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 $18.4 billion before interest and taxes last year and won’t return to its pre-pandemic peak –– a $45.6 billion profit in 2018 — until the latter half of the decade, the firm said.
Air travel within the U.S. has been around pre-pandemic levels, according to the Transportation Security Administration, leading to renewed airline demand for planes. Airbus SE and Boeing Co. reported strong deliveries for June, and United Airlines Holdings Inc. 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.