Commercial Aviation
Airlines to Face 11 Billion Dollar Supply Chain Costs in 2025
IATA report reveals airlines will incur $11 billion in extra 2025 costs due to supply chain disruptions affecting fuel, maintenance, and fleet capacity.
Airlines Confront $11 Billion Supply Chain Burden: Inside the 2025 IATA Report
The global airline industry is facing a seismic challenge as it braces for more than $11 billion in additional costs in 2025, driven by persistent supply chain disruptions. This revelation, stemming from a joint study by the International Air Transport Association (IATA) and consulting firm Oliver Wyman, marks the first comprehensive quantification of the financial toll exacted by ongoing aerospace supply-chain issues. The report’s findings have reignited concerns about competition and pricing power within the $250-billion aerospace sector, raising critical questions about the industry’s ability to adapt in the face of mounting operational pressures.
At the heart of the issue are delays in aircraft and engine deliveries, shortages of spare parts, and labor constraints that have forced airlines to extend the operational life of older, less efficient aircraft. As a result, carriers are contending with spiraling expenses for fuel, maintenance, leasing, and inventory, costs that threaten to erode already thin profit margins. The situation has also constrained airlines’ capacity to meet resurgent passenger demand, with implications for fares, service quality, and overall industry stability.
The significance of these challenges extends beyond balance sheets. With global backlogs for new aircraft reaching a record 17,000 in 2024, the industry’s ability to modernize fleets and achieve sustainability targets is increasingly at risk. The current crisis underscores the need for greater transparency, collaboration, and competition across the aerospace supply chain, as stakeholders grapple with both immediate disruptions and long-term structural questions.
Breaking Down the $11 Billion Supply Chain Impact
Quantifying the Financial Toll
According to the IATA and Oliver Wyman report, titled “Reviving the Commercial Aircraft Supply Chain,” global airlines are set to incur more than $11 billion in extra costs in 2025 due to supply chain bottlenecks. This figure is broken down into several key components, each reflecting the cascading effects of disrupted production and delivery schedules.
The largest share, $4.2 billion, stems from excess fuel consumption, as airlines are compelled to operate older, less fuel-efficient aircraft for longer periods. Maintenance costs for aging jets add another $3.1 billion, while engine leasing expenses, driven by the need to replace units awaiting delayed maintenance, contribute $2.6 billion. Finally, inventory costs from the necessity to stockpile spare parts are estimated at $1.4 billion.
These figures represent not only a significant increase over pre-pandemic norms but also a direct threat to airlines’ ability to maintain profitability. For an industry where net margins are forecast at just 6.7% for 2025, according to IATA, such additional burdens can have outsized effects on financial stability and long-term investment capacity.
“The industry is now facing unprecedented waits for aircraft, engines and parts, with unpredictable delivery schedules. Together, these have sent costs spiralling by at least $11 billion this year and limited the ability of airlines to meet consumer demand.” – Willie Walsh, IATA Director General
Capacity Constraints and Passenger Demand
The supply chain crisis is not merely a matter of cost; it is also constraining airlines’ ability to meet soaring post-pandemic passenger demand. In 2024, the industry recorded a 10.4% increase in demand, outpacing the 8.7% rise in available capacity. This imbalance pushed load factors to a historic high of 83.5%, indicating that planes are flying fuller than ever, but also that growth is being artificially capped by the inability to procure and deploy new aircraft.
For passengers, these constraints may translate into higher fares, as airlines pass on some of their increased costs and leverage strong demand. For airlines, the inability to expand fleets as quickly as desired means missed opportunities for revenue growth and a greater reliance on older jets, further compounding operational expenses.
The backlog of 17,000 aircraft at the end of 2024, up from an average of 13,000 between 2010 and 2019, illustrates the scale of the challenge. With production and delivery schedules remaining uncertain, many airlines have little choice but to extend the service life of their existing fleets, often at the cost of efficiency and sustainability.
Industry Structure and Competition Concerns
The report’s release has intensified debate over the structure and competitiveness of the aerospace supply chain. IATA’s Director General, Willie Walsh, has been particularly vocal about the disparity in profit margins between airlines and some suppliers, notably engine manufacturers and parts providers. While airlines are expected to operate on margins of 6.7%, some suppliers reportedly achieve margins in the mid-20% range.
This dynamic has led to calls for greater transparency and openness in the aftermarket for aircraft parts and services. Walsh has suggested that allowing airlines broader access to alternative suppliers could help alleviate some of the cost pressures and reduce dependency on a handful of dominant original equipment manufacturers (OEMs).
The issue of competition is not new. IATA previously filed, and later withdrew, a complaint to the European Union over alleged anti-competitive practices by engine makers. However, the current crisis has brought these concerns back to the forefront, with industry stakeholders and regulators alike considering whether further action is warranted to ensure a more balanced and resilient supply chain.
“We see an opportunity to reshape the industry’s structure through transparency, data sharing and collaboration.” – Matthew Poitras, Partner at Oliver Wyman
Pathways Forward: Collaboration, Transparency, and Adaptation
Industry Responses and Recent Developments
The IATA report has catalyzed renewed discussions among airlines, manufacturers, and regulators about how best to address the current supply chain bottlenecks. While some progress has been made, major planemakers have reportedly become more transparent about delivery delays, significant challenges remain.
Industry leaders, including IATA, are advocating for a more open aftermarket, increased data sharing, and collaborative approaches to inventory and maintenance planning. Such measures could help mitigate the impact of shortages and delays, while also fostering a more competitive environment that benefits both airlines and passengers.
At the same time, the crisis has highlighted the need for long-term investments in workforce development, digitalization, and supply chain diversification. Addressing labor shortages, modernizing inventory management, and expanding the pool of qualified suppliers are all seen as essential steps in building a more resilient aerospace ecosystem.
Broader Implications for Sustainability and Innovation
The supply chain disruptions are also having a knock-on effect on the industry’s sustainability ambitions. Airlines’ ability to retire older, less efficient aircraft and replace them with state-of-the-art, fuel-saving models is being hampered by production backlogs and parts shortages. This, in turn, risks slowing progress toward emissions reduction targets and undermining public commitments to environmental stewardship.
On the innovation front, the crisis may serve as a catalyst for new approaches to fleet management, maintenance, and procurement. As airlines seek to adapt to ongoing uncertainty, there is growing interest in digital platforms for parts sourcing, predictive maintenance technologies, and alternative financing models for fleet renewal.
While the immediate outlook remains challenging, some industry observers see an opportunity to use the current disruption as a springboard for deeper transformation, one that could ultimately yield a more agile, sustainable, and customer-focused aviation sector.
Conclusion
The $11 billion supply chain hit facing airlines in 2025 is a stark reminder of the interconnectedness and fragility of the global aerospace industry. With costs rising across fuel, maintenance, leasing, and inventory, and with capacity growth lagging behind soaring demand, airlines are navigating a period of unprecedented operational and financial strain.
Yet, the crisis also presents an opportunity for the industry to re-examine long-standing practices, embrace greater transparency, and foster collaboration across the supply chain. By addressing structural imbalances and investing in resilience, airlines and their partners can lay the groundwork for a more competitive, sustainable, and innovative future.
FAQ
What is causing the $11 billion in extra costs for airlines in 2025?
The additional costs are primarily due to supply chain disruptions that have led to higher expenses for fuel, maintenance, engine leasing, and inventory, as airlines are forced to operate older aircraft longer and face shortages of new planes and spare parts.
How are supply chain issues affecting airline capacity?
Supply chain delays are preventing airlines from expanding their fleets as quickly as needed to meet rising passenger demand, resulting in higher load factors and potential impacts on fares and service.
What solutions are being proposed to address the crisis?
Industry leaders are calling for greater transparency, collaboration, and openness in the aftermarket for parts and services, as well as investments in workforce development, digitalization, and supply chain diversification.
Sources
Photo Credit: Envato
Aircraft Orders & Deliveries
BOC Aviation Orders Up to 220 Pratt Whitney GTF Engines
BOC Aviation finalizes its largest-ever Pratt & Whitney order, buying up to 220 GTF engines for 110 A320neo aircraft at Farnborough 2026.
BOC Aviation Limited has finalized an agreement with Pratt & Whitney to purchase up to 220 Geared Turbofan (GTF) engines to power a fleet of up to 110 Airbus A320neo family aircraft.
Announced on July 21, 2026, at the Farnborough International Airshow, the transaction represents the largest single order the aircraft leasing company has ever placed with the RTX Corporation subsidiary. The deal was originally signed as an undisclosed agreement in June 2025 and reinforces BOC Aviation’s commitment to the GTF platform amid a broader expansion of its narrowbody portfolio.
Deepening a decades-long partnership
The agreement extends a 29-year relationship between the lessor and the engine manufacturer. BOC Aviation Chief Executive Officer and Managing Director Steven Townend noted the historical significance of the deal in a press release issued by the companies.
“This order is the largest that BOC Aviation has placed with Pratt & Whitney and a continuation of our 29-year relationship, reflecting the key role they have played in our growth,” Townend stated.
Pratt & Whitney President of Commercial Engines Rick Deurloo emphasized that the order demonstrates continued market confidence in the GTF platform. The manufacturer highlights that the GTF engine delivers a 20 percent reduction in fuel consumption and a 75 percent reduction in noise footprint compared to prior generation engines.
Broader fleet strategy and market positioning
The Pratt & Whitney agreement is part of a dual-sourcing strategy for BOC Aviation’s narrowbody expansion. On July 20, 2026, the lessor announced a separate order for up to 300 CFM International LEAP engines to power both Airbus A320neo and Boeing 737-8 aircraft.
As of June 30, 2026, BOC Aviation reported a total portfolio of 811 aircraft and engines, encompassing owned, managed, and on-order assets. The lessor cited the fuel efficiency of the GTF engines as a primary driver for the acquisition. Townend noted the engines will enable a substantial reduction in fuel costs for future fleet operations.
Pratt & Whitney backlog growth
The BOC Aviation order contributes to a growing backlog for the engine manufacturer. On July 22, 2026, Pratt & Whitney reported that its GTF engine program had surpassed 800 orders and commitments year-to-date, bringing the total program backlog to over 8,000 engines.
AirPro News analysis
We view BOC Aviation’s decision to split its massive narrowbody engine requirements between Pratt & Whitney and CFM International as a standard risk-mitigation strategy for top-tier lessors. By securing up to 220 GTF engines alongside its recent 300-engine CFM LEAP order, BOC Aviation ensures it can offer airline customers their preferred powerplant options on the Airbus A320neo family.
The public confirmation of this order at the Farnborough International Air-Shows provides Pratt & Whitney with valuable commercial momentum. A record-breaking commitment from a major lessor like BOC Aviation signals enduring institutional confidence in the engine’s long-term operating economics.
Sources: BOC Aviation (July 21 Press Release)
Photo Credit: RTX
Commercial Aviation
MSC Air Cargo Orders Five Boeing 777-8 Freighters at Farnborough
MSC Air Cargo placed a firm order for five Boeing 777-8 Freighters at the 2026 Farnborough Airshow, joining 80+ total orders for the type.
MSC Air Cargo has placed a firm order for five Boeing 777-8 Freighters, expanding its dedicated air logistics network with the manufacturer’s newest widebody cargo aircraft. The transaction was formally announced on July 21, 2026, during the Farnborough International Airshow in the United Kingdom.
In a press release issued by The Boeing Company, the manufacturer confirmed the five aircraft were previously attributed to an unidentified customer on its official order book. The acquisition marks the first 777-8 Freighter order for MSC Air Cargo, the aviation subsidiary of ocean shipping giant MSC Group, as the company transitions from outsourced flight operations to building its own internal fleet.
Fleet expansion and operational shift
According to FreightWaves, MSC Air Cargo currently operates seven Boeing 777-200 Freighters. Four of these aircraft are operated on the company’s behalf by Atlas Air, a partnership that began when MSC launched its air cargo division in 2022.
The remaining three 777-200 Freighters are operated internally. Aviation Week reported that MSC Air Cargo secured its own European operating authority in 2024 after purchasing the Italian freight carrier AlisCargo. The addition of the 777-8 Freighters will build upon this existing all-Boeing widebody fleet.
Jannie Davel, chief executive officer of MSC Air Cargo, stated that the order represents an investment in the long-term future of the company and its customer base.
“The 777-8 Freighter gives us the efficiency, range and capacity to serve our customers reliably for years to come, while advancing our commitment to more sustainable operations. It is the right aircraft for the next stage of our growth,” Davel said.
The Boeing 777-8 Freighter market position
Boeing noted in its announcement that widebody freighters currently fly approximately 75 percent of global air cargo capacity. The 777-8 Freighter is positioned to capture replacement and growth demand in this high-capacity sector.
With this transaction, MSC Air Cargo becomes the third Europe-based air cargo operator to select the 777-8 Freighter. Boeing has accumulated more than 80 total orders for the aircraft type to date.
Brad McMullen, Boeing senior vice president of commercial sales and marketing, noted the aircraft will connect the operator’s hubs to key international markets. He described the 777-8 Freighter as the most efficient aircraft in its class, designed to enhance the reach of global air networks.
AirPro News analysis
We view MSC Air Cargo’s transition from an unidentified customer to a named buyer for the Boeing 777-8 Freighter as a clear indicator of the maritime logistics sector’s continued encroachment into dedicated air freight. When MSC Group launched its air division in 2022, relying on Atlas Air provided a low-risk entry into the market. The subsequent acquisition of AlisCargo in 2024 and this direct order for next-generation widebody freighters demonstrate a strategic shift toward full vertical integration. By operating its own aircraft, MSC is positioning itself to capture high-value e-commerce and specialized freight yields directly, bypassing traditional air cargo intermediaries and securing long-term capacity control.
Sources: The Boeing Company
Photo Credit: The Boeing Company
Commercial Aviation
AerolÃneas Argentinas Leases Six Boeing 737-10s from ACG
AerolÃneas Argentinas signs leases for six Boeing 737-10s with ACG at Farnborough, part of a 20-aircraft fleet renewal plan.
AerolÃneas Argentinas has secured lease agreements with Aviation Capital Group (ACG) for six Boeing 737-10 aircraft, marking a critical step in the carrier’s largest fleet modernization effort in a decade.
Announced on July 23, 2026, at the Farnborough International Airshow, the transaction is part of a broader 20-aircraft renewal program scheduled for the 2027-2031 timeframe. According to a press release from ACG, deliveries of the Boeing 737-10s from the lessor’s orderbook will commence in 2028, providing the Argentine flag carrier with increased capacity for high-demand domestic and regional routes across South America.
Comprehensive Fleet Modernization Strategy
The ACG agreement fits into a larger procurement strategy formalized at the Farnborough event. According to reporting by Infobae and La Nación, the airline’s 2027-2031 plan encompasses 20 new aircraft, representing a renewal of 25 percent of its total fleet and 60 percent of its long-haul fleet.
The overall 20-aircraft plan includes six Airbus A330neos, eight Boeing 737-10s, and six Boeing 737-8s. During the airshow, AerolÃneas Argentinas formalized lease agreements for 14 of these aircraft with lessors ACG and Avolon.
Fabián Lombardo, President and Chief Executive Officer of AerolÃneas Argentinas, stated that the agreement reflects a commitment to building a more modern, efficient, and sustainable fleet.
We are pleased to strengthen our relationship with ACG through this agreement for six Boeing 737-10 aircraft. These aircraft are a key part of our 2027-2031 fleet plan and will allow us to add capacity on high-demand domestic and regional routes, improve operating efficiency and continue offering a more competitive product to our passengers.
Financial Restructuring and Self-Financing
The airline’s leadership emphasized that the fleet renewal is entirely self-financed, a notable shift following its recent financial restructuring.
La Nación reported that AerolÃneas Argentinas achieved positive operating results of $56.6 million in 2024 and $120.7 million in 2025, as audited by KPMG. These figures have allowed the carrier to pursue this capital-intensive modernization without relying on state subsidies.
Capacity Expansion with the Boeing 737-10
The Boeing 737-10, the largest variant of the MAX family, will be deployed from the carrier’s primary hubs at Aeroparque Jorge Newbery (AEP) and Ezeiza International Airport (EZE) in Buenos Aires.
Thomas Baker, Chief Executive Officer and President of ACG, highlighted the operational benefits of the aircraft for the South American market.
We are delighted to expand our partnership with AerolÃneas Argentinas as it continues to strengthen its domestic and regional network. The 737-10 offers airlines vital additional capacity, improved fuel efficiency and enhanced profitability, making it well suited to high-demand routes.
AirPro News analysis
We view AerolÃneas Argentinas’ ability to self-finance a 20-aircraft renewal program as a strong indicator of the carrier’s stabilized financial footing following years of restructuring. By securing leases through established lessors like ACG and Avolon rather than direct manufacturer purchases, the airline mitigates upfront capital expenditure while securing near-term delivery slots starting in 2028. The selection of the Boeing 737-10 specifically addresses capacity constraints at slot-restricted airports like Aeroparque Jorge Newbery, allowing the airline to maximize passenger throughput on its most lucrative regional routes without increasing flight frequencies.
Sources: Aviation Capital Group
Photo Credit: Aviation Capital Group
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