A recession is unlikely to ground air travel’s continuing recovery from several years of pandemic curbs, according to a leading Irish aviation chief.
Dublin-headquartered aircraft lessor Avolon confirmed on Thursday that revenues grew 9 per cent last year to $2.9 billion (€2.7 billion) while it earned $9 million net profit.
Chief executive Andy Cronin predicted that global air traffic would hit pre-pandemic levels by June, driven by China’s reopening from months of severe lockdowns.
Speaking after Avolon published its results, Mr Cronin said the recession predicted by many economists was unlikely to slow the continuing momentum of a recovery sparked last year by the end of Covid curbs in Europe and the US. He pointed out that the speed of last year’s recovery, which caught many airlines and airports unawares, showed the “importance that people place on the ability to travel”.
Mr Cronin also argued that, unlike Covid, which had a near-uniform impact around the world, a recession was likely to move at a different pace through different regions.
He predicted that the chaos which led to delays, queues and cancelled flights across Europe and the US last summer was unlikely to be repeated this year.
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“Anything we see in 2023 will be much milder than the disruption we saw in 2022,” he said.
Some industry figures fear that Europe’s crowded air space, along with likely air traffic control strikes and staff shortages, could disrupt many flights and holidaymakers this summer.
The Avolon chief executive warned news agency Reuters that there would be no quick fix to the aircraft delivery delays that threaten to dampen the industry’s recovery as plane-makers wrestle with weak supply chains. He is one of several chief executives who recently highlighted delays by manufacturers Boeing and Airbus in delivering promised aircraft to airlines and lessors.
“We know where we stand based off the current plan,” Mr Cronin said of the manufacturers’ 2023 schedules. “The constant problem is the plan may continue to evolve as we move through the year. And it’s that fear of the unknown that is driving a lot of the anxiety in our customer base.”
Avolon uses debt and cash to buy planes from manufacturers which it leases to 146 airlines around the world. The Irish company expects airline revenues to grow this year and next as travel continues its recovery.
Earlier on Thursday, Avolon reported that, excluding the $244 million cost of aircraft held by Russian airlines after the company terminated their leases, adjusted profits last year were $253 million. Including the Russian losses left it with $9 million net income. This, it said, was a 438 per cent increase on the $47 million net income it earned in 2021.
Cash flow grew 35 per cent to $1.2 billion while total assets ticked $188 million up to $30.8 billion. Avolon owned or managed 576 aircraft on December 31st.
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Along with several other lessors, Avolon terminated agreements with Russian carriers to comply with sanctions imposed on the country following its invasion of Ukraine in February 2022. It was unable to recover 10 of 14 planes leased to Russian carriers. The company is suing insurers, including Lloyds, for their failure to pay out on policies covering the aircraft.
Mr Cronin did not comment on the lawsuit, beyond saying that the company believed it had a strong case. Several other leading players in its industry are also pursuing their insurers. – Additional reporting, Reuters
