Deferring jet orders over Iran war would be costly for Middle Eastern carriers, IATA VP says

• Long waiting times for aircraft, especially Airbus's latest single-aisle planes, make order deferrals financially unwise despite current 'hiccup' from Iran war
• Iranian attack damaged a terminal at Kuwait airport used by foreign carriers, with repairs expected to take at least a year according to Al-Awadhi
• Middle Eastern carriers are major buyers of Boeing and Airbus jets, and global airlines are cutting flights and raising fares to offset higher costs from the conflict

Market Summary: Middle East Airlines Maintain Aircraft Orders Despite Iran War

Key Developments:

Kamil Al-Awadhi, IATA's Regional VP for Africa and the Middle East, stated that Middle Eastern carriers should not defer aircraft orders despite ongoing war in Iran and rising jet fuel prices. Speaking at IATA's annual summit in Rio de Janeiro on June 6, he warned that deferrals would prove costly due to extended aircraft delivery timelines.

Main Points:

• Middle Eastern airlines, major customers of Boeing and Airbus, are expected to maintain current aircraft orders
• Extended waiting times for Airbus's latest single-aisle planes could delay deliveries by years if orders are deferred
• Global airlines are reducing flights and increasing fares to offset higher operational costs
• Middle East airports have been targeted by airstrikes related to the Iran conflict

Critical Infrastructure Damage:

An Iranian attack on Kuwait's airport earlier this week severely damaged a terminal used by foreign carriers. Al-Awadhi estimates repairs will take "at least a year," potentially ages based on damage assessments. This raises concerns about foreign carriers' ability to operate in Kuwait.

Proposed Solutions:

Kuwait may need to either fast-track completion of new airport terminal sections or allow foreign airlines to use terminals currently reserved for domestic carriers like Kuwait Airways.

Market Implications:

The situation presents a complex challenge for Middle Eastern aviation: airlines face pressure from higher fuel costs and security risks, yet must maintain fleet expansion plans to avoid longer-term competitive disadvantages. Air New Zealand separately reported hedging only 25-40% of fuel cost increases, indicating widespread industry pressure on margins.

The conflict's impact on regional aviation infrastructure could reshape Middle East airline operations and route planning significantly.