Airbus and Boeing hustle to keep airplanes flowing to a collapsed market

Everything is broken and everyone is embracing weird dynamics to keep airplanes moving that no one needs.

Log-in here if you’re already a subscriber

Release Date
April 21, 2020
Airbus and Boeing hustle to keep airplanes flowing to a collapsed market
“This is not a great time to sell airplanes, let’s not kid ourselves,” said U.S. President Donald Trump summing up the state of the industry earlier this month.

It’s an understatement, of course. Passenger demand is near zero, well over half of the world’s fleet is parked and credit markets — by all accounts — are effectively frozen. No less than 55% of the $570 billion in industry revenues are slated to evaporate this year. Airlines are selling planes to lessors for immediate cash with the intent of parking them. On top of it all, oil futures have reached a point that producers will pay you to take their oil.

The commercial aviation market has collapsed.

Amid this COVID-19 chaos, it is apparent both Boeing and Airbus are trying every trick in the book to keep airplanes moving and their industrial ecosystems alive. More than a dozen interviews by The Air Current with senior leaders at airlines, plane makers, lessors and suppliers around the world reveal a host of short and longer-term efforts at moving airplanes to buyers. All this at a time for most airlines and lessors, taking delivery of a new airplane looks more like a burden than a blessing.

Related: The airlines are staring down a slow and uneven recovery from coronavirus

“The vast majority of their revenues have been put down to zero and most of them are fighting for their survival and fighting for short term ways of securing their balance sheet, their cash positions and being able to navigate through their next weeks and months,” Airbus CEO Guillaume Faury said of the company’s customers in a recent call with the media.

In slashing its production plans by a third on April 8, Faury said, “What we are doing in terms of rate reflects the blending of the very diverse situations around the world.” The conversations have been “very granular” in trying to understand the financial positions of its customers and how many airplanes the company should be building. Airbus was left with 60 unclaimed aircraft at the end of the first quarter, some of which it is now trying to re-sell. The surge in deferrals has forced Airbus to scale back A350 output from 10 to 6 per month, A330s from three to two and A320 production from 60 down to 40.

For both Boeing and Airbus, near term strategies are geared around an “exchange of short term deliveries against long term relief,” said Henri Courpron, chairman of Plane View Partners consultancy. The goals, he told TAC, are aimed at clearing the inventory of aircraft in the production system, which is holding onto billions of dollars in working capital.

Continue Reading...

Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.

error: We protect our content to protect our future.