# Analysis-Aviation nurses a nasty headache as travel recovers from COVID
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-22
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Aerospace industry faces supply chain woes post-pandemic
Meta Description: Discover the latest insights on the aerospace industry's recovery post-pandemic, and the challenges it faces with supply chain disruptions. Stay updated on the crucial developments shaping the industry's future.
URL: https://financedigest.com/analysis-aviation-nurses-a-nasty-headache-as-travel-recovers-from-covidhtml

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By Tim Hepher and David Shepardson

FARNBOROUGH, England (Reuters) – Aerospace has turned the page on an unprecedented pandemic demand shock with dozens new orders at its largest air show in three years – only to face mounting worries over supply chains and reminders that its future hinges on decarbonisation.

From rural Farnborough to nearby Heathrow, this week brought stark evidence of the supply crunch now entangling manufacturers and airlines alike, with shortages of both labour and parts.

It comes as [airlines – whose expansion had propelled the industry to record profits](https://www.financedigest.com/portuguese-airline-tap-swings-to-profit-earlier-than-expected.html "Portuguese airline TAP swings to profit earlier than expected") in the past decade, only to collapse during the pandemic – are desperate to cash in on a nascent recovery in international travel.

Even the Farnborough Airshow struggled to find enough [hospitality staff](https://www.financedigest.com/the-icu-is-full-medical-staff-on-frontline-of-chinas-covid-fight-say-hospitals-are-overwhelmed.html "‘The ICU is full’: medical staff on frontline of China’s COVID fight say hospitals are ‘overwhelmed’") despite downsizing from a seven-day aviation festival to a five-day trade show with no weekend aerobatics.

We have to accept that a lot of people left the aviation industry and the aerospace industry during 2020 and it is difficult to [bring them back,”](https://www.financedigest.com/trump-charges-bring-new-york-zombie-case-back-to-life.html "Trump charges bring New York ‘zombie case’ back to life") Emirates president Tim Clark told delegates after clashing with Heathrow over capacity curbs.

Departing Farnborough attendees got a personal taste of the resulting [travel chaos](https://www.financedigest.com/europes-summer-travel-chaos.html "Europe’s summer travel chaos") after discussing their own shortages of labour, parts and materials at the July 18-22 aerospace event.

Long lines formed at Britain’s airports, Eurostar train [terminal and the port](https://www.financedigest.com/german-coalition-divided-over-chinese-bid-for-hamburg-port-terminal.html "German coalition divided over Chinese bid for Hamburg port terminal") of Dover on Friday – the start of the busiest travel weekend since 2019.

For years, the alternating Farnborough and Paris air shows fed a fast-growing ecosystem as airlines lavished new orders on manufacturers, who served that [demand in part by encouraging their supply chains to set](https://www.financedigest.com/aussie-supermarkets-set-to-capitalise-on-high-inflation-but-softer-demand-ahead.html "Aussie supermarkets set to capitalise on high inflation, but softer demand ahead") up facilities in purchasing nations.

Posters this week continued that theme of a connected, cleaner [world as suppliers defended emissions targets](https://www.financedigest.com/the-mouse-that-roared-new-zealand-and-the-worlds-2-inflation-target.html "The mouse that roared: New Zealand and the world’s 2% inflation target"), but campaigners said they did not go far enough.

Now, global [supply chains](https://www.financedigest.com/mercedes-benz-and-microsoft-collaborate-on-supply-chain-data-platform.html "Mercedes-Benz and Microsoft collaborate on supply chain data platform") need fixing and Western factories and the airlines they serve are also beset by problems. Longer term, analysts [say supply](https://www.financedigest.com/ceraweek-europe-gas-supplies-to-stay-tight-2-more-winters-equinor-ceo-says.html "CERAWEEK-Europe gas supplies to stay tight 2 more winters, Equinor CEO says") chains are likely to get shorter.

This is not a great [year to say](https://www.financedigest.com/uk-to-avoid-recession-this-year-but-outlook-still-weak-bcc-says.html "UK to avoid recession this year but outlook still weak, BCC says") ‘you need a new supplier, have you thought about setting up here’,” a senior aerospace executive said. “The industry is hunkering down this week; there are not a lot of discussions with edge players or new entrants.”

[Airbus in particular is wrestling with delays](https://www.financedigest.com/airbus-may-delay-some-2023-jet-deliveries-sources.html "Airbus may delay some 2023 jet deliveries: sources") as it tries to increase output in anticipation of higher demand. In [part that is down to engine](https://www.financedigest.com/engine-parts-makers-must-cross-valley-of-death-to-reach-ev-era.html "Engine parts makers must cross ‘valley of death’ to reach EV era") shortages, which in some cases have been traced to glitches at tiny suppliers, executives said.

‘STRONG FUNDAMENTALS’

Despite the summer rebound – outbound airline bookings from the UK for example are at 88% of [pre-pandemic levels](https://www.financedigest.com/fraport-sees-2023-passenger-traffic-at-80-90-of-pre-pandemic-levels.html "Fraport sees 2023 passenger traffic at 80-90% of pre-pandemic levels"), according to ForwardKeys – there were warnings that inflation could slow the rebound in air traffic that ultimately supports jet demand.

Boeing [cut jet demand forecasts this week](https://www.financedigest.com/meta-plans-to-cut-thousands-of-jobs-as-soon-as-this-week-bloomberg-news.html "Meta plans to cut thousands of jobs as soon as this week – Bloomberg News"), while saying they remained stable after adjusting for war-sanctioned Russia.

Population [growth says](https://www.financedigest.com/growth-will-pay-for-uk-government-spending-plans-minister-says.html "Growth will pay for UK government spending plans, minister says") travel is going to continue strong, so production rates have strong fundamentals behind them,” said Stephen Timm, president of Collins Aerospace.

The question is, are the [near term](https://www.financedigest.com/automotive-glass-market-to-witness-sales-slump-in-near-term-due-to-covid-19-long-term-outlook-remains-positive.html "Automotive Glass Market to Witness Sales Slump in Near Term Due to COVID-19; Long-term Outlook Remains Positive") economics going to change the slope of the curve? That’s the question we’re all asking,” he told Reuters, while adding the Raytheon unit would work to [support planemakers’ ramp-up plans](https://www.financedigest.com/netflix-ad-supported-plan-to-launch-in-november-at-7-a-month.html "Netflix ad-supported plan to launch in November at  a month").

Boeing sought to answer that question, and lift concerns over the future of its 737 MAX cash-cow, with a flurry of announcements that translated into [gains in its share](https://www.financedigest.com/bayer-shares-gain-on-prospect-of-second-activist-pushing-for-change.html "Bayer shares gain on prospect of second activist pushing for change") price.

The future of the MAX, in the wake of two fatal crashes, a two-year grounding and ongoing regulatory issues, is key for the aerospace industry and airlines that have [invested hundreds of billions](https://www.financedigest.com/shell-to-evaluate-25-billion-pound-british-investments-after-windfall-tax.html "Shell to ‘evaluate’ 25 billion pound British investments after windfall tax") of dollars in making or buying the medium-haul planes.

“Airlines want to support Boeing because they recognise that if they don’t, the competitive balance is irreparably damaged and with it any attempt to get discounts,” Agency Partners analyst Sash Tusa said.

Airline industry boss Willie Walsh this week also reiterated [warnings of becoming](https://www.financedigest.com/uk-becoming-less-attractive-for-investment-manufacturers-warn-2.html "UK becoming less attractive for investment, manufacturers warn") too dependent on Europe’s Airbus in the $150 billion jet market’s transatlantic duopoly.

Sitting on a hefty order backlog, Airbus had a quiet week after a massive recent order from China, allowing it to focus instead on setting out decarbonisation [plans in Britain’s](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden") record heat, while leaving the Farnborough stage to rival Boeing.

It doesn’t mean we are less committed to taking [orders and growing the company,”](https://www.financedigest.com/computerized-physician-order-entry-cpoe-systems-market-to-generate-profitable-avenues-for-existing-companies-as-well-as-new-players.html "Computerized Physician Order Entry (CPOE) Systems Market to Generate Profitable Avenues for Existing Companies as Well as New Players") Chief Executive Guillaume Faury told Reuters. It’s probably just that the demand is less synchronised (with the air show) and that the [supply chain issues](https://www.financedigest.com/uks-j-d-wetherspoon-returns-to-profit-as-supply-issues-ease.html "UK’s J D Wetherspoon returns to profit as supply issues ease") are more (pressing) than in the past.

[(Reporting by Tim](https://www.financedigest.com/tim-shares-slide-as-reported-grid-bids-disappoint.html "TIM shares slide as reported grid bids disappoint") Hepher, David Shepardson,Paul Sandle, Nick Carey, Josephine Mason; Additional reporting by Jamie Freed; Editing by Kirsten Donovan)


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