There is No Recovery in the Aerospace Industry

Mish

Over the next year, Airbus needs to reduce its airliner business workforce with 15,000 positions. Boeing is in similar shape.

“COVID-19 Adaptation Plan”

CEO Guillaume Faury announced a “COVID-19 adaptation plan” including a cut of 15,000 positions.

“Airbus is facing the gravest crisis this industry has ever experienced. Our business in the civil airliner business has reduced with 40%, and we expect this to remain the level for the next two years. Then, in 2022 we think there will be an uptake in single-aisle business. Widebody deliveries will take longer to recover, perhaps until 2025. Today’s announcement is our longer-term adaptation to the lower demand. There is no further adaptation of our announced production rates because of this. Our initial estimate from April was pretty good. It took single-aisle from rate 60 to 40, A350 from 9.5 to six, and A330 from 3.5 to two. We expect this to be the level for the coming months. Airbus is always adjusting the rates to the actual situation, so there will be smaller adjustments going forward, but these are the levels we work from.”

Era of Jumbo Jets is Over

In the US, Boeing Quietly Pulls Plug on the 747, Closing Era of Jumbo Jets.

Boeing Co. hasn’t told employees, but the company is pulling the plug on its hulking 747 jumbo jet, ending a half-century run for the twin-aisle pioneer.

The last 747-8 will roll out of a Seattle-area factory in about two years, a decision that hasn’t been reported but can be teased out from subtle wording changes in financial statements, people familiar with the matter said.

“At a build rate of half an airplane per month, the 747-8 program has more than two years of production ahead of it in order to fulfill our current customer commitments. We will continue to make the right decisions to keep the production line healthy and meet customer needs,” Boeing said for this story. 

Airbus is already preparing to build the last A380 jumbo, after the final convoy of fuselage segments rumbled to its Toulouse, France, plant last month.

Air France, Lufthansa, and Qatar Airways are among carriers weighing whether to ground their A380s permanently or are preparing to do so. Airbus has just nine of the planes still be delivered. 

The Recovery Will Have Many Shapes, Not One

Boeing is an excellent example of why The Recovery Will Have Many Shapes, Not One.

Also see Unemployment is Much Worse Than it Looks.

Fed Chair Jerome Powell promotes the idea that a Quickening Takes Many Years.

Regarding Boeing, my industry contact commented "Boeing only has the 737 MAX in the single aisle category . If wide bodies take till 2025 to recover, their 787 and 777 X planes are in trouble."

Mish

Comments (32)
No. 1-9
caradoc-again
caradoc-again

Not to mention the whole ecosystem supplying Boeing from fasteners to flight control elements & engines.

The aerospace-industrial complex will be hit just like the autmotive-industrial.

Only the military-industrial is likely to plough on as before with its relevant section of aerospace being OK.

davebarnes2
davebarnes2

Let's revisit this in 2030.
I think you are way too pessimistic.

anoop
anoop

Regarding headline numbers of layoffs -- COVID-19 has given the opportunity to companies to clean up their balance sheet (with no impact to stock price) and also to reduce the median age of employees. Once they get rid of the 15,000 people (most older) they will be ready to hire younger people at lower wages, plus depend more on labor in countries where it is cheaper to hire. Without the pretext of COVID-19 they would not be able to clean up their balance sheet, or do such a massive renewal of their workforce, without a huge backlash.

Bam_Man
Bam_Man

Well, if the "climate change" crowd has their way, then at least some of these people will be re-employed in buggy whip factories.

TimeToTest
TimeToTest

Airplanes can last an extremely long time. If this recession turns into a depression aerospace industry could find itself in a situation where supply can greatly outnumber demand.

Anda
Anda

The 747 is a great plane, will be sad to see it go. Earlier, if you went to an airport there were planes, and then there was the 747. Concorde was something also. A380, well we hardly knew ya, I guess size alone is not exactly inspiring.

ColoradoAccountant
ColoradoAccountant

Boeing and Airbus better start working on that flying car the Jetsons would love to see in their driveway.

wmjack
wmjack

All the airlines will declare bankruptcy after the government aid expires Sept 29th
All the airlines have used bankruptcy before when fuel costs rose --next will be the aerospace industry

frozeninthenorth
frozeninthenorth

Mish; a few correction are needed here. The B747-800 was launched 15 years ago, which is a very very long time ago in this business, especially since it was mostly a variant of the type, and not a new design. As for the A380/A350 aircraft (really one platform) the type (especially for the A380) have been in trouble long before covid19. In fact, two years ago, Singapore airline scraped its first A380 because it could not find a buyer. The A330 is also a very old aircraft -- going back to the late 90s with very little changes to the type.

What Covid has done is the exact opposite of what happened after 9/11 -- where international flights (hence large aircraft) took to the skies first. Here the exact opposite is happening.

Long haul flights are dead(er) and short haul (domestic) flights will dominate!


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