Willie Walsh: Engine OEMs Could Learn From Boeing

WASHINGTON—As Willie Walsh prepares to relinquish his role as head of the International Air Transport Association (IATA) to become CEO of Indian carrier IndiGo, he says the ongoing war between the U.S. and Iran is not a crisis for the airline industry but a challenge it can cope with.

Speaking with Aviation Week’s Window Seat podcast in his last week as IATA director general, the long-time airline career executive expressed continued optimism for the global air transport industry.

Walsh, who was CEO at Aer Lingus, British Airways and International Airlines Group before becoming IATA director general in April 2021, said OEMs that have been struggling with their delivery schedules and production quality could learn from Boeing’s turnaround.

“I think one of the criticisms that was leveled at Boeing going back a few years ago, when they sort of lost their way, was that they were more focused on capital markets than on serving their customers. And to be honest, I think the same could be said now of the OEMs, particularly the engine OEMs, where they have been working very hard to satisfy the market and maybe not hard enough to satisfy their customers. And for me, that’s completely unacceptable,” Walsh said.

“You’ve got to give credit to Boeing under [Boeing CEO] Kelly [Ortberg] and [Boeing Commercial Airplanes CEO] Stephanie [Pope] in particular. They’ve turned that position around and are getting great credit from the industry for the work that they’re now doing and the refocus they’ve had on their customers. And I think there’s a strong lesson in that for the other OEMs,” Walsh said.

Walsh also commented on his successor, whose appointment was announced last week. Saadia Zahidi, who is currently the managing director at the World Economic Forum, will take up the IATA role on Nov. 1, becoming the first female director general.

“Obviously, it’ll be a big change for her coming into the industry, not having experienced it before, but I think the board was very conscious when making that decision that she will have the support of the expertise within IATA. And I think it’s a strong indication of the confidence that the board has in the management structure of IATA,” he said.

Of the continued war between the U.S. and Iran, which has led to the closure of the Strait of Hormuz and sky-high oil and jet fuel prices, Walsh said, “The underlying demand for air travel continues to be strong. I think there is a feeling of confidence in the industry that we can steer our way through the current challenges. I don’t see this as a crisis for the industry. Clearly, we’re still forecasting profitability at an industry level. It will be very challenging for some airlines, but at an industry level, I think these are challenging times, but not crisis times.”

Walsh’s first IATA annual general meeting (AGM) as director general was in October 2021. The industry was still reeling from the impacts of the COVID-19 pandemic, but the AGM made a significant commitment to becoming carbon net zero by 2050.

Walsh was asked if that 2050 goal had been too ambitious given the continued dire lack of sustainable aviation fuel (SAF) that is an important bridge to net zero. Walsh reiterated that the industry may need to reevaluate whether the 2050 net-zero target was still realistic.

“We’re at a point where I think that target is definitely in the balance. I think we can still achieve it, but it’s becoming more and more difficult every day,” Walsh told Window Seat.

“But the important point that we made at the time was that we couldn’t achieve it as airlines on our own. It would require contribution from everybody, including governments,” he said. “And it’s terrible to have to acknowledge that we’re not seeing that now. OEMs obviously haven’t played their part because they’ve been delayed in getting new aircraft into service so gross emissions are higher than they should be. We haven’t seen air traffic control reform, and that was going to be a critical part. We haven’t seen governments play their part in encouraging the production of SAF.”

Walsh noted that major oil producers could produce SAF not just for aviation but for every industry that requires a liquid fuel source, but all have walked back from earlier SAF commitments.

“There’s little incentive for them because they’re continuing to receive financial incentives to produce oil, and the incentives to produce sustainable fuels just aren’t where they should be,” Walsh added. “They really do need to come to the game and start putting some of the massive profits that they’ve made and are making today, given the current crisis with the oil supply, into a sustainable future.”

Listen to the Window Seat podcast with Willie Walsh here.