Behind aviation recovery, suppliers struggle to keep up

The Paris Air Show this week will serve as a showcase for businesspeople for the surge in demand for commercial aircraft and military equipment.

What won’t be on show is the issue that has taken up executives’ and consultants’ time and concern for the previous two years: the lengthy and yet ambiguous lead times in delivering the parts for all the sold aircraft and weaponry.

Guillaume Faury, CEO of Airbus, claimed that things have started to stabilize. Others in top management see a ray of hope.

The industry’s extensive supply chain will need to be completely rebuilt before it can fully recover, a process that will take years due to growing costs, parts shortages, and a shortage of competent labor in the wake of the pandemic.

“I can’t stress enough the tsunami that it (the pandemic) created in our supply chain. The good news is traffic is back,” the CEO of engine maker CFM International Gael Meheust told reporters ahead of the show.

Smaller suppliers that took on debt during the pandemic and are now struggling to fund new capacity remain a chief concern.

“The issue now is deep down in the supply chain, tier-three suppliers and lower, where the investment and headcount required for the demand picture makes them very nervous and makes their lenders very nervous,” said Andy Cronin, CEO of lessor Avolon.

Much of the response involves putting out fires one by one and discussing priority lists that can change month by month.

“There are a lot of smaller and medium sized companies for whom Covid was a real challenge,” added Mike Madsen, CEO of supplier Honeywell Aerospace. “Helping them get back to, and now above, 2019 production levels is where all the focus is.”

The entire ecosystem—from new assembly to maintenance shops—is suffering from a labor scarcity as demand for travel and aircraft increases. According to Eric Bernardini, general director of the US consulting firm AlixPartners, “we get calls from someone in the aerospace industry every day asking for help in fixing their supply chain.”

Weather radar and emergency locating transmitters (ELT) for both Airbus and Boeing narrowbody jets are two items that have lately been raised as issues, according to two industry individuals with firsthand knowledge of the situation.

We are not aware of any delayed airplane deliveries linked to either of these product lines, according to a Honeywell representative.

Labour shortages are hurting the whole ecosystem from new assembly to repair shops as demand rebounds for travel and planes. “Every day we get a call from somebody in aerospace asking for help in fixing their supply chain,” said Eric Bernardini, a managing director at US consultancy AlixPartners.

Among the items recently flagged as a concern are weather radar and emergency locator transmitters (ELT) for both Airbus and Boeing narrowbody jets, two industry sources with direct knowledge of the matter said.

A spokesperson for manufacturer Honeywell said: “We are not aware of any delayed aircraft deliveries related to either of these product lines”.