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Interview with John Plueger, Air Lease Corporation

«Some concerns about the certification of the 777X»

John Plueger, CEO of Air Lease Corporation, tells aeroTELEGRAPH about concerns about the Boeing 777X, delays at Airbus and electric or supersonic aircraft.

ALC

John Plueger, CEO of Air Lease Corporation: More than 300 aircraft in the fleet.

At the Paris Air Show earlier this year you were very optimistic about the Airbus A321 XLR. Boeing is also planning the NMA. How do you see this market?
John Plueger*: Yes, we do like the A321 XLR. It‘s a big part of customer demand. We think that it addresses the smaller size of what Boeing envisions to be the NMA (a larger and smaller version). It remains to be seen as to market acceptance and economic viability of that program in terms of being able to develop it and deliver it to the airlines at a price point which is compelling. So these are items that are still open. We will assess, and we are talking with Boeing as they continue to look at the NMA. However, I think it is obvious that Boeing‘s total priority right now is returning the Max to service.

What do you expect: When will the Boeing 737 Max fly again?
I have no idea and I will not speculate. The big question mark remains the recertification, not only by the FAA, but also by Easa and the other regulatory authorities. That is still a big unknown. We were supposed to take 27 more Max by the end of the year for delivery. But all our Max so far are to non-U.S. operators. So this is highly dependent on foreign certifications and today we don’t expect to take any further deliveries to the end of this year. With an earlier certification by foreign authorities including Easa than that might change. But right now we don’t see it.

So how bad is the grounding of the Max for your company?
At the time of the grounding we only had 15 aircraft out on lease to various airlines out of our total fleet that well exceeds 300 aircraft. As to Air Lease Corporation we are more concerned with the impact that it had on our customers. We don‘t like it when our customers are disappointed and we are working closely with Boeing to minimize the consequences.

An improved production system is needed particularly for the A321

Are you also talking about compensations with Boeing?
All these discussions are confidential. But we are working with Boeing on a variety of constructive solutions to help our different airline customers, and to minimize impact financially to ALC. It‘s a multi-faceted approach including financial support, extension of leases and other aspects for aircraft deliveries.

Are you interested in the Boeing 777X?
We have no 777X on order, so we are not currently on this customer list. For us we need to see a larger number of airline customers that have committed to the 777X. Also, we are looking at the delivery timing and certification timing of the aircraft. It has been delayed. We have some concerns about the engine and the final certification of the aircraft. There was another setback recently in a pressure testing of the aircraft. At the moment it is premature for us to really comment and we have no current commitment to require the 777X.

Also Airbus had some problems lately with the A320 family production. Late deliveries of the A321 to IAG and Jet Blue are just two examples. Is this worrying you?
We have been experiencing industrial delays with Airbus now for almost 18 months and those delays are continuing. Primarily they are related to A321 Neo deliveries out of the Hamburg factory, and A330 Neo delays. These delays are disruptive to our customers so we are working with Airbus to minimize those delays. But nevertheless there is a very challenged industrial program, and an improved production system is needed particularly for the A321. I know Airbus is taking all steps they possible can to get this program back on track, but we believe that we will continue to see delays for the next year to two years.

Do you think there will be an interesting leasing market for used hand Airbus A380?
No, I don‘t see a strong used market for the A380.

Hard to see a commercial airline viability for supersonic aircraft

Could you image to buy aircraft from Russia or China one day, from UAC or Comac? And what would be the requirements?
It is hard to see that today. But if we see a sufficient number of airlines with a strong interest across the globe, then those airplanes would be potential candidates, especially China‘s Comac aircraft. But I think that we are still far from that. My concern is not so much brand-new aircraft, but rather the follow-up lease with the second and third operators as used aircraft. You need to have a very deep customer base for that. And the question does remain on the ability of Chinese or Russian manufacturers to be able to fully support those aircraft wherever they might be operated globally. That is a key consideration on non-Airbus and non-Boeing products.

What will we see first: Electric aircraft on short distance flights or supersonic flight crossing the Atlantic ocean again?
I really don‘t know. I do think that an increasing focus at both Airbus and Boeing are aircraft that can utilize alternative forms of energy. I know Airbus is doing a lot of work on electric powered aircraft at this time. It will be very interesting to see how that turns out on the application to large commercial aircraft.

But it is both interesting for you? Or do your think the demand will be too small?
Even though the technology is there to minimize the sonic boom over land it still takes a lot more fuel to run an aircraft at supersonic speed. So right now it is hard to see a commercial airline viability for supersonic aircraft. Aircraft with alternative forms of energy used either as supplemental or as primary, on the other hand can have economic viability, depending on normal like payload – range standards. All the things we think about regarding normal commercial operations I believe are adaptable to an electrical or alternative powered aircraft. It is still some time away before we see any large commercial application. But it is a very hot topic politically these days in terms of the next 20 or 30 years of airline industry development. We are watching that very closely.

*John L. Plueger is Chief Executive Officer, President, and Member of the Board of Directors of Air Lease Corporation. He has 31 years of aviation industry and aircraft leasing experience. Mr. Plueger is an active jet pilot, holding a U.S. FAA Airline Transport Pilot license, with multiple jet type ratings and instructor ratings.

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