Full width home advertisement

Post Page Advertisement [Top]


Montreal, Canada - The airline industry has been one of the hardest hit by the coronavirus pandemic. Airlines cancel their aircraft orders and ground most of their planes in the fleet.  The manufacturers halted their productions.

Most of the big companies in the airline industry are now relying on government bailouts. Despite supplying more than 90 percent of the world’s commercial aircraft, Boeing and its European rival Airbus do not have much leverage when nearly all their airline customers are fighting for survival.

As international air travel grinds to a halt in the face of the coronavirus pandemic, the global aerospace industry is being forced to confront some hard truths about a future it once believed was secure for at least the next decade. Record order books, built on a decade of booming demand and worth more than $1tn at list prices, are looking less certain by the day as airlines push back deliveries and even cancel orders to survive the worst crisis in aviation history.

Nearly 90 percent of commercial aircraft have been grounded as governments quarantine their populations and close borders. And with little or no revenue coming in, airlines are cutting costs, drawing down huge credit lines to bolster liquidity, and calling for billions in state aid.

Ed Bastian, chief executive of the world’s biggest carrier, Delta Air Lines, says his company is burning through $60m a day while 600 aircraft are parked on the tarmac and 80 percent of April’s scheduled flights are canceled.

IATA, the aviation industry’s trade body, has warned that some 25m jobs in both the aerospace and aviation sectors are at risk if governments do not step in with lifelines.

“I wish I could predict this would end soon. But the reality is we simply don’t know how long it will take before the virus is contained and customers are ready to fly again,”

Mr. Bastian told employees in April.


For Boeing, already struggling to overcome the grounding of its 737 MAX single-aisle fleet after two fatal crashes, and for Airbus, which earlier this month slashed aircraft production by a third, the world has changed enormously. It is a sharp U-turn for companies which in recent years had so relentlessly increased production that they sometimes struggled to sustain it.

Only in February Boeing and Airbus were confidently predicting demand for more than 40,000 aircraft worth roughly $7tn over the next 20 years. In March, even after Italy went into lockdown, Airbus was pushing European suppliers to invest in accelerating production of the A320 the Family jets.

Now airlines are preparing for a long period of depressed demand and, having taken on substantial debt to survive the crisis, will not be fighting for aircraft delivery slots as they were just a few months ago.

“More order cancellations and deferrals are coming,” 

predicted Cai von Rumohr, an aerospace analyst at Cowen investment bank, in a note to clients last week.

“We are in uncharted waters.”
The impact of the aviation shutdown on the aerospace industry is beginning to raise concerns at the government level.

Aerospace companies are not only lifelines for tens of thousands of high-tech suppliers, ranging from big international companies such as Rolls-Royce and General Electric to small family-run businesses providing low volumes of critical components. They are also strategic enterprises for their governments. They pay higher than average wages, drive innovation, and generate healthy trade surpluses. In 2018, the sector was responsible for the largest share of the EU’s high-tech exports at €94bn, while US civil aerospace exports were worth $122bn.

When Boeing had to suspend deliveries of the 737 MAX jets after they were grounded last year, US economic growth slowed. President Donald Trump said in April he would do “whatever is necessary” to help Boeing, which has called for $60bn in state aid to help the industry and its supply chain through the crisis.

Bottom Ad [Post Page]