Incentive to buy airplanes: who in the airline industry will benefit from war-raised oil prices?

Airlines may accelerate the write-off of old airplanes against the backdrop of higher oil prices due to the war with Iran. This, in turn, is potentially beneficial to aircraft manufacturers Airbus and Boeing, Bloomberg writes.

Rising oil prices could spur airlines to buy new planes, Airbus global business vice president Wouter van Versch said April 7 at Latin America's largest aerospace exhibition in Chile. "If fuel prices go up, there is an incentive to buy the most modern airplanes," the top executive said.

Brent crude oil prices reached a record $144 a barrel on Tuesday, April 7, but then fell below $100 after U.S. President Donald Trump and Iran agreed to a two-week ceasefire in the Middle East. Versh expressed his views before the US-Iran deal became known. At the time of writing the news, Brent crude oil is trading at $91 and US WTI crude oil is at $92.4, which is however 25% higher than before the war.

Boeing and Airbus forecast that airlines in Latin America will need more than 2,300 new airplanes by 2044. At the same time, aircraft manufacturers are concerned that some customers may renegotiate deals amid the war with Iran, assessing the impact of hostilities on demand for transportation, fuel costs and the ability to fly in a high-risk environment, Bloomberg writes. According to Versch, customers have not yet asked Airbus to postpone orders or suspend deliveries, "They need efficient airplanes. But if the situation continues, it will affect our customers," he added.

- Among other constraints that could make it harder to meet demand for the planes, Bloomberg cites engine shortages. Airbus, despite plans for record aircraft deliveries in 2026, is already facing pressure on production: in February, the company accused one of its main suppliers, RTX Corp. (a unit of Pratt & Whitney), of under-delivering engines, which - even amid a record order book - forced Airbus to adjust production plans.

According to Wouter van Versch, RTX Corp. is trying to solve the problem, but the results of this work will be stretched over time: "accumulated delays will persist, and it will be difficult to achieve the necessary volumes," stated the top manager of the company. Earlier, Airbus explained that Pratt's problems are largely related to the maintenance of the already operating fleet of engines, which constrains the ability to produce new ones. Against this backdrop, Airbus warned in February that monthly production of A320 family aircraft could fall to less than 75 units by the end of next year. However, despite the uncertainty, the company is not changing its forecasts for this year, van Versch added.

- In addition, despite the opening of the Strait of Hormuz by Iran, the restoration of aviation fuel supplies will take months, said the head of the International Air Transport Association (IATA), Willie Walsh, writes Reuters. Disruptions to oil operations in the Middle East will still persist despite a two-week truce brokered by the parties, he added. Fuel is the second largest cost item for air carriers after personnel costs and typically accounts for about 27 percent of operating expenses, IATA said.

A sharp rise in oil prices amid the US-Israeli war against Iran has led to a jump in the cost of jet fuel and is already forcing airlines to significantly increase ticket prices. For example, Malaysian low-cost carrier AirAsia X increased ticket prices by almost 40% in early April and raised fuel surcharges by about 20% after the price of jet fuel rose to about $200 per barrel against the pre-war $90.

Analysts and industry organizations warn that jet fuel shortages, which have already manifested themselves in Asia, may spread to Europe in the coming months. The International Energy Agency (IEA) estimates that European airlines could face jet fuel shortages as early as April or May.

Airbus shares traded in Paris jumped 7 percent on April 8, while Boeing securities added 3.3 percent on the New York premarket.

This article was AI-translated and verified by a human editor