Supply Chain Challenges Continue to Impact Aircraft Production for China Airlines
The ongoing supply chain challenges in the aviation industry have been causing major setbacks for aircraft production. As a result, many airlines, including the Taiwanese flag carrier China Airlines, have been forced to reassess their fleet strategies. Specifically, China Airlines has had to hold on to its aging Boeing 737-800 and Airbus A330-300 jets for longer than initially planned.
Initially, the carrier had intended to phase out these older models as part of a larger fleet renewal effort. This included placing significant orders for newer aircraft to replace the aging jets. However, due to delays and setbacks in the manufacturing process, the airline has had to reevaluate its retirement schedule and explore alternative options to maintain operational reliability while awaiting new deliveries.
To address these challenges, China Airlines is currently finalizing lease extensions for several of its older aircraft to ensure continued availability while navigating production setbacks from both Boeing and Airbus. The airline is also working closely with the manufacturers to try and expedite the delivery timelines for its outstanding orders.
According to sources, the contract between China Airlines and Boeing includes provisions for compensation specifically related to supply chain delays. However, other forms of disruption are not covered under this agreement. While Boeing has yet to confirm a firm delivery schedule, they have stated that deliveries will likely begin by late 2025. In a statement to Reuters, George Kao, Chairman of China Airlines, acknowledged the impact of the delays, saying, “We are at present being greatly impacted. Some aircraft that were scheduled to be phased out, or handed back at the end of their lease, as some are leased, will remain and have their leases extended.
Despite these challenges, China Airlines remains optimistic about its long-term modernization plans. Towards the end of last year, the airline placed orders for ten Airbus A350-1000s and ten Boeing 777-9s to support its growth on long-haul routes. These orders were in addition to their previous commitments for 18 Boeing 787-9s and six 787-10s, which were confirmed at the 2023 Paris Air Show. According to ch-aviation, China Airlines currently operates a fleet of around 86 aircraft, including a mix of Airbus and Boeing models.
In June, the airline announced its plans for further growth, including the acquisition of 13 additional aircraft, consisting of five Airbus A350-900s and eight Airbus A321neos. The proposal, which is valued at close to $2 billion, has been approved by the board of directors. It is expected that the acquisition will include a mix of direct purchases and leases, with five A321neos coming from Air Lease Corporation (ALC) and negotiations still ongoing for the remaining three aircraft. The five A350-900s have been priced at no more than $1. 96 billion if purchased directly, though the cost could decrease to $1.