Aerospace industry will struggle to turn profit in 2021, report says

The commercial aerospace industry will struggle to make a profit this year despite recent news of big orders for jets and announcements that production rates are rising, according to a new report. Jetliner manufacturers, parts suppliers and lessors at best will barely break even this year, consulting firm AlixPartners said in a report released Thursday that blamed pricing pressures, a weakened supply chain and depressed output of wide-body aircraft production. The industry posted a loss of $18.4b before interest and taxes last year and won’t return to its pre-pandemic peak –– a $45.6b profit in 2018 -- until the latter half of the decade, the firm said. Air travel within the US has been around pre-pandemic levels, according to the TSA, leading to renewed airline demand for planes. Airbus and Boeing reported strong deliveries for June, and United agreed to purchase 270 planes from the companies. International and business travel has been slow to return, however, forcing manufacturers and lessors to hold inventories that are outpacing demand. That oversupply is driving down prices for jets, leading manufacturers to squeeze suppliers, according to Eric Bernardini, AlixPartners’ global co-leader of aerospace, defense and aviation. “If you want to buy aircraft, you can get very good deals,” he said. “The suppliers are going to have to adapt because otherwise, how are they going to survive?” That puts the industry as a whole at risk of posting a loss for the second consecutive year.<br/>