Kevin Michaels, Managing Director at AeroDynamic Advisory
After 15 years of uninterrupted growth, jetliner industry production rates are in a downward spiral, thanks to the Boeing 737 MAX production shutdown and the COVID-19 crisis.
While Airbus and Boeing will navigate through the crisis weakened but intact, the outlook for suppliers is less certain. The jetliner supply chain expanded and evolved in recent decades to cope with uninterrupted growth and new customer needs. Three major changes are likely for it in the post-COVID world.
First, aircraft and aeroengine OEMs and major Tier 1 companies will shed noncore and underperforming assets acquired or developed over the last 20 years. Rolls-Royce, which lost $7 billion in the first half of 2020, announced it will shutter several UK facilities as well as Trent engine final assembly operations in Singapore and Germany. More is on the way: It plans to sell £2 billion ($2.6 billion) in assets, including Spanish subsidiary ITP Aero.
Airbus recently terminated its initiative to insource A320neo nacelles, resulting in the loss of 350 jobs. Spirit AeroSystems also scrapped its planned acquisition of component supplier Asco and may do the same with Bombardier’s aerostructures business.