Cash-strapped, low-cost and deep discounter airlines are putting off spending billions of dollars on new aircraft to save money as they try to return to steady profitability and face the impact of engine repairs. Airlines flooded the U.S. with flights this year, causing fares to drop and revenue to decline while costs went up. Spirit Airlines, JetBlue Airways, and Frontier Airlines have not reported profits since 2019. These airlines are now deferring deliveries of new aircraft and dialing back growth plans to account for the oversupply in the market. Frontier CEO Barry Biffle cited delays in aircraft deliveries as a reason for the deferrals. JetBlue Airways is deferring 44 Airbus A321 airplanes to save approximately $3 billion. The airline is also grappling with grounded jets due to an engine recall.
Despite the deferrals from low-cost carriers, most of the global airline industry is still experiencing a scarcity mindset. Lease rates for new aircraft from Airbus and Boeing are at record highs, indicating strong demand. Airbus and Boeing are facing challenges in increasing output due to skilled worker shortages and supply shortfalls. While Airbus has over 7,000 unfilled orders for A320 family planes, Boeing has nearly 4,200 orders for its 737 Max planes. Airlines like Southwest are adjusting their fleet plans and growth strategies in response to delayed aircraft deliveries. The outlook for the industry remains uncertain as airlines navigate the challenges posed by the pandemic and its aftermath.
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