Coronavirus: ‘All bets are off’, says aircraft industry chief

Avolon chief Dómhnal Slattery questions State’s preparedness for outbreak

Avolon chief executive Dómhnal Slattery with Leo Varadkar. The aircraft leasing company is among the world’s largest in that sector. Photograph: Robbie Reynolds

Avolon chief executive Dómhnal Slattery with Leo Varadkar. The aircraft leasing company is among the world’s largest in that sector. Photograph: Robbie Reynolds

 

“All bets are off” when it comes to the impact of coronavirus on the airline industry, according to the chief executive of one of the world’s largest aircraft leasing companies.

Avolon chief executive Dómhnal Slattery noted that the Italian authorities had moved pretty quickly in the wake of the outbreak of the virus in the north of the country. But he questioned the preparedness of Ireland and other countries. Mr Slattery spoke to The Irish Times in New York on Tuesday night where he was presented with the Lewis L Glucksman Award for Leadership at Glucksman Ireland House.

“One would have to seriously question whether Ireland is prepared for an epidemic situation. All bets are off, this is not a Chinese issue anymore.”

Mr Slattery downplayed the impact of the discovery of fresh problems with the Boeing 737 Max aircraft that have been grounded since last year following two plane crashes. It was reported last week that debris was found in the fuel tanks of many of the aircraft.

“We spoke to Boeing on Friday. Clearly the news on the debris was a shock to everybody.”

However he said it was a “quality control” rather than a “safety” issue.

He also expressed confidence that the planes may be back and running by the summer.

“We’re still working on the basis that the airplane is back certified by the June, July timetable, and there’s also a possibility that it can happen a little earlier.

“We’re more confident now that they’re likely to meet that date or be ready earlier rather than the date slipping,” he added.

He also welcomed the appointment of a new chief executive at the company.

Mr Slattery dismissed suggestions the company could turn to another manufacturer for more planes, noting that Airbus is sold out until 2027.

“A healthy Boeing and a healthy Max programme is good for all players in the food chain,” he said. “A scenario where Airbus is the dominant player is not good for competition, it’s not good for customers and it’s not good for the supply chain. All constituents in the industry really want this airplane back flying safely.”

Biggest customers

Avolon is one of Boeing’s biggest customers. It has orders for almost 150 737 Max jets and Mr Slattery says Boeing will face a huge logistical challenge once the safety issues have been addressed and it is back flying. A total of “400 individual aircraft need to be brought back flying. There are 300 parked across the world. The big challenge Boeing face is that every minor issue, even normal operational issues, will become major issues. Boeing are very alive to that, so are the engine manufacturers.”

Mr Slattery also said he would welcome a move by the Chinese government to bail out HNA, the company that controls Avolon through its subsidiary Bohai.

“I think all the Chinese airlines will be get bailed out in one way or another,” he said. “Whether it’s cash injections or deferrals of tax, whatever it is to provide liquidity. So in a strange way the virus is potentially going to be a positive for the HNA story.”

“If HNA gets bailed out or the airlines get divided up, that’s positive,” said Mr Slattery, recalling that the Chinese government had provided liquidity during the Sars (severe acute respiratory syndrome) outbreak of 2003.