As the COVID-19 pandemic continues to rage, the question of when – and where – to re-open the global economy lingers. One of the big questions plaguing the industry is when will manufacturing plants fully open, will they remain open – and, at what cost?
Boeing plans to send 27,000 employees back to work in plants responsible for the manufacture of the 747, 767, 777 and 787 beginning April 20 or 21, a welcome sign of progress toward a semblance of normalcy. As of publishing, that appears to be about the most positive news on the wire, Forecast International reports.
A report from the International Civil Aviation Organization (ICAO) paints a bleak picture for aviation, particularly in the commercial segment. The ICAO predicts a loss of $112-$135 billion in operating revenues for airlines in the first half of 2020. If the contraction in business continues until September 2020, the segment may incur an additional monthly loss of $35-$40 billion for every month of Q3 2020, with North America and Europe being hit particularly hard.
Airbus and Boeing both temporarily suspended all production, and production cuts have been announced across the board.
Referencing the Oliver Wyman report covered in a previous Forecast International report on the impacts of COVID-19 on the R&M/MRO market, the outlook has worsened over the last two weeks. Forecasts for 2020 anticipate a loss of 57 percent of MRO activity in the widebody segment, 50 percent for narrowbodies, 47 percent for regional jets, and 43 percent for turboprops. This equates to an annual loss of $48 billion in MRO activity for 2020.
2021 is projected to fare better, though the effects of production shutdowns, deferred orders, and global aircraft groundings will still be felt then as well. Annual revenues had been projected to top $96 billion in 2021 – that figure has been adjusted to $79.1 as of press time.
The impacts of such drastic losses in revenue are difficult to fathom at this time. Businesses closed by the crisis may still be waiting weeks, if not months, to reopen their doors, and exactly what the eventual reopening will look like is still undetermined. The Trump administration has outlined a three-phase plan for opening the American economy, which includes strict social distancing measures and limits on non-essential travel until it appears the virus is leveling off in intensity.
We are still in the midst of the first phase of re-entry, where some states have not yet neared their projected peak infection timeframe. As such, all we can expect is a prolonged and incremental reopening of the American economy, and the same can be expected for the world as a whole, Forecast International concluded.