What differentiates Airbus from Boeing was what happened during Covid: AerCap CEO Aengus Kelly

Gus Kelly is here, CEO of Air Cap, the world’s largest aircraft leasing operator in the world. On a day you have your Capital Markets Day here in New York, you’re announcing your first dividend and a big order today. That’s right, Phil. We’re very excited about our Capital Markets Day. Three announcements today are inaugural dividend and additional buyback program for half a billion and also a $3 billion engine for LEAP engines, which are the most advanced engines in the world. We’re doing that from CFM. So very excited about all of these announcements. You know so many people will be questioning the commercial aviation market and they’ll say what about this aircraft or this plane, but the engines is kind of unappreciated in terms of or not appreciated enough about the impact that it’s having on the airlines, correct? For sure, like many people will call an airplane an engine stand. You know, without the engines nothing happens. And the engines are the key to the economy of the aircraft in terms of less fuel burn. That’s all driven by the engines. Unless you can get 15% reduction in fuel burn, you cannot build a new airplane. The in service life of an airplane is also determined by the reliability of the engines. The engines are the crucial piece of technology that power these aircraft. Let’s talk about Boeing. You have been following everything that’s going on. You have a lot of Boeing 737 Maxes as well as 7-8 sevens. It seems like we get a new headline every single day. Do you understand why airlines are fed up and frustrated with this company? We do, of course. Look, we’ve been Boeing’s biggest customer for the last 30 years. We own more Boeing airplanes than anyone in the world. And so of course, we understand the frustration, the frustration with the customers. Customers can deal with bad news if they’re given enough time. But when you have a summer schedule, you’ve sold the tickets, you’ve got your customers coming, you’ve hired the pilots, you’ve paid for all the grand handling staff, and then you’re told six weeks before the summer the airplane will come in October or November. That’s a disaster. How do you recover from that? Well, you’re paying big penalties to your customers, you’re paying someone else to fly your customers. So as I said, the airlines can do a lot better if they’re given the news in advance. I think that is what airlines will be crying out for over the next couple of years from Boeing in particular. And to an extent, have you thought about cutting Max orders and saying, you know what, we can’t do this. We cannot plan for a future where we thought we were going to get X number of 3737 Max’s and you’re not going to be able to deliver it. No, we’re not going to cut them. We’re a big believer in the Max. When the Max is in service, it does a great job, particularly the Max 8, which is 180 seater aircraft. That aircraft is extremely competitive with its Airbus rival, the A320, and every airline we have that has a Max 8IN service likes that aircraft and pretty much every one of them wants more. So why is Airbus so much more consistent than Boeing right now? They have the same suppliers essentially worldwide. There is a lot of commonality in the supply chain. To me, I think it goes back to what happened during COVID. Airbus took the decision that they were not going to let go significant numbers of their most skilled engineers and mechanics. They kept them coming into the office. They kept them coming into the office as well. They everyone they could, they brought in and on the production line they said, and I had a call with Guillaume 4A because we’re also being Airbus’s biggest customer for the last 30 years. And Guillaume said to me, you know, Gus, you’re my shock absorber. You’re the guy who has the money. You I sell to you at the price I sell to because I know come rain, hail or shine, you’re the guy who’s going to show. So when the airlines were under tremendous financial pressure, he kept producing. He said you’re going to buy and he kept going and he didn’t send home or let go the most experienced engineers and mechanics that did Boeing make a mistake on on. If you look at the amount of skilled mechanics and engineers that left Boeing, it’ll be a much higher number than what happened in Airbus. And you cannot take a barista from Starbucks, with all due respect to a barista, and have them drill in holes in a jet engine after six months of training. It takes years and years to have that institutional knowledge of how to build a jet, a jet engine and an aircraft you get kind of doesn’t make me happy. So the the the French outworked us and out and and outmaneuvered Boeing through all of this and it paid off that’s that’s so we got who who was making those decisions at, at the time at Boeing, is that Calhoun at Boeing. Well Joe, that’s a decision for that’s taken by the whole company. But I think, Joe, if you look back at the last four or five years and said which companies came into the office, which guys didn’t give up, which guys kept going, They’re the winners. The French company, yeah, they were doing it too. You know it doesn’t matter where you come from. Have you got the hunger in the you know in your bed. So you you would normally think Boeing would be I don’t know I would hope but obviously I would be wrong and and I think that they’re reaping what what they in your view I that’s I hadn’t heard that. Have you heard that before? If that’s what happened with Boeing, with Boeing that during COVID this has clarified it to a degree that we haven’t heard before, that Airbus that they had the level of staffing and and people who were still coming in and doing their job. When you think about it, these are sophisticated, huge. Think about how big they are and what goes into the manufacturer of an airline. You want engineers around five days a week, 6 real quick because we have to go next Boeing CEO. When do you think they finally get a decision? This is one that cannot be rushed. You have to get the right person. The challenge is faced. That company is so important to the world. I think that the key now is to get someone who is the right person for the job. It cannot be rushed. There could be no knee jerk reaction whenever the new CEO comes in. Financial targets are completely irrelevant. If there was not an absolute focus on quality and anything were to happen, that would could be spelled the end for a lot of Boeing’s customers and potentially significant issues for Boeing. So whoever comes in has to be able to deal with in time. You’re probably slowing down production, I would say, to make sure that everything is done right because the impact of another event would be there’s a sobering thought to end the day on.