Daily Management Review

Airplane Manufacturers And Suppliers Hit Hard By Coronavirus


03/24/2020




Airplane Manufacturers And Suppliers Hit Hard By Coronavirus
While the European plane maker Airbus only partial restarted production after a four-day shutdown even as suppliers cut jobs, its rival United States plane maker Boeing said that it would temporarily stop production of most widebody jets as the coronavirus pandemic hits the global aerospace manufacturing very hard.
 
There is pressure on plane makers and their suppliers to spend less and save cash in order to tide over the virus pandemic as most of the major airlines all of the world have been majorly forced to ground their planes because of demand collapse over fear of contracting the Covid-19 disease as well as the travel air restrictions imposed by governments.
 
The outlook for the aerospace and defense industry was changed from stable to negative by ratings agency Moody’s and warned that demand for new aircraft by airlines would be slow because even after the opening up of markets because of the hit that they have are taking during this period.
 
According to data from airline schedules firm OAG, last week, there was a 35 per cent drop in global air passenger capacity which was the worst drop since the coronavirus crisis begun. The industry body said that in the coming weeks, airlines would be imposing more capacity reductions.
 
Data from Cirium shows that so far this year airlines have grounded more than 2,500 planes already and taxiways, maintenance hangars and even runways of major airports have been transformed into parking lots for planes.
 
For the first time in over a decade, the Asian jet fuel refining margins which is the difference in value between raw crude and the refined product, reported a negative value which indicated that the currently there is no timeframe for a recovery of the aviation industry.
 
According to report in the United States, the large airlines of the country have also developed contingency plans in case of any halting of passenger air traffic in the country even though the US President Donald Trump confirmed that no domestic travel ban was being planned by him.
 
The situation for Boeing, one of the largest aircraft maker of the world, is also critical as the company is now looking at a second round of shutdown of its key assembly lines for the second time in a year. The company was  forced opt halt production of its 737 Max planes in January after all of the planes were grounded in march last year following two deadly crashes involving the planes within a span of just five months.
 
Production at the largest industrial building of the world - the giant Boeing wide-body plant at Everett north of Seattle, will have to be stopped by the company for the first time in recent memory because of the halt in production of the company’s long-haul jets like the 787 and 777 in Washington state for a period of 14 days starting Wednesday.
 
On the other hand, a decision to lay off all non-essential workers in Brazil was announced by Brazil’s Embraer SA, the third-largest aircraft maker of the world, on Sunday. The company makes regional jets in Brazil. The company could announce further cost cutting measures this week.
 
Reports also said that Canadian production of business jets will also be stopped by another plane maker Bombardier.
 
(Sourcew:www.financialpost.com)






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