SMBC says it will take time for 737 Max to return to service
Dublin aviation firm reports 19% annual increase in pretax profit to $200m
Regulators grounded Boeing’s new 737 Max earlier this year following fatal crashes blamed on software faults, stalling its delivery to airlines and lessors.
Peter Barrett, chief executive of Dublin-based SMBC, which has ordered 89 Maxs from Boeing, believes that US and EU authorities may not allow the craft to fly again until early 2020.
He pointed out that delays in delivering the craft would not end there, as up to 380 of them were parked following the grounding, while Boeing had built, but not delivered, a further 400.
“The logistics challenge of all that is going to be significant for Boeing and its customers,” Mr Barrett said.
“In the longer term, getting the whole production schedule back on track is going to last well into 2021.”
Earlier this month, Boeing predicted the US Federal Aviation Administration (FAA) would lift the Max’s grounding next month. The FAA said it would take whatever time was needed.
Delays in the craft’s delivery prompted Ryanair to rein in growth plans in the autumn, while Norwegian Air Shuttle blamed some recent troubles on the hold up.
Mr Barrett acknowledged that it was a key issue for the industry, but stressed that the objective was “to get the aircraft back in their air safely”.
SMBC buys aircraft and leases them to airlines around the world. Its pretax profit grew 19 per cent to $200 million in the six months ended September 30th while lease revenue and other income rose 13 per cent to almost $600 million. Its aircraft were worth $12.4 billion at the end of September.
The company recently sold 80 craft to Japanese investors including pension funds. The investors used their own cash and money borrowed from banks recruited by SMBC. The Irish company manages the aircraft which are leased to airlines.
Mr Barrett explained that the transaction allowed the institutions to invest directly in the aircraft rather than in a leasing business. He said that SMBC would consider taking the same approach in Europe and other markets.
– Additional reporting: Reuters