices for commercial aircraft across Boeing would rise by 25%.

The belief remains that if this were to occur, prices would be out of control, and airline customers would be unwilling to pay the amount required for aircraft and would seek alternatives.

Typically, when airlines order aircraft, significant discounts are handed down. However, if prices were to increase, the lessor argues that an appetite to purchase Boeing wouldn’t be as strong.

This opens up the opportunity for Airbus to secure crucial market share levels. Kelly stated that if prices rose, more airlines would turn to the European plane makers’ offerings, a decisive move that would increase Airbus’ market share tenfold.

However, there remains concern that if the prices were to increase, Airbus, which already has a substantial backlog but faces its production constraints, would be unable to keep up with the surging requirement to provide aircraft.

This factor has led airlines such as Cebu Pacific to express interest in a new modest commercial airliner from Brazilian planemaker Embraer.

Cebu Pacific believes that the specifications would be of great interest and would provide a solution to the ongoing backlogs at Airbus and Boeing, which are preventing some airlines from acquiring their aircraft when they need them most.

Despite this, Fitch believes this is truly a worst-case scenario and feels that it will have no impact on the price point of Boeing’s commercial aircraft at this stage.