Airlines are losing money. They will still buy a lot of planes

The Covid-19 crisis is hardly a good time to be in the aviation business. Investors seem to have forgotten, though, that plane makers have years of purchase commitments locked in. Over the past month, markets have lost the will to discriminate, first piling into stocks particularly affected by the pandemic then, last week, dumping them due to fears of a second wave. The shares of Boeing and Airbus have performed broadly in line with those of airlines and engine makers, whose business models are more exposed to economic busts. Of course, plane makers will suffer too. Their main customers are airlines, which in aggregate won’t return to profit until 2022 at the earliest, according to the IATA’s estimates. Boeing has been particularly hard-hit, with a net minus 615 orders for its grounded 737 MAX jet this year as a result of cancellations. The firm also is more focused than its European rival on wide-body models used on international routes, which are expected to take longer to recover. Both companies have been forced to slash production rates. Since 2013, an increasing share of jet deliveries has been used to service new markets, rather than to replace aging aircraft, figures by analytics firm Cirium show. These “growth” markets have evaporated in the pandemic. Yet plane makers still look insulated from the worst of the slump. Airbus’s outstanding orders are above 7,600, while Boeing’s still stand at almost 4,800—about 10 and 6 years of production, respectively. <br/>