Aerospace Industry Faces Turbulent Times Amid Economic Stress and Security Concerns

Strategic Insights -

The 100th Paris Air Show, a premier event in the aviation industry, is taking place amidst a backdrop of economic downturn and security concerns, casting a shadow over the global aerospace market. The industry is grappling with a predicted 1.5 percent drop in global economic activity, leading to a severe decline in air traffic and orders for both commercial and military aircraft. The International Monetary Fund has forecasted an $80 billion decline in airline revenues this year, with a 12 percent fall in revenue for airlines worldwide, and industry-wide losses of $9 billion.

Key Takeaways:

  • The International Monetary Fund has predicted a 1.5 percent drop in global economic activity, leading to a severe decline in air traffic and orders for both commercial and military aircraft.
  • The industry is facing a 12 percent fall in revenue for airlines worldwide, with industry-wide losses of $9 billion.
  • Boeing's order backlog stands at $352 billion, with 866 Boeing 787 Dreamliners on order, valued at $140 billion.
  • Airbus's A400M military transport program is €5 billion over budget and three to four years behind schedule.
  • United Airlines has requested proposals from both Airbus and Boeing for up to 150 new aircraft, worth potentially $10 billion.
  • Bombardier is pinning its hopes on its C Series of 110- to 130-seat airliners, due to enter service in 2013.
  • Embraer is focusing on its E-170 to E-195 family, comprising four light airliners, as a safer strategy.
  • Boeing and Airbus are planning to extend their carbon-fiber composite designs to their smaller 737 and A320 single-aisle family members.

Statistics:

  • 12 percent fall in revenue for airlines worldwide (IMF prediction)
  • Industry-wide losses of $9 billion (ImF prediction)
  • 1.5 percent drop in global economic activity (IMF prediction)
  • $80 billion decline in airline revenues (IATA prediction)
  • $352 billion Boeing order backlog
  • $140 billion value of Boeing 787 Dreamliner orders
  • €5 billion over budget for Airbus's A400M program
  • 198 A380 super-jumbo airliners sold to 16 customers (Airbus)
  • 478 A350 Extra Wide Body model orders from 29 customers (Airbus)

Sources:

  • The 100th Paris Air Show
  • International Monetary Fund
  • International Air Transport Association (IATA)
  • Boeing
  • Airbus
  • Bombardier
  • Embraer
  • United Airlines
  • Pankaj Nangia/ Bloomberg News (caption for Airbus photo)