Boeing has faced a few challenges in recent years, and some lessors recently started expressing concerns about the company’s market position.

Aircraft leasing isn’t an exciting topic for many people. However, it’s easy to forget that lessors are Boeing’s and Airbus’ biggest customers. Leasing companies own over half of the world’s airliner fleet. And there are far fewer leasing companies than there are airlines. So the average lessor is a bigger customer, to an aircraft manufacturer, than the average airline.

AerCap is the world’s biggest lessor, with over 2,000 aircraft in its fleet – not including outstanding orders. The gap between them and the next-sized lessor, Avolon, is quite large – the latter having just under 600 aircraft. But the next 5 lessors own over 400 airliners each. Obviously, both Boeing and Airbus have to listen to lessors carefully.

Boeing Market Position And Lessors

Conversely, lessors generally are quite careful about what they say, when they speak of aircraft manufacturers. And this makes some recent statements from lessors about Boeing particularly important. Of course, Boeing’s recent woes are affecting lessors and airlines alike. These issues include the need to recertify the MAX (and certify its two remaining variants), 787 production issues and certification of the 777X.

Last Friday, Avolon CEO Domhnal Slattery, said this at the Airfinance Journal conference in Dublin:

“I think it’s fair to say that Boeing has lost its way. Boeing has to fundamentally re-imagine its strategic relevance in the marketplace.

“Boeing has a storied history…They build great airplanes. But it’s said that culture eats strategy for breakfast and that is what has happened at Boeing.”

These are very harsh words, coming from a company that orders many dozens of aircraft a year, every year. Slattery added that he believes the company will eventually “figure it out”. But he also commented that Boeing may need “fresh vision, maybe fresh leadership”. References to the leadership of Boeing are a theme in the comments of other lessors as well.

Air Lease Corp (ALC) is the fourth largest lessor in the world. Its Executive Chairman, Steven Udvar-Hazy, seemed to echo Slattery’s statements. Speaking to financiers at another event in Dublin, Udvar-Hazy was asked about his view on the 777X. Recently, Boeing announced a year-long delay on the program, which is already over three years late.

Lessors Questioning Boeing Management?

The manufacturer also announced that it is stopping production of the 777-9, increasing production of the current 777F freighter instead. Financiers asked ALC’s Udvar-Hazy if he believed that Boeing might have to cancel the program outright. He said that this will depend on the Boeing board, adding:

“What I’m saying is that those decisions, whether to continue with the programme or not, it will probably not be made by this board of directors anyway.”

Put together, lessors Avolon and ALC own well over a thousand aircraft, predominantly Boeing and Airbus jets. Udvar-Hazy also expressed dismay about the issues around the 787, saying “I have never seen anything like it”. He also said that his company thought about ordering Boeing’s 777-8F freighter, but decided against it. ALC is the launch customer for Airbus’ A350F freighter.

Despite the above, there is some more optimistic news for the American aircraft manufacturer. Unlike other lessors, AerCap’s CEO Aengus Kelly expressed some optimism for Boeing. He said:

“I think Boeing will bounce back. There are a few scenes in this movie to be played out yet.

“Clearly Boeing has got its own issues, but Boeing is a tremendous company that’s helped build the world for the last 100 years and I would never write them off, they still build great airplanes.”

Priorities And Some Good News

Some of the criticism from lessors and analysts came shortly after Boeing announced the move of its headquarters. After around 21 years in Chicago, the company is now moving to Arlington, Virginia. The site, an existing Boeing building, is very close to Washington DC – and a stone’s throw from the Pentagon. The company stated that it did so in order to be closer to its key customers. Its critics said that this is not what Boeing’s management should be focusing on.

But Boeing did get some good news. On Monday the 9th, Lufthansa announced an order for nine new freighters and seven 787-9s The latter jets, in particular, are reportedly a compensation for delays in Lufthansa’s order for twenty 777-9s. Of the nine freighters in its new order, seven are of the future 777-8F. The other two are current 777F models, and the airline will also acquire a used 777F.

Lessors and analysts are waiting for Boeing to announce what its next aircraft will be. With the production of the 747 coming to an end and 787 production now in one site, Boeing has plenty of capacity to produce a new aircraft in the Seattle area. But with production and certification issues in its current line-up, it isn’t clear how big a priority a new design is, for the manufacturer.