Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Areeba Khan

In this 9fin feature, we delve into Boeing’s safety issues, the hard-to-abate environmental footprint of the aviation industry, its alleged greenwashing, and its challenges. We also discuss best practices for investors to navigate the complex aviation world.

On 7 April 2024, a Boeing 737-800 aircraft flown by Southwest Airlines was forced to make an emergency landing after an engine cover fell off during takeoff and struck the wing flap of the airline. Thankfully the incident did not result in any injuries, or fatalities. But US airplane manufacturer, Boeing is now under investigation by the Federal Aviation Administration (FAA).

It’s not the first time this year that Boeing has been in the spotlight due to safety concerns: in January 2024, a door panel exploded out of a Boeing 737 MAX plane on an Alaska Airlines flight. The incident resulted in no casualties. The Department of Justice (DOJ) opened a criminal investigation into the incident and the FAA ordered the grounding of about 170 Boeing 737 MAX 9 aircraft until the safety issues were resolved. The door panel that blew out was found to be missing four key bolts, which highlighted quality control issues at Boeing and its supplier of the fuselage, Spirit AeroSystems.

There has been a series of other incidents involving Boeing 737-800 planes recently, some of which resulted in injuries and required emergency landing. On 25 March 2024, news sources reported that United Airlines lost about $600m in market capitalisation after the FAA decided to increase scrutiny on the airline involving Boeing 777-200 and Boeing 737 MAX aircraft.

Q1 2024 isn’t the first time Boeing has hit headlines with safety concerns.

Since 2018, it has received significant negative media attention and has also been involved in multiple legal proceedings. For instance, in 2021, Boeing agreed to pay $2.5 billion, including a $244 million fine, to the DOJ to settle an investigation into the crashes of 2018 and 2019. According to the DOJ, Boeing defrauded the Federal Aviation Administration (FAA) by not disclosing information about an important aircraft part known as the manoeuvring characteristics augmentation system (MCAS) that impacted the flight control system of the Boeing 737 MAX and was responsible for the crashes. Pilots and airlines lacked information and training on this system. Subsequently, Boeing 737 MAX planes were grounded by the FAA in 2019 for almost two years.

A recent FAA audit found that Boeing failed to comply with manufacturing quality control requirements on “multiple” occasions. News articles have also highlighted quality control issues in manufacturing multiple times in the past (1, 2, 3).

Assessment by an expert panel of Congress found deficiencies in Boeing’s safety culture with repercussions for reporting safety issues and an exaggerated focus on financial and shareholder returns over safety and quality.

Boeing 737 MAX production has fallen sharply, which has impacted deliveries and passenger forecasts for several airlines. Passengers are also refusing to fly on these planes. Ryanair is one of Boeing’s largest customers and is expecting a decline in profits following a slowdown in deliveries. Alaska Airlines, United Airlines, and Southwestern Airlines are also large customers of Boeing.

9fin’s analysis of the British Airways fleet reveals that Boeing 777s and 787s account for 35.96% of total flight inventory in 2023. As part of its fleet renewal plan for more efficient aircraft, Boeing orders at Lufthansa account for 40.32% of all orders. United Airline’s fleet modernisation plan involves the significant ramp-up of Boeing 737 MAX aircraft.

The TUI Airways fleet comprises 30 Boeing 737-800 aircraft (20% of TUI’s fleet) and TUI is investing to further increase the Boeing aircraft (737 and 787) component as part of its airline decarbonisation strategy. According to the group, planes 787 and 737 MAX are 20% and 16% more fuel efficient than its other aircraft. 

9fin also found that Wizz Air and easyJet’s fleet renewal plan involves the expansion of Airbus “neo” technology aircraft with reportedly more fuel-efficient engines, called the A320neo. Airbus has an excellent reputation for safety, so given how Boeing’s safety issues have impacted the reputation and bottom line of airlines, those that invest in Airbus as part of their fleet modernisation plan maybe at an advantage. 9fin’s overall issuer analysis found that airlines are acknowledging the risk of Boeing’s deliveries and safety issues impacting their bottom line, but many of the airline’s fleet modernisation plans to increase fuel efficiency still depend on Boeing aircraft.

Deconstructing the environmental impact of aviation

In 2022, aviation accounted for 2% of global CO2 emissions, however, when we consider the non-CO2 emissions released by flying, aviation accounts for 3.5% of global warming. Two-thirds of global warming originates from non-CO2 emissions such as nitrous oxides, sulphur dioxide, water, particulate matter (soot), and contrails (water vapor trails from aircraft exhausts) account for the largest share.

9fin analysed the carbon footprint of airlines including KLM, British Airways, easyJet (p.3 and p.4), IAG, Lufthansa, United Airlines, Wizz Air, and found that the most significant CO2 emissions (>90% of the total carbon footprint) originate from the use of jet fuel in the combustion of aircraft (scope 1) and upstream emissions from the production and transport of jet fuel (scope 3). 9fin also found that most of the airlines have not incorporated non-CO2 emissions in their decarbonisation plan.

Airlines have received significant media attention for alleged greenwashing and have been involved in multiple legal proceedings.

In May 2022, KLM faced legal action from environmental groups regarding accusations of greenwashing. This event is believed to have triggered the initial wave of greenwashing litigation within the airline sector. The legal action stemmed from concerns raised about KLM's "Fly Responsibly" campaign. Since then, greenwashing lawsuits have become commonplace in the industry.

In June 2023, Consumer groups from 19 countries led by the European Consumer Organisation (BEUC) filed a formal complaint with the European Commission for greenwashing against 17 airlines, accusing them of violating EU regulations regarding unfair consumer practices. Among the airlines targeted are Ryanair, Lufthansa, Wizz Air, KLM, and Air France.

In December 2023, adverts from Lufthansa, KLM, and Etihad Airways were banned by Britain’s advertising regulator, the Advertising Standards Authority (ASA), due to concerns that they provided a misleading impression of the airlines’ environmental impact. For instance, one advertisement from the latter airline stated: "Total peace of mind with Etihad Airways. Environmental advocacy.” Consumer protection laws in the EU and UK could impose fines of up to 4% and 10% of an airline's global annual turnover.

Most of the greenwashing lawsuits are based on concerns that airlines’ green claims are not well substantiated. For example, they are often based on carbon offsets, which have been criticised, technologies such as sustainable aviation fuels (SAFs), which are not market-ready, and fleet modernisation which can only reduce overall emissions by a small proportion.

Theoretically, carbon offsets enable companies to offset or cancel their own emissions by financing emissions reductions elsewhere. However, a Guardian investigation with Unearthed in 2021 found that carbon credits used by major airlines such as easyJet, British Airways, and United Airlines were ‘phantom credits’.

These were allegedly based on unreliable calculations that overstated avoided emissions. In January 2024, an academic study by the University of California found that 40% of all cookstove credits issued on the market led to 9.2 times fewer avoided emissions than claimed. Airlines such as easyJet and British Airways stand out as major corporate purchasers of popular cookstove credits, as revealed by a Financial Times analysis of the largest carbon offset certifier, Verra. Read more about best practices for assessing carbon credits in 9fin’s educational pieces here and here.

Apart from unreliability, doubts have also been raised about the insignificant impact of carbon credits on emissions reductions. For example, In 2020, Ryanair discontinued two carbon offset projects — a tree planting scheme and a whale watching project — valued at £175,000, amid doubts raised by a BBC Panorama investigation that they contribute insignificantly to reducing airline carbon emissions. The projects would offset <1% of total 2019 emissions.

The European aviation industry under Destination 2050 and members of the International Civil Aviation Organisation (ICAO) aim to achieve net zero by 2050. However, the availability and economic viability of SAFs are critical factors in realising this objective.

SAFs are made of a variety of feedstocks and waste products (municipal solid waste, cellulosic waste, used cooking oil, agricultural, forestry waste, fats, plant oils, animal or plant waste oil), as well as e-fuels (green hydrogen or renewable electricity used to create synthetic fuels).

According to the International Air Transport Association (IATA), these feedstocks do not compete with food production or promote biodiversity loss or deforestation. They have the have the potential to contribute approximately 65% of the emissions reduction required for aviation to achieve net-zero by 2050.

Currently, SAF is priced at 2 to 6 times higher than traditional jet fuel, impacting demand from airlines.

According to IEA, SAF accounted for 0.1% of all aviation fuel consumed in 2022. Additionally, feedstock is very scarce. According to IATA, projections suggest that global production of SAF will only satisfy approximately 2% of the fuel demands of global aviation by 2025. Therefore, effective collaboration is needed between airlines, aircraft manufacturers, governments, and investors to significantly ramp up production and lower costs.

These cost and demand challenges have led environmental groups to argue that a significant decrease in air travel is the sole means for the industry to achieve decarbonisation. According to IEA, 10% of SAF use in global aviation is required by 2030 for a net zero by 2050 scenario.

9fin’s issuer analysis revealed that SAF use accounted for a negligible proportion of total fuel use in the airlines assessed. SAF represented 0.6% of annual emissions reductions for IAG in 2023. It made up 0.6% of the fuel mix at KLM in 2022. The total volume of SAF used in United Airlines’ operations remained less than 0.1% of its total aviation fuel usage. SAF made up 0.005% of Wizz Air’s total fuel in 2023.

Evolving regulation and customer preferences

In April 2023, the EU approved an SAF policy as a part of its Fit for 55 package. RefuelEU mandates airlines to gradually increase their utilisation of sustainable fuels for flights departing from EU airports. Scheduled to take effect in 2025, the policy initially stipulates a minimum of 2% SAF usage, escalating to 6% by 2030, and reaching 70% by 2050. The UK has set a goal to achieve 10% SAF usage by 2030.

CO2 emissions from aviation have been included in the EU Emissions Trading System (EU ETS) since 2012. The programme solely pertains to flights within the EU and sets a cap on the allocation of emissions allowances, which decreases annually, thus restricting the overall emissions within the sector. 

Airlines have the option to trade any surplus emissions allowances to other operators, a practice known as carbon trading. This enables companies to either reduce their own emissions or support emissions reduction initiatives elsewhere.

The EU also agreed to amend the ETS Directive to encourage aircraft operators to boost SAF usage. Starting in 2024 and until 2030, the EU will distribute 20 million allowances at no cost to promote the adoption of sustainable aviation fuels. This initiative aims to cover the cost difference between sustainable aviation fuels and conventional jet fuel for operators utilising SAF.

Under the ETS, there will be a more substantial reduction in the total number of CO2 certificates compared to previous reductions, and the previously allocated 'free allowances' will be entirely eliminated by 2026. This is expected to result in a significant rise in the cost of flights within Europe. Additionally, ETS will require airlines to monitor, report, and verify non-CO2 emissions.

Under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), all international flights will be mandated to offset their emissions, starting from 2027. Airlines must purchase emission reduction offsets from other sectors or use lower carbon ‘CORSIA eligible’ fuels to counteract any rise in their emissions.

The offsetting requirements each year will be determined by the sector's increase in emissions compared to 2020 levels. SAF reductions can be deducted from an operator's offsetting requirements. Eligible emissions units, determined by ICAO, can be bought by airlines to fulfil offsetting requirements.

The EU Taxonomy regulation recently included aviation activities including the manufacturing of aircraft, leasing of aircraft, passenger and freight air transport, and air transport ground handling operations as economic activities that could potentially make a substantial contribution to the climate change mitigation objective.

9fin’s analysis of the climate transition plans of KLM, United Airlines, and Wizz Air revealed that changing customer preferences for more sustainable travel is a key transition risk likely to materialise in the medium term (2030) for airlines. According to Booking.com’s new travel research, about 80% of global travellers consider sustainable travel important.

How can investors navigate the complex aviation world?

Good practice would entail airlines having a net zero SBTi verified target, coupled with an SBTi-verified interim targets. In line with SBTi guidance, offsets must only be used to neutralise residual or unavoidable emissions. 

For example, easyJet aims to be net zero by 2050 and will only use carbon offsets to mitigate any residual emissions from its operations. easyJet’s interim target is SBTi-validated. However, its net zero commitment was removed by the SBTi (this happens when airlines fail to submit targets within 24 months of commitment).

Good practice would entail airlines reporting comprehensive and transparent climate transition plans which involve high-emissions (greater than 2°C) and low-emissions scenarios (lower than 2°C) to account for both physical and transitional risks in the short, medium (2030), and long-term (2050). 

The plans should also include financial planning i.e. reporting capex and opex aligned with the transition and the potential financial impact of risk and opportunities. Read more about climate transition plans in 9fin’s educational piece here. Wizz Air ,as an example, has a comprehensive climate transition plan.

An airline’s decarbonisation strategy should be backed by SAF goals, and planned capex to secure SAF should be reported. Airlines are increasingly engaging in offtake agreements which entail airlines committing to purchasing a predetermined volume of SAF over a specified duration at a mutually agreed fixed price.

These agreements aim to ensure a consistent, long-term, and secure fuel supply. Transparency is key, and issuers should provide comprehensive detail about the price, amount paid, supplier, and duration of such agreements. 9fin’s issuer analysis found SAF agreements signed by KLM, British Airways, easyJet, IAG, Lufthansa, United Airlines, TUI Airways, and Wizz Air. The offtake agreements should also be backed by SAF targets. Airlines are increasingly setting SAF targets. For example, British Airways and IAG aim for 10% SAF by 2030. Lufthansa and United Airlines aim for 5% SAF by 2030.

Airlines are also increasingly adopting fleet modernisation plans, however, according to ICAO, fleet modernisation is an effective short-term strategy for reducing CO2 emissions. New-generation aircraft emit 20 to 25% less CO2 per seat kilometre compared to the aircraft they replace. For example, KLM aims to have 80% of its fleet composed of new-generation aircraft by 2030. As this is a short-term measure, decarbonisation will critically be driven by long-term factors.

Good practice would also entail airlines outlining detailed measures to address non-CO2 emissions. For example, according to Wizz Air and easyJet, fleet modernisation using the expansion of Airbus A321neo aircraft delivers an almost 50% reduction in noise footprint, resulting in significantly less nitrous oxides.

All kinds of non-CO2 emissions should be addressed. For example, 9fin found that Wizz Air acknowledges all of its non-CO2 emissions, but 9fin could not find any publicly available information on measures to address all of them. This is consistent with findings from 9fin analysis which shows airlines are acknowledging non-CO2 emissions, but are yet to develop comprehensive measures and targets to address them.

Boeing's safety issues have highlighted the importance of having a robust supplier procurement policy that includes social issues such as safety and quality. For example, Wizz Air has a supplier procurement policy which entails collecting emissions data from suppliers. It is time airlines hold suppliers accountable for social issues.

Enjoyed our deep dive? Our customers receive news and analysis ahead of the crowd on the 9fin platform. To request a trial, click the button below.

We are entering an area of turbulence — assessing Boeing and HY airlines

Owen Sanderson

Excess Spread — Sweet release, baked Danish

9fin team

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

Sasha Padbidri

Luke Viner

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

Save time, react faster to news, outperform your peers.

Asset Managers & Hedge funds

Save time, pitch more efficiently, and win business.

Investment Banks

Turbocharge your trading desk P&L, with the market's fastest news alerts.

Sales & Trading

Spot novel covenants, save time drafting and win business.

🍪 Our Cookies

We are entering an area of turbulence — assessing Boeing and HY airlines

Read all our public content for free

Recently Published

Excess Spread — Sweet release, baked Danish

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

What are you waiting for?